South Iowa News

The U.S. House of Representatives has passed a bipartisan bill introduced by Representative Zach Nunn, aimed at targeting Chinese Communist Party shell companies in the United States and supporting American small businesses. The legislation, titled the Protect Small Businesses and Prevent Illicit Financial Activity Act, was approved with a 420 to 1 vote.

Representative Nunn highlighted the impact of these shell companies on national security and the economy. "The Chinese Communist Party has more than 40,000 shell companies currently operating in the United States that jeopardize our national security, steal our intellectual property, and undermine our economy," he stated. He emphasized that the bill addresses these concerns while reducing regulatory burdens on Iowa's small businesses.

In 2020, Congress passed the Corporate Transparency Act to address issues related to shell companies by implementing new reporting requirements. However, during its implementation by the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), certain changes were made that deviated from the original bill. These changes included options for companies to declare themselves “unable to obtain” or “unable to identify” their true ownership, which undermined the law's effectiveness.

Nunn’s bill aims to rectify these issues by closing loopholes that allow omission of information under those declarations. It also mandates new entities to report within 90 days of formation or registration and extends the filing deadline for American businesses by 12 months. This extension allows time for adjustments in Treasury Department implementations without overburdening small businesses with complex regulations.

The bill now moves to the Senate for consideration. It is co-led by Joyce Beatty, Ranking Member of the Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions.