14/12/20

US: Country passes sweeping anti-money laundering reforms.

As published on thestar.com, Saturday 12 December, 2020.

A law to thwart the use of U.S. shell companies by terrorists, human traffickers and arms dealers is set to be enacted with rare bipartisan support strong enough to override a presidential veto.

The sweeping anti-money laundering reform was included in the annual defence spending bill that passed the U.S. Senate on Friday, and was approved by the House earlier in the week. The bill will now be sent to the White House for President Donald Trump’s signature before becoming law.

The Corporate Transparency Act requires U.S. companies to report their true owners to the Treasury Department’s Financial Crimes Enforcement Network, known as FinCEN — largely ending anonymous shell companies in the country. All existing and future corporations and limited partnerships will have to comply.

The International Consortium of Investigative Journalists (ICIJ), which counts the Star among its partners, has repeatedly documented how the rich, the powerful and the criminal have used anonymous entities to hide their wealth and keep it from being taxed.

Gary Kalman, the U.S. director of Transparency International, welcomed the clampdown.

“It is rare for such a simple measure to promise such an enormous impact,” he said.

Kalman added that the long sought anti-corruption reforms would “move us into a new era of enforcement.” The new legislation will allow law enforcement agencies and financial institutions to request company ownership information from FinCEN. The data will not be publicly available.

“Too many times, people . . . think money laundering is a federal, victimless crime. It is certainly not that,” Sen. Sherrod Brown of Ohio, the top Democrat on the Senate banking committee, told reporters on a call organized by the advocacy group the FACT Coalition.

“Sinaloa cartel actors, fentanyl traffickers have been destroying thousands of families in my state and across the country.”

“This is a really big deal to get this passed,” Brown said Thursday. “No more hiding these abuses in anonymous shell companies. It also cracks down on bank officials who look the other way or actively aid money laundering.”

ICIJ has shown how offshore shell companies have been used for dubious financial dealings and tax avoidance through a series of global exposés, including the Panama Papers and Paradise Papers.

U.S. lawmakers have repeatedly cited the investigations in proposing reforms over the years.

Countries like the United Kingdom, Indonesia and members of the European Union have also taken steps toward ending anonymous shell companies in response to ICIJ reporting.

“When the Panama Papers leaked, there was a huge flurry of interest because there’s all of a sudden this recognition that it was kleptocrats, money launderers, corrupt officials the world over, as well as criminals, were all using a very common structure to help evade law enforcement, which was setting up an anonymous company,” Lakshmi Kumar, policy director of Global Financial Integrity, said.

The phenomenon is not limited to the exotic offshore tax havens of popular imagination. U.S. jurisdictions like Delaware, Wyoming and Nevada are among the world’s top locations to set up anonymous companies. Legislation to require corporations to disclose their true owners was first proposed in the U.S. over a decade ago, co-sponsored by then-senator Barack Obama, and similar bills have been introduced over the years.

Advocates credit years of lobbying by a broad coalition of stakeholders, including the U.S. Chamber of Commerce which had previously been a leading opponent, in getting the reforms across the finish line this year.

“What’s changed now is a growing understanding among various constituencies about the harms that anonymous companies pose, and the threats that they pose for our financial system, to our businesses,” Clark Gascoigne, senior policy adviser at FACT Coalition, said.

“It’s one of the few areas where the outgoing Trump administration agrees with the incoming Biden administration,” Gascoigne said. “It may be the first bill in the history of Congress that has the support of both Dow Chemical and Friends of the Earth. Heck, the state of Delaware even supports reform.”