Jan 1, 2021
Earlier this afternoon, the U.S. Senate voted to override President Trump’s veto of the “National Defense Authorization Act" (NDAA). The House voted to do the same earlier in the week meaning that the NDAA is now set to become law.
Pertinent to Big “I” members, the NDAA contains a provision that would create a burdensome new federal reporting requirement for most small businesses. This onerous new requirement was originally meant to cover nearly all small businesses including insurance agents.
However, working with key legislators the Big “I" was successful in securing a full exemption for independent agents and brokers by showing that insurance producers already provide this beneficial ownership information to state regulators and that the additional burden of providing it to the federal government would be duplicative and unnecessary.
Throughout the legislative process, the Big “I" was the only producer group that advocated on behalf of agents and brokers to exclude them from this new onerous requirement. For various reasons, the other producer groups did not engage.
Without this exemption, the beneficial ownership provision would have required agencies with fewer than 20 employees to file new reports on their beneficial ownership with the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN). Agencies would have to comply with the new requirement annually starting within two years of the law's enactment for existing businesses or upon the incorporation of a new business. The penalties for failure to comply with these reporting requirements are severe, with civil penalties of up to $10,000 and criminal penalties of up to two years in prison.
The Big "I" is especially grateful to Sen. Mike Crapo (R-Idaho), chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs, and Rep. Carolyn Maloney (D-New York) for their determined work on this provision. Throughout the NDAA negotiations, the Big “I” worked with both Chairman Crapo and Rep. Maloney to improve this legislation and make sure insurance agents and brokers remain free from these duplicative burdens while still ensuring that bad actors would be prevented from using anonymous shell companies to hide illicit activities.
As many of you know, legislative victories come in various forms: sometimes it means passing legislation beneficial to the IA system, other times it means stopping legislation harmful to independent agents, and here it meant securing our exemption to protect independent agents from this new requirement that will apply to many other small businesses.