House Passes Money Laundering Bill Cheered by Wall Street Banks

(Bloomberg) -- The U.S. House passed legislation to strengthen anti-money-laundering rules, moving closer to a victory for Wall Street banks.

The bill, H.R. 2513, which passed 249-173 Tuesday, would make it harder to use anonymous shell companies to break the law. A similar bill in the Senate has yet to get a committee hearing, which would be the next step before a vote on the Senate floor.

Big banks favor the measure, sponsored by Carolyn Maloney, a Democrat from New York, because they would no longer shoulder the full burden of reporting customer wrongdoing to law enforcement. Opponents, including the National Federation of Independent Business, say it would threaten privacy and create unnecessary burdens for small businesses, and wouldn’t actually do much to stop violators.

The Senate bill, introduced by Virginia Democrat Mark Warner and Arkansas Republican Tom Cotton, includes different provisions and is still far from a Senate vote. The House and Senate must pass the same version to send to President Donald Trump to become law.

The House bill would require companies to tell regulators the names of the owners of shell companies -- information the Treasury Department would collect in a private database and law enforcement could use to help catch money launderers, tax evaders and other criminals.

The White House budget office, in a statement, said the House measure “represents important progress” but said several revisions are needed, including protecting small businesses from unduly burdensome disclosure requirements.

Current rules are lax about requiring people setting up LLCs and other small firms to disclose who will benefit from the profits. Banks are required to report any suspicious activity, which can involve a lot of paperwork and legal exposure for which the banks would rather not bear sole responsibility.

Dueling lobbyists have put Republicans and moderate Democrats in a tough spot, forcing them to choose between donors. On one side are big banks and law enforcement advocates, on the other are powerful industry groups including the NFIB and American Bar Association.

©2019 Bloomberg L.P.

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