In the name of curtailing money laundering and the risk of terrorist finance, Sens. Chuck Grassley (R-Iowa), Dianne Feinstein (D-Calif.) and Sheldon Whitehouse (D-R.I.) have introduced a bill that would require extensive reporting on the ownership of small corporations and limited liability companies. Provisions of the law “would regulate many lawyers and law firms as financial institutions under the Bank Secrecy Act,” notes the ABA Journal, and require them “to gather extensive beneficial ownership information on businesses when they incorporate. The information would be held and disclosed on request to many governmental agencies and financial institutions.” The businesses themselves would also face direct reporting and regulatory burdens.
The ABA is opposing provisions in this bill on the ground that they would infringe on traditional attorney-client privilege. “Concerns about erosion of attorney-general privilege have played a role in resisting numerous bad regulatory and prosecutorial initiatives in recent years,” I write in a new Cato piece. “Now if only the rest of us who are not lawyers could get someone to stand up so effectively against the government on behalf of our privacy interests.”