Venture Step

Dalton Anderson (00:01.218)
Welcome to Ventureset Podcasts where we discuss entrepreneurship, industry trends, and the occasional book review. Shell companies, hidden owners, and a web of financial secrecy. Sounds like a spy novel or some kind of movie, right? Nope, it's reality. Today we're going to be discussing the BOI filing that is pending to be required to file January 1st next year.

The reason why I say pending is is up in the air and TBD depending on the appeal of the Department of Justice in response to some of the rulings from court cases from various states.

That being said, the BOI filing is related to what is called the Corporate Transparency Act or CTA. So I'll be saying CTA and BOI pretty often. And I'm not sure if I recall correctly, but BOI is the Beneficial Ownership Information Filing.

Dalton Anderson (01:11.276)
What we'll be discussing in the episode is TD's recent money laundering scandal.

the legal cases and their ruling so far, how this potentially would affect your business. And I was going to show you how to file and I was going to do my own filing because the two LLCs and the website is seeming to be down for the form to fill out. Cause you would fill it out on the financial crimes enforcement network website.

And it's like F sin.gov forward slash B O I Fs Fincer. Yeah. And so you would go there and it's right on their homepage. You just go B O I and you click on it and then it's like how to file. You click on that and there's a form that you fill out and that's it. It's really easy. But I was going to show you how to do that. Maybe they have the link down either because it's the government.

and they don't have proper maintenance put up. But when I clicked the link, it seemed like it was sending me to their test environment. And it probably doesn't only use the test environment because I don't have test environment credentials.

or they thought that it was easiest. when they win the appeal or something happens, they could just switch it to prod. I don't know. But I would like to caveat this episode with I'm not a lawyer, nor am I an accountant. If you are seeking legal or financial advice, please do so with someone that is a professional.

Dalton Anderson (03:02.814)
and has licenses in the areas that you're doing business.

Okay, before we dive in, I'm your host Dalton Anderson. My background is a bit of a mixer programming, data science and insurance offline. You can find me running, my side business or lost in a good book. You can listen to the podcast in both video and audio on YouTube. If audio is more your thing, you could find the podcasts on Apple podcasts, Spotify, or wherever else you get your podcasts.

TD's money laundering recently came out October 2024. Such a crazy case. $3 billion in fees, which it's not really a fee, it's more a penalty, but fees to the government, same thing. So 1.8 billion to the Department of Justice, which might fund the appeal for the Corporate Transparency Act, I don't know.

And then 1.3 billion to the financial crimes enforcement network. Right. So just throw it out there. So the Department of Justice is going to be appealing. Texas is ruling. On the B.O.I. filing and also is part of this T.D. piece and the FinCert is the financial crimes enforcement network is the same place you would file your B.O.I. filing.

Crazy stuff though, so close to.

Dalton Anderson (04:44.632)
You know, three billion. don't, don't, I don't know if it's been completely finalized, but they are getting, they're getting fleece for sure for their, what they're doing here.

What they did, I think is respectable. You should be getting paid, you should be paying out billions, but TD is pretty big. They're not a small bank. They're top 10 in the United States under assets, under management.

And I think one of the things that they had to agree to is capping their growth to like 438 billion or something like that. I have it. I have it down below so I could I could correct myself later in the episode.

Dalton Anderson (05:30.476)
I don't know. mean, three billion's a lot, but is that enough?

Right? Like the more I read about it, the more I felt that it was just gross negligence on the executives, management, culture, infrastructure, system processes, like just, just crazy stuff. One of the things that I pulled out from an article and I highlighted was that retail employees, when I, they didn't formally define what a retail employee was, but

I'm pretty sure what they mean by that is that an employee that works at the bank on the retail side, flagged, many employees flagged transactions over $100 million moving in and out, illicit transactions. And TD Bank didn't do anything until the law enforcement or

FBI or whoever, whatever agency was involved was like, hey, like these are illegal transactions. You need to take action on them. Freeze the accounts. 100 million is a lot. Like if you flag the 100 million.

There's just no way that TD didn't know. If you pull out more than $5,000, you've gotta say what you're doing it for. I'm buying a car, or I'm doing this. And they write down the reason. And you're saying that the bank had no idea that there was just transactions flowing in at 100 million at a time or something?

Dalton Anderson (07:10.444)
That's crazy. And then the employees were even joking about it on, like it was an open joke where it was like, hey, like, we're complicit in money laundering and just like the company's okay with it. And when your employees start openly joking about it, that's how you know it's just so bad that it's not even a secret anymore where it's like, like.

