January 18, 2024

Scott Introduces Bill to Ease Burdens on Small Business, Target Chinese Shell Companies

Washington, D.C. – Ranking Member Tim Scott (R-S.C.) today introduced legislation that would make commonsense reforms to ease reporting requirements for small businesses and close loopholes for Chinese shell companies operating in the United States. The Protect Small Businesses and Prevent Illicit Financial Activity Act extends the timeline for small businesses to comply with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) regulation on beneficial ownership reporting requirements and prohibits FinCEN from allowing companies to omit information to obfuscate their true owners.

“Chinese shell companies cannot be allowed to operate discreetly in the United States – threatening our national security, harming our economy, and stealing sensitive information. At the same time, we must ensure U.S. small businesses have the time necessary to comply with new reporting requirements. This bill makes important changes to do both,” said Ranking Member Scott.


The Corporate Transparency Act was signed into law as part of the FY21 National Defense Authorization Act and established new reporting requirements around beneficial ownership for businesses. During implementation of the law, FinCEN created a loophole allowing reporting companies to select “Unable to Obtain” or “Unable to Identify” their true ownership. This loophole undermines the effectiveness of the law and degrades the benefits of this registry by allowing bad actors to obscure the identity of a company’s owner.

The Protect Small Businesses and Prevent Illicit Financial Activity Act removes the option to select “Unable to Obtain” or “Unable to Identify.” In addition, it makes the following changes to allow U.S. small businesses additional time to comply with the new requirements:

  • Existing Reporting Entities: Reverts the FinCEN beneficial ownership filing deadline back to the statutorily mandated timeline of 24 months instead of 12 months.
  • New Reporting Entities: Requires new reporting entities to file a report with FinCEN within 90 days at the time of formation or registration.
  • Changes to BOI Information: Requires reporting entities to submit updated information within 90 days after the date the change when into effect.

Congressman Zach Nunn (R-Iowa) led companion legislation in the U.S. House of Representatives.