Roger Williams Asks Witness About How To Protect Small Businesses From BOI Fraud And Scams

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During a House Financial Services Committee hearing last week, Rep. Roger Williams (R-TX) spoke about Beneficial Ownership Information reporting scams.  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript   Stay Connected Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com

Transcript

00:00for five minutes. Thank you Mr. Chairman. Thanks to the witnesses for being here.

00:03Ms. Burns Colvin, we are seeing an evolution how fraud is being committed

00:06and concealed particularly through the use of emerging technologies like

00:10decentralized exchanges and cryptocurrencies. These tools are not

00:14only being exploited by traditional scammers behind investment funds and

00:18pig butchering schemes but increasingly by sophisticated transnational

00:22criminal organizations including Mexican drug cartels that are adapting their

00:27tactics to evade the detection. In many cases these groups are bleeding fraud

00:32proceeds with other illicit revenue streams and using crypto infrastructure to

00:36obscure the origin and flow of funds. Now from your advantage what trends are you

00:42seeing in how fraudsters both individual and organized are using these

00:46technologies to evade AML controls and how is your organization working with the

00:51private sector and law enforcement to stay ahead of these evolving threats and

00:54ensuring we can continue to track down these criminals effectively? Thank you for

00:59the question and we're able to track these cartels purchasing fentanyl precursors

01:06from Chinese dealers who are primarily operating in cryptocurrency. We're seeing

01:10illicit actors adopt cryptocurrency for the same reason it's being used for

01:14legitimate purposes because it's stable, it's liquid, it's fast. Any technology we can

01:21count on fraudsters to abuse and luckily we've been able to track some of these fentanyl dealers

01:28and Mexican cartels but they're early stage in cryptocurrency and they are not expert

01:35launderers which provides excellent opportunity for intervention. I want to highlight the Eastern

01:40District of Wisconsin for forfeiting 5.5 million dollars in cryptocurrency associated with cartels and Chinese fentanyl precursor dealers.

01:48So there's a number of cases where we see this over and over at the federal and state and local level

01:55and we need to make sure that state and local investigators are equipped to be able to identify and track these payments.

02:01Thank you. One particular area of concern of mine is how government related reporting requirements such as

02:07Vincent's beneficial ownership information rule may be putting small businesses at and their owners at risk.

02:12The rollout of BOI reporting under the Corporate Transparency Act has required millions of small businesses

02:18to navigate a complex new federal compliance system often for the first time.

02:22Unfortunately, bad actors are using the requirements of the rule to exploit business owners through

02:28emails, fraudulent websites, and scam calls impersonating FinCEN.

02:34I applaud the Trump administration for scaling back its harmful requirement, recognizing the disapproaching

02:40of burden and security risks that rule that this rule is placed on small businesses, but there are still bad actors

02:46we must protect small businesses and entrepreneurs from. So, Mr. Brabant, how has FinCEN's BOI reporting requirements

02:53opened up small businesses to the threat of fraud and scams, and how can Congress better protect small business owners

02:59from BOI-related fraud?

03:02Thank you, Congressman. The first one I discussed earlier is filing scams themselves.

03:09When you do a Google search, the first several results are not going to be from FinCEN.

03:14They're going to be from BOIR.org, who has what looks to be a government seal with an eagle in it.

03:21And some of these sites are charging $400 to file, and then small business owners have no idea if their

03:28information's actually being filed. And then, of course, there is the question of when you have your copy of your

03:35driver's license in a database, and there's tens of millions of driver's licenses in there, it's only a

03:41matter of time until that information is leaked or hacked, and that opens up significant identity theft risks.

03:47Thank you. I've got limited time, but Mr. McLaughlin, could you elaborate on how the current

03:51filing burden of SARS and CTRs are affecting community banks, and how can Congress provide financial institutions

03:57some relief from these burdens while still giving law enforcement the information and tools that they need?

04:03Thank you for your question. I think the burden needs to be shifted to a risk-based approach

04:10that's in alignment between regulatory agencies, law enforcement, and the financial institutions.

04:15Check the box exercises are a drain on resources across the industry, and it's demoralizing to the institution,

04:23the folks that I represent, that we are not focusing on the threat, the real threat to our customers,

04:30but rather we are taking part in check-the-box exercises to get the machine of filing SARS or CTRs

04:37out within the regulatory expected SLAs.

04:44Okay, thank you. I have Lee and my time back, Mr. Chairman.

04:47Thank you, gentlemen, and the gentleman from Illinois, who's the ranking member of the Financial Institution Subcommittee.

04:53Mr. Foster is now recognized for five minutes.

04:56Thank you, Mr.

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Transcript

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