We do money laundering. It's not in our explicit company benefits when you're an account holder with us, but I'm sure that if you need to use us for these illicit activities, it's fine. I mean, we have people move in hundreds of millions of dollars, no problem. So if you need to move the money, just come to TD. We would service your account and we wouldn't say anything. I mean, what a great sales pitch that is.

And if they're moving 100 million, they're not getting any service fees for that. There's no low minimum balance or any of those things where they could charge you 25 bucks a month. I don't know. So they're fined a couple billion. They have to do a whole bunch of stuff. So they've agreed to having three years third party

audit. So if they retain an audit team to audit the company, they had to hire 700 new employees to

Dalton Anderson (08:51.192)
help with this anti-fraud stuff. They had to put in a new procedures and decision making process. It seems pretty reasonable. And then they had to use data-driven mitigation technologies. Maybe they didn't have that. It's just some of this stuff that they're talking about. like, okay, you're...

A company that's managing hundreds of billions of dollars, you don't have anything sophisticated? mean, data-driven risk mitigation technologies is not something that's too complicated. Okay, this transaction seemingly comes out of nowhere. Okay, here's another one that comes out of nowhere. All right, and then they're pulling money in and out fast. Okay, that seems weird.

and people don't do that. And you have so much transaction flow throughout the whole bank and all your accounts that you hold, it should be pretty easy to pull the data and understand what is normal and what's outside of normal. And like if you're if you're so many deviations outside of what normal is, then automatically flags that count. And if you're like, like X deviations out, like not like crazy deviation, but enough to where it's quite unusual.

flag it for review. I don't know. So they're having that going on. And then the weird thing is they also had to agree to, and this is what I feel like is the worst thing that they had to agree to, is a 434 billion cap on assets. So they are completely limiting their growth in the U.S. and

From my understanding, it was a limitation until they got everything squared away. So it's like three years where they have to do that and they can't grow.

Dalton Anderson (11:07.406)
so they have to get approval to grow or three years. it was like a weird option thing where if they grow enough, or no sorry, they can't grow, but if they improve their processes enough, then they can get sign off or it's after the audit team is like, yeah, like we don't need to audit them anymore. So crazy stuff. I don't know how these things happen and it's kind of similar to Wells Fargo.

Like how do these banks do these things? And be like, I didn't know. I had no idea. Sorry. No idea that I did that to you.

Dalton Anderson (11:49.59)
It's yeah, it's just hard for me to understand. I bank with Capital One and I flew to Japan and Korea as you talked about in previous episodes. And every time I flew there, originally when I go to Japan or I go to Korea, they would do a dual factor requirement on my account for like a day and a

And then at one time I typed in my password wrong. So I tried to do my fingerprint sensor and my finger was at a weird angle and it didn't work. And then I went, I had me type in my password and then I did it wrong apparently. And then I had to dual factor authenticate for weeks, for weeks, literally almost a month.

And I was so fed up with it because also my flights are in there because I use Capital One travel. So every time I had to look at my flights or looking for updates or whatever, I had to go into the app. And for me to go in the app, I had to use dual factor. But the issue is when I'm traveling, my Internet isn't that good until I set up my e-sim in that area. So I was struggling, struggling to get get able to log in and look at my flights or

figure out where I need to go or whatever I need to do. Such a pain in the butt and I called Capital One and I was like, I am me, I've passed the dual factor authentication for weeks now, you've got to turn this off. And then they're like, yeah, we can't. And I was like, what do mean you can't? You can't turn it off? And they're like, yeah, they just, like, I don't have the controls. And I was like, okay, well, can I speak to someone who does? This is really annoying.

This is frustrating me. And I'm not one of those people that just call and complain, but it was really frustrating me because all the travel and it was so difficult to access my account. And they're like, okay, yeah, no, we can't. I can't really help you. She was like, you are in that department that you're supposed to be with and there is no way for any of us to turn this off. It's when the system says,

Dalton Anderson (14:14.73)
It's okay. So you've got to pass enough checks. And once the system deems that you are a threat, then we will unlock your account. But no employee has the ability to unlock it. It's a system and algorithmic thing. And it's locked until it says otherwise, which one is annoying. Two, it prevents people from jerking around the system and doing things they shouldn't be doing.

So that may have been helpful for TD Bank. I get why Capital One does it, but I was like, in that moment, I was like, come on, are you kidding? Like that's crazy. My account is permanent. And when I was speaking to the person on the phone, they were like, yeah. And I was like, so how long can this be? And then they're like, forever. was like, what? What are you talking about? She's like, I don't know. I mean, it could be forever. It could be next day.

I'm not sure. I was like, I've been doing it for almost a month. How long do I have to do it for? I've been logging in multiple times a day and there's like, yeah, I don't know. But yeah, it was crazy statement when she's like maybe forever. And I was like, if it's forever, I have to leave the bank. Like I can't, I can't dual factor authenticate every time I log in.

But TD Bank could definitely use some increased controls because they didn't know about it, quotations, quotations.

Okay. So that's money laundering and TD Bank got caught doing that. So this corporate transparency act is supposed to help mitigate the risks of foreign governments interfering with the US economy in malicious ways and or preventing foreign governments and or criminal organizations and or

Dalton Anderson (16:17.206)
individuals from laundering money with illegal activities.

Okay, so, beneficial ownership, switching topics, beneficial ownership is defined as a natural person who has control of a legal entity.

and or the legal organization structure and the actual person identified.

that runs the company. So basically the person who filed the legal entity and or the person who is in charge and or the person who has legal control or financial benefit.

Dalton Anderson (17:10.382)
Sorry, I think I got a mosquito. It's biting me mid episode. is crazy. have to defend my honor live, live against the audience. Oh my gosh. Okay. So for this BOI filing, what's required and is it extensive? Well, the demo on their website is about five minutes, so not really.

You have to file your legal name, your date of birth, your residence address and your business address, which could be the same, could be different. Then you need a unique identifying number related to a government issued identification, either your passport or your ID, whatever. And then you have to type that in.

You go to the next page, type in some other stuff, like what the business name is, and then it's like three pages, 10 questions each or something, 10 questions, seven or so, and then you're good to go. And you'll get a response.

Dalton Anderson (18:31.625)
and then you're fine.

So it's pretty simple. It's not overly burdensome. It's not difficult. There's not a lot involved in it, but the failure to comply when I was reading why not the why, but what they are trying to say is the penalty. I feel is quite bogus. And this reminds me when you go into these college like a dorm apartments and they have some, some kind of

clause in there.

Dalton Anderson (19:09.742)
in their contract that said, like if your rent's late one day, you're charged $800 a day until you comply. But I'm like, okay, the person didn't have any money to pay the rent, or maybe they did and just chose not to pay, but charging them additional $800 a day, one, I don't know if that holds up that well in an argument, and then two, what's going on?

So it's similar thing here. They're saying you have civil penalties of $500 a day.

per violation or yeah, per day of violation. So if the filing is due January 1st and you take 20 days or 10 days, mean, that's a lot of money. Like, I don't know who has that much money to just throw away. You know how you would have that much money if you were money laundering? If you're money laundering, no problem. But yeah.

I can't just pay out five grand, 10 grand just for some nonsense penalty that you're prescribing to me. Like it just doesn't even sound reasonable. And criminal penalties can be up to 10,000. So this is a civil penalty and then we have criminal penalties and then they have up to two years in jail, not jail but prison.

Dalton Anderson (20:42.382)
Yeah, just a weird, a weird, a weird scenario where it's so easy to do and then the penalty for not doing it is so severe. For what reason? I don't understand, but I'm not the government, so don't know. But $500 a day and then up to $10,000 in criminal penalties is a lot. I don't, VentureStep doesn't make any money.

Like it only has expenses. Like it literally has zero revenue for now, eventually. mean, eventually it'll have revenue, but like it doesn't have any revenue. So like where are we getting this money from? Am I like, if the government hit me with like, Oh, you're supposed to pay 10,000 of this and that.

I would just say no.

Dalton Anderson (21:43.93)
I don't know what else to tell them. there's no way, man. Like we're not doing that. We got to figure something out. We got to figure something out with Sam, cause that's not going to work for me. So the corporate transparency act, I covered that a little bit where it was a bill that was passed years ago and it was saying that, Hey, whenever it passes and it comes law, they have up to two years to like actually require it.

And it's coming down to the wire where January 1st is the month that you're supposed to filing these things. And you're supposed to, if you filed.

Two things, if you created a new entity, you should file within 90 days. And if you're an existing entity, you have to file January 1st. And the general purpose of it is to...

help combat financial crime.

Dalton Anderson (22:46.838)
And in a sense, national security, and there are some caveats to it. Some people are concerned that this might be something where, okay, it just starts with this, and then it's that, and then it slowly slips down. Kind of like the gray ball thing where it's like, okay, it started with geofencing, and then after geofencing, it went to burner phones, and then after blocking burner phones, it went to...

scraping people off the internet and finding those individuals and then keeping them from your app. So it could be a slippery slope.

but it's not really affecting the general person. And I would say in defense to

the CTA is one, businesses already know who you are. if you used LegalZoom, if you used any of these things to help you file or create your legal entity, if you have a phone number, if you have an email, like if you have a bank account, I mean the government knows who you are. Like you're not off the grid.

And if you think you are off the grid, you're delusional. If you have social media, I mean, if you gave me your number and you don't repetitively change numbers all the time, if you gave me your number, you could literally look up like where you lived previously, who you are, what your name is, all this stuff.

Dalton Anderson (24:31.776)
So for that to be the complaint, I think that's invalid. There is some valid complaints though, and we'll talk about them a little later. But you may be asking, who is exempt? Because there's 23 exemptions, who is exempt? Well, the sure and sweet is any exemption is mainly related to financial services.

So if you are regulated by the SEC, then that would.

that would allow you to be exempt pretty much. So if you're a securities reporting issuer, if you're a government authority, a bank, a credit union, a, hmm.

An investment banker, an investment company, a venture capitalist, an accounting firm, a public entity.

tax-exempt entities or large operating company, then you're exempt. Those are just some examples, not an exclusive list. I'm not gonna read off all 23, but that is something.

Dalton Anderson (25:51.33)
something for you to think about. So unless you are a licensed investor or accountant or a public entity, you need to file. So it's pretty much everyone besides the financial services, large financial services industry.

And that makes sense because they have to have their own licenses and the government already knows who they are and they have to already report their transactions. So that makes sense.

Legal challenges and the appeals. So there's been a couple legal challenges from various states and the main one being Texas. So Texas has an appeal that, and I don't know the exact verbiage, but basically they're

Their legal case said that it was.

in concert or unconstitutional. And there's a pulmonary injunction which stops the enforcement of a national pulmonary injunction, which stops the enforcement of the B.O.I. And the DOJ had a appeal, which is still pending. So we don't necessarily know what's going to happen because depending on the results of the appeal.

Dalton Anderson (27:19.596)
that may change, but then I think that the Texas court system could also make an appeal too. And then I think then the DOJ can make another appeal and then it just keeps escalating up the circuit. And then before you know it, you get to the Supreme Court. I don't know how long that stuff would take. I have no idea, but I'm sure it will take a while. So I,

was going to lean with since it's easy and not a big deal and I have no real.

real fight for this, I'll just do it and carry on with my life. It seems like other great American citizens are fighting the good fight for you. So I was just going to get it out of the way, do it real quick and then share it with you guys. And then you would make the decision on what you want to do. But yeah, definitely, definitely not something that is

completely in stone for January 1st. They came out with a report today that they officially delayed the January 1st, but I don't know when this appeal is going to come out. And so the appeal might change their current standing on what to do, but right now it's optional to file. And if you optionally file, that's great. And it's encouraged from the government saying, of course.

And if you don't want to, you're not required to until otherwise stated.

Dalton Anderson (29:01.902)
So that's the Texas case. And so Texas deemed it was unconstitutional and they didn't like it. And there was a couple of things that they were talking about. So the state stat appeal or file against

the government, they are saying that one, it's a violation of amendment four and the first amendment in the 10th amendment. The first amendment, they're stating that it.

removes people's freedoms of speech and interaction, which I guess is kind of true. That one's a little broad for me. Maybe for a podcast makes sense. Like I don't want the government to know what I'm talking about or know what I'm I don't know. I don't know. That one's a stretch for me.

Cause if I'm talking about it and doing these things or if I'm sharing it on the internet, I can't be completely anonymous in the first place. So anonymity is kind of thrown out. Like there's always a digital footprint of things that you're doing on the internet, even though you are bouncing your IP address and doing all these things not to be found and you're anonymous. I you could be found whenever it's not that hard. I'm sure anyone with sophistication could do it.

So that's where it kind of got lost on that, but apparently it infringes on freedom of association and speech. And I could see how potentially it could get down a path where like, okay, we're looking for certain groups that are associated with companies and then we're targeting them. I could get that, so that makes sense.

