U.S. Treasury Wants a Registry to Crack Down on Shell Companies
(Bloomberg) -- The U.S. Treasury Department has proposed a federal registry in an effort to close loopholes that have enabled terrorists, criminals and corrupt government officials to launder illicit cash through so-called shell companies.
When the proposal is finalized, businesses in the U.S. will have to file basic information to Treasury’s Financial Crimes Enforcement Network, including the identities of companies’ “beneficial owners,” according to documents released Tuesday.
The change was mandated by the Corporate Transparency Act, a sweeping revision of anti-money-laundering efforts that became law early this year. The proposal, open for public comments until Feb. 7, requires companies to disclose the name, date of birth, address and “unique identifying number from an acceptable identification document” for every owner -- information that could be shared with law enforcement.
Beneficial owners are defined as people who own at least 25% of a company or who exert significant authority over it. The provision is meant to unmask anyone making consequential decisions, and to stop corporate structures designed to obscure the people behind them.
Businesses formed before the final regulation is enacted would have a year to comply. Companies created after the rule is in place must file within 14 days after their formation. Treasury officials said efforts have been made to ease the burden for small businesses.
FinCEN, the Treasury arm that combats money laundering, has been taking an “aggressive stance” in implementing the corporate transparency law, Deputy Secretary of the Treasury Wally Adeyemo said this week.
The law ensures that “for the first time,” U.S. businesses and certain foreign companies operating in the country will have to reveal “those who actually own or control them -- when they are formed, registered in the U.S., or when they change hands,” he said.
In May, a coalition of progressive and corporate-transparency groups argued in a comment letter to FinCEN that the law -- embedded in a defense-spending bill that had to dodge a veto from former President Donald Trump -- represents “an historic opportunity to close a major vulnerability in the U.S. financial system.”
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