Small‑business groups tell House subcommittee beneficial‑ownership reporting poses fraud and privacy risks

Jeff Brabant, vice president for federal government relations at the National Federation of Independent Business, told the subcommittee that many small businesses view the Corporate Transparency Act (CTA) beneficial‑ownership information (BOI) filing requirements as invasive and a target for scammers.

“Small businesses overwhelmingly oppose the CTA,” Brabant said in testimony, describing instances where fraudulent third‑party filers and imitation websites have charged fees to business owners attempting to comply. He described a case in which an Indiana farmer was charged $249 by a commercial filing service that the farmer later identified as a scam.

Brabant and other witnesses urged Congress and Treasury to address what they called implementation risks: phishing and copycat filing services, the storage of driver‑license images and other sensitive data, and the administrative burden on small firms that lack compliance resources. Several witnesses said that banks already collect ownership information as part of customer due diligence, and that CTA reporting can duplicate those requirements while creating a central database of sensitive records.

Committee members asked about trade‑offs between law‑enforcement utility and privacy risk. Witnesses recommended targeted exemptions or a risk‑based approach to minimize small‑business compliance costs while preserving usable information for investigations. No legislative change was decided at the hearing; members on both sides pressed Treasury and FinCEN officials in questioning and asked witnesses for additional detail in the written record.