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Civil rights advocates in the US contest recent business legislation

Black Politics Now by Black Politics Now
October 10, 2024
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Civil rights advocates in the US contest recent business legislation
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Img source: www.smithsonianmag.com

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Allegations arise concerning the constitutionality of the Corporate Transparency Act, asserting it unfairly singles out individuals of color and immigrants. Lawyers for Civil Rights filed a federal lawsuit in Boston, Massachusetts, on May 29, challenging the legality of the Corporate Transparency Act (CTA), enacted earlier this year. 

The law, designed to bolster financial transparency and national security, mandates millions of small businesses to divulge extensive private information about their proprietors to the federal government. Critics argue that this places an undue burden on businesses owned by people of color, immigrants, and those with lower incomes.

The lawsuit, initiated on behalf of the Black Economic Council of Massachusetts (BECMA), the African Community Economic Development of New England (ACEDONE), and three black women business owners in Massachusetts, contends that the CTA infringes upon the privacy rights of business proprietors. They argue that it disproportionately impacts minority-owned businesses, thus violating several amendments to the US Constitution.

Under the CTA, over 32 million small businesses nationwide are compelled to disclose the names, dates of birth, addresses, and government ID numbers of their beneficial owners. This information, collected by the Financial Crimes Enforcement Network (FinCEN), can be shared with law enforcement agencies, regulators, financial institutions, and even foreign governments. Failure to comply can lead to substantial fines and imprisonment.

The lawsuit underscores concerns that the CTA may disproportionately burden businesses owned by minorities, immigrants, non-English speakers, and individuals with lower incomes. These groups already face challenges in accessing capital and securing loans, and the additional compliance requirements of the CTA could exacerbate these difficulties. The threat of severe penalties for non-compliance further disadvantages these businesses.

Moreover, the lawsuit suggests that the CTA could discourage investment in small businesses due to its burdensome requirements and the potential for fines and imprisonment. This could deter potential investors from supporting small businesses.

The claimants argue that the CTA represents federal overreach and imposes intrusive reporting requirements and potential criminal penalties. They raise concerns about increased scrutiny from financial institutions and potential breaches of data security. Additionally, there are apprehensions that individuals seeking to adjust their immigration status may be compelled to disclose sensitive information, risking immigration enforcement.

Representatives of the claimants, including Nicole Obi, President and CEO of BECMA, and Abdul Hussein, Founder and CEO of ACEDONE, emphasize the importance of supporting small businesses, particularly those owned by marginalized communities. Michael Kippins, a litigation fellow at Lawyers for Civil Rights, highlights the alleged disproportionate impact of the CTA on vulnerable populations and vows to fight against what he deems an “unprecedented and unlawful intrusion into their privacy.” Source: ICLG

The claimants seek to declare the CTA unconstitutional, halt its enforcement, and remedy any violations. In the case of Black Economic Council of Massachusetts et al v Yellen, the claimants are represented by Lawyers for Civil Rights, Boston.

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