S-4419-119
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Sponsored by John Kennedy (R-LA)
What it does
This bill would amend the Corporate Transparency Act (31 U.S.C. § 5336) to restrict beneficial ownership information (BOI) reporting requirements exclusively to foreign-formed entities registered to do business in the United States. It would exempt all U.S. persons — individuals and domestically formed companies — from having to report who ultimately owns or controls a reporting company. It would also require the Financial Crimes Enforcement Network (FinCEN) to delete all previously collected BOI data on U.S. persons within 90 days of enactment.
Who benefits
Owners of U.S.-formed small businesses (LLCs, corporations) who would no longer need to file BOI reports with FinCEN — an estimated 32+ million domestic entities that were subject to the original CTA requirements. Attorneys and accountants who advise clients on compliance would see reduced regulatory burden. Privacy-conscious business owners who objected to disclosing personal identifying information to a federal database. Domestic shell company operators, including those used for legitimate estate planning, real estate holding, or investment purposes.
Who is hurt
Law enforcement agencies and financial intelligence units that rely on BOI data to trace money laundering, tax evasion, and illicit finance through domestic shell companies. Banks and financial institutions that use FinCEN BOI data to satisfy their own anti-money laundering (AML) due diligence obligations. Foreign governments and international partners (e.g., FATF member nations) that coordinate with the U.S. on financial crime investigations. Victims of fraud and financial crimes where anonymous domestic shell companies are used as vehicles. FinCEN itself would lose a significant portion of its beneficial ownership database upon the mandated deletion of U.S. person data.
Supporters argue
Supporters argue that the Corporate Transparency Act imposed an unprecedented and burdensome federal registry on tens of millions of small, law-abiding domestic businesses — many of them sole-member LLCs with no connection to illicit finance. They contend that the original reporting mandate raised serious privacy concerns by requiring individuals to submit sensitive personal data to a federal database, and that multiple federal courts found the CTA's application to domestic entities constitutionally questionable. By limiting the requirement to foreign-formed entities — the category most associated with cross-border money laundering — the bill targets the actual risk while relieving ordinary American entrepreneurs from a compliance obligation that carried civil and criminal penalties.
Opponents argue
Opponents argue that anonymous domestic shell companies — not just foreign ones — are a primary vehicle for money laundering, tax fraud, and sanctions evasion in the United States, as documented in FinCEN's own advisories and the 2020 Senate Permanent Subcommittee on Investigations report. They contend that exempting all U.S. persons effectively guts the Corporate Transparency Act's core purpose, since bad actors can simply use a domestically formed LLC to avoid disclosure, and that the mandated deletion of already-collected data would permanently destroy an investigative resource that took years to build. International anti-money laundering bodies such as FATF have specifically cited U.S. shell company opacity as a major compliance gap.
Constitutional context
The Corporate Transparency Act rests on Congress's Commerce Clause authority (Art. I, §8, cl. 3) and the Necessary and Proper Clause (Art. I, §8, cl. 18) to regulate financial activity with a nexus to interstate commerce. Several federal district courts have questioned whether the CTA's application to purely domestic, intrastate entities satisfies the Commerce Clause limits articulated in United States v. Lopez (1995). Post-Loper Bright (2024), any FinCEN rules implementing the remaining foreign-entity requirements would face independent judicial scrutiny rather than deference.
Checks and balances
Congress would narrow FinCEN's (Treasury's executive branch) data collection authority; FinCEN retains rulemaking power over foreign-entity reporting, subject to independent judicial review under Loper Bright; courts remain available to review both the scope of the exemption and the mandated deletion order.
Historical precedent
The Corporate Transparency Act (2021) originally established the BOI reporting framework this bill would narrow; multiple federal courts, including the Eleventh Circuit, have issued conflicting rulings on the CTA's constitutionality as applied to domestic entities, leaving the legal landscape unsettled.