Tag: Beneficial Ownership

Senate Hearing on Beneficial Ownership Follows House Committee Action Affecting Corporate Entity Transactions

Posted on by Trey Jackson

A Senate Banking Committee hearing this week on “Combating Illicit Financing by Anonymous Shell Companies Through the Collection of Beneficial Ownership Information” followed recent approval of legislation by the House Financial Services Committee that would affect beneficial ownership requirements for commercial real estate transactions.

Senate Banking Chairman Mike Crapo (R-ID)  held a hearing this week on “Combating Illicit Financing by Anonymous Shell Companies Through the Collection of Beneficial Ownership Information.”

  • Senate Banking Chairman Mike Crapo (R-ID) said in his opening statement that the committee seeks solutions “… to deter money laundering and the financing of terrorism through the use of front companies, shell companies, shelf companies, opaque nominees, and other means to conceal and disguise the true beneficial owners of property and other assets.”
  • The Senate committee held a previous hearing on the subject last November.  Another hearing focusing on industry perspectives is expected in June.
  • Congressional consideration of the beneficial ownership issue comes after the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) amended the Bank Secrecy Act regulations in May 2018.  FinCEN added a Customer Due Diligence rule requiring financial institutions to collect the beneficial ownership information of legal entities with which they conduct commerce. (FinCEN news release, May 2018)
  • In the House of Representatives, the Financial Services Committee considered legislation (H.R. 2514) affecting beneficial ownership during a May 8 mark-up.  (Committee Memorandum, May 3)
  • The committee approved legislation introduced by Reps. Emanuel Cleaver (D-MO) and Steve Stivers (R-OH) – introduced the “Coordinating Oversight, Upgrading and Innovating Technology, and Examiner Reform Act” or the “COUNTER Act” by a vote of 55-0.   The bill would require financial institutions to determine the beneficial owners involved in certain commercial real estate transactions – similar to a FinCEN Geographic Targeting Order (GTO) requirement affecting certain residential purchases. (CQ, May 9) 

    Congressional consideration of the beneficial ownership issue comes after the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) amended the Bank Secrecy Act regulations in May 2018. 
  • FinCEN’s GTO issued in November 2018 requires U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate.  The purchase amount threshold, which previously varied by city, is now set at $300,000 for each covered metropolitan area.  The GTO also covers certain counties within the following major U.S. metropolitan areas: Boston; Chicago; Dallas-Fort Worth; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle. (Wall Street Journal – Nov. 15, 2018) 
  • Another House Financials Services Committee proposal introduced by Reps. Carolyn Maloney (D-NY) and Peter King (R-NY) was postponed during the May 8 mark-up, yet is expected to be considered in June.  Their Corporate Transparency Act of 2019 ( H.R. 2513) would shift FinCEN reporting requirements on beneficial ownership from banks to the business community.  (CQ, May 9 and May 21) 
  • The Maloney-King legislation would require every business with fewer than 20 employees to register their beneficial owners with FinCEN.  Businesses would also need to update that registration with any changes (home or business address, driver’s license change, change in ownership) within 60 days, and annually for the life of the business.  Failure to do so would result in federal criminal penalties.  However, the bill fails to address the required information and the process for compliance.

The Roundtable has raised concerns about beneficial ownership reporting requirements and the potential burdens they place on the real estate industry. (Coalition letter – Feb. 6, 2018).  The Roundtable will continue to work with policymakers to stake out a balanced position on the issue that would inhibit illicit money laundering activity but does not place unnecessary costs and legal burdens on the real estate industry.

Roundtable Members and National Lawmakers Focus on Public Policies Beneficial to Economy, Job Creation and Communities

Posted on by Trey Jackson

This week’s Real Estate Roundtable Spring Meeting featured discussions with U.S. lawmakers on developing market-based public policies that benefit national economic growth, create sustainable jobs and meet the evolving housing needs of local communities.  The meeting focused on issues such as infrastructure; terrorism insurance; tax issues such as opportunity zones and FIRPTA repeal; and energy efficiency.

Roundtable Chair  Debra A. Cafaro (Chairman & CEO, Ventas, Inc.)

 

  • Roundtable Chair Debra A. Cafaro (Chairman & CEO, Ventas, Inc.) launched the meeting by noting the wide range of issues addressed in The Roundtable’s 2019 National Policy Agenda.  Cafaro also recognized the organization’s anniversary in the advocacy world, stating, “During these past 20 years, our mission has been to bring together the top leaders from commercial real estate sectors with the industry’s 17 leading trade associations to address key national policy issues relating to our industry and to the overall economy.”  She emphasized that the organization’s successful business model has always been based on “…analyzing national issues for their real world impact, and then advocating a nonpartisan, unified position based on solid research and facts.” 
  • [Cafaro this week was also appointed as chair of the board of directors of The Economic Club of Chicago for a two-year term beginning July 1. (Video of Cafaro’s Speech, April 10) ]

Meeting speakers at The Roundtable’s Spring Meeting included: 

  • Senator Michael Crapo (R-ID) —  chair, Senate Committee on Banking, Housing and Urban Affairs — spoke with Roundtable members about his committee’s policy agenda,  his recent efforts to reshape the role of the Government Sponsored Enterprises (GSEs) and the need to reauthorize the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA)

Chairman Michael Crapo (R-ID)— Senate Committee on Banking, Housing and Urban Affairs

  • Senator Cory Gardner (R-CO) — member, Senate Committees on Commerce, Science and Transportation; Energy and Natural Resources — discussed funding challenges for a national infrastructure improvement initiative, tax and other polices to encourage energy efficiency, and his recent reintroduction of the STATES Act to  resolve the federal-state conflict over cannabis laws. (U.S. News & World Report, April 4)
  • Reps. Josh Gottheimer (D-NJ) and  Tom Reed (R-NY) — House co-chairs of the Problem Solvers Caucus — discussed the efforts of their 46-member bloc of bipartisan policymakers who seek cooperative approaches to policy solutions.  No Labels Founder and CEO  Nancy Jacobson joined the discussion on efforts to find common ground in the 116th Congress.
  • Justin Muzinich — Deputy Secretary, U.S. Department of Treasury — discussed TRIPRA reauthorization, Treasury’s highly-anticipated 2nd round Opportunity Zone regulations, and other ongoing security, trade, and tax initiatives.
  • Terry McAuliffe — former Governor of Virginia (2014-2018) and co-chair of Hilary Clinton’s 2008 presidential campaign — spoke about public policy lessons learned from his state’s successful economic expansion.
  • Tim Sloan — former CEO and President, Wells Fargo & Company — discussed his leadership experience as the largest lender to the CRE industry in the nation and the pressing need to recognize cybersecurity as a major risk to the country and banking industry.

The Roundtable will convene next on June 11-12 for its all-member Annual Meeting and policy advisory committee meetings in Washington, DC.