By Katalina M. Bianco, J.D.
Representative Carolyn B. Maloney (D-NY) is promoting action on legislation that is intended to stop anonymous money laundering operations by requiring disclosure of shell corporation beneficial owners. Reps. Maloney and Peter King (R-NY) originally introduced the Incorporation Transparency and Law Enforcement Assistance Act (H.R. 4450) in the 113th Congress. Maloney was joined by various law enforcement officials, including Manhattan District Attorney Cyrus Vance and former Federal Bureau of Investigation Special Agent Konrad Motyka from the Society of Former Special Agents of the FBI.
“ISIS and other terrorists are remarkably sophisticated, and they are looking for any opportunity to exploit our legal and financial systems,” said Maloney. “We are aiding and abetting terrorists and criminals when we allow them to set up anonymous shell companies and funnel money into the United States.” The lawmaker added, “The level of ineptitude in dealing with this problem in Washington is shocking.”
Maloney said that her bill simply would require that to form a U.S. corporation, the true owners must be revealed. “I think the American people would be shocked to learn that isn’t the law already.”
Legislation. According to Maloney, the introduction of H.R. 4450 followed an investigation by Global Witness that exposed the common practice of using U.S.-based shell corporations to launder money linked to criminal enterprises. An investigation last year by The New York Times documented how streams of foreign wealth shielded by shell corporations are used to purchase more than half of all properties in New York City that cost more than $5 million.
The bill directs the Treasury Department to issue regulations requiring corporations and limited liability companies formed in a state that does not already require basic disclosure to file information about their beneficial ownership with Treasury as a backup. The measure also provides minimum disclosure requirements for states and civil penalties for those who submit fraudulent, incomplete, or outdated information when setting up a corporation.
For more information about recent efforts to reveal the beneficial owners of shell corporations, subscribe to the Banking and Finance Law Daily.