Dalton Anderson (30:57.902)
And then the fourth amendment is related to like unreasonable searches and seizures. And so they're saying, OK, like if I'm requiring personal identifiable information without suspicion, like this is an unreasonable search, which I don't feel is as.

as competitive as the first amendment. And then the one that makes the most sense is the 10th amendment. So they're saying that since this law regulates interstate commerce, it infringes on state's rights and that falls under state jurisdiction. And so it's an overstep by the federal government and they shouldn't be able to require these things because this is state jurisdiction and state commerce.

I think that's a more solid ground to stand on versus the other two. In my opinion, once again, I'm not a lawyer. And then there's some other cases. So there is the National Business Small Business Association versus Yellen in Alabama. They ruled that the CTA is unconstitutional. And then the Texas Top Shop versus Garland. And this is December, 2024, so this is very recent.

they issued that nationwide preliminary injunction. It's the CTA. And then there was one other one, Firestone versus Janet Yellen. They upheld, and this was in Oregon, they upheld the CTA and they said it was constitutional and they rejected both the 9th and the 10th Amendment challenges. So there's conflicting rulings and there is the...

Dalton Anderson (32:53.742)
from the DOJ.

So the general sense is like, we don't know what's gonna happen. Like we have no idea if it's going to be required January 1st, probably not. We don't have that much longer. We have no idea if it's gonna be required in the future, what to do. I just wanted to file it, get it over with, whatever. And I just found out about the recent announcement because it came out today.

that you're not required to file and it's optional. But I don't really see why it would be a big deal to file.

Like companies already know that I own a business. They're sending me mail. They know my name. The government probably knows who I am too. So I don't think it's a secret and I'm not doing anything wrong. So I don't, I don't really see the issue. So the impact on the business, could could it be a financial burden and or compliance burden? I don't think so. It's very simple. It would take you about three minutes.

if you already had your docs put together. So all you need is to know your name, your date of birth, and you need to have some scan of your passport or ID, and then you're good to go. So I don't think that there is a lead time required to prepare for this filing. If you're doing your other filings related to compliance or accounting, you should have all this information anyways.

Dalton Anderson (34:37.334)
It's quite streamlined. I think the only thing that would make it more business friendly is if the link to submit the form worked. So you can't submit to the government at the moment or the financial crimes network because enforcement network, because their link doesn't work. It's like, can't help me there. And I couldn't find myself. So it's unfortunate.

But we spoke about

TD Bank's financial crimes, the financial crimes enforcement network got TD Bank. TD Bank's charged approximately three billion. We talked about what businesses are exempt. Just as a reminder, unless you work in financial services or investments and raising capital, you need to file.

So I lean towards you need to file versus you don't need to file. And if you're asking the question, do you need to file? I would just say file because if you don't know, you don't know. And if you don't know, then you definitely need to file. Because if you're not doing those things, the select view, you need to file.

talked about some of the consequences that I think are way overboard. $500 a day per violation and up to $10,000 in...

Dalton Anderson (36:16.27)
penalties for criminal activity and or so there's civil and then criminal. There's criminals 10, 10 K civil's 500 a day and then up to two years in prison.

just bonkers, like way overboard. Talked about the Corporate Transparency Act or CTA. We went over how you could do it as a business. That was the part where I was supposed to demo it. And I really felt that that was gonna make the episode. But you can't always get what you want. And I hope that you think this episode was interesting and practical. It potentially prepared you for some of the

maybe legal changes that may or may not happen. Who knows when it comes to legality, people take forever when it, when it, can appeal the appeal and the appeals appeal to the appeal. So I hope that we get a solution. I'd rather know what to do than just be constantly waiting around.

Dalton Anderson (37:26.03)
And what are your thoughts about TD Bank? What are your thoughts about CTA and the BOI filing and how are you reacting to this as a business owner or someone looking to start their business?

Dalton Anderson (37:42.03)
And just in general, like, what do you think about this BOI thing? Like, you have you have you done it? Because I try to do it. I watch the demo and I can memorize the pages because there's not that many. What do you think about the BOI filing and tune in next episode, we are going to be talking about AI analyst agents. I'm excited to talk about it. Something I've been waiting to do for a while. I've got some materials to demo.

And overall very exciting stuff from Google and something that they promised to roll out. I would say six months ago, summerish time, they said they'd be rolling out later this year and they're one of the few companies that actually do what they're saying they're going to do when it comes to these promises. Apple has consistently promised something publicly, not done it.

OpenAI has done the same thing.

Google and their Gemini product, they have consistently said they're going to do something and then they roll it out and it's public. And overall, very excited to demo that to you next episode. So please tune in and of course have a good day, a good night, good afternoon, wherever you are in this world. Thank you for listening and I hope that you tune in next week.