On January 1, 2024, American corporate executives, charity directors, and small business owners woke up to new rules from FinCEN, the federal Financial Crimes Enforcement Network. FinCEN’s new rule requires all but sole proprietors to report the “beneficial owner” of every corporation in the US, implementing the Corporate Transparency Act of 2021. In 1970, American dissident Abbie Hoffman famously published his provocatively titled book Steal This Book. By compiling beneficial ownership information, FinCEN is saying essentially the same thing.
The Corporate Transparency Act contains some thoughtful policy elements, but is typical of the kind of dangerous “bipartisan” legislation passed by Congress. Bipartisan often means bought off, with the kind of legislative consensus that is dangerous to the American public. The administrative rule adopted by FinCEN suffers from many of the characteristic problems of other administrative rules: it is unclear exactly how corporations are supposed to indicate who are beneficial owners. Given that the federal government already collects much of this information through information sharing agreements with states or through tax filing, the beneficial ownership database is functionally redundant, little more than a fishing operation to search for information to target businesses later.
Worse still, the FinCEN database is to be shared with “state, local, and tribal” law enforcement agencies. The federal government faces major problems safeguarding its own data and smaller law enforcement agencies likely face even worse circumstances. There is a strong possibility that the FinCEN database will be intentionally, or accidentally on-purpose leaked to dox political opponents. If this seems far-fetched consider California’s recent leaks of the names and addresses of 200,000 gun owners in the state, or the fact that California lost the Americans for Prosperity v. Bonta 2021 Supreme Court case, because California was demanding all charities file Schedule B donor data, and then accidentally leaking that information publicly so that online mobs could target conservative organizations.
Disfavored publishers, gun companies, body armor companies, and other businesses are among those that will likely need to be most concerned about FinCEN’s rules. Industry organizations and their members likely have standing under current Supreme Court case law to bring as applied or overbreadth challenges to the new FinCEN rules, and will likely achieve standing again when a change in beneficial ownership—whatever that really means—prompts subsequent filings.
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