The U.S. House of Representatives passed a bill that would force anonymous shell companies to disclose their actual ownership.
The Corporate Transparency Act would require companies to disclose their true, beneficial owners at the time the company is formed to prevent anonymous shell companies from evading law enforcement and hiding illicit activities. It passed on a bipartisan vote of 249 to 173 Tuesday evening.
Before the vote, the White House endorsed the measure, saying “this legislation represents important progress in strengthening national security, supporting law enforcement, and clarifying regulatory requirements.”
The bill now moves to the Senate, where similar bipartisan legislation is co-sponsored by close to one-third of the key Senate Committee on Banking, Housing, and Urban Affairs. The chair and ranking member of the Banking Committee have indicated the issue is a priority.
“The illicit use of anonymous shell companies is one of the most pressing national security problems we currently face,” said Rep. Carolyn Maloney, D-N.Y., who introduced the legislation. “They are being used by money launderers, criminals, and terrorists — but we can stop that. We’re the only advanced country in the world that doesn’t already require disclosure of this information — and frankly, it’s an embarrassment.”
She introduced the bill in May with Rep. Peter King, R-N.Y., and Tom Malinowski, D-N.J. The bill would close loopholes that enable traffickers, corrupt officials, terrorists and other criminals to hide, launder, move and use their money. This legislation requires corporations and limited liability companies to disclose their beneficial owners to the Financial Crimes Enforcement Network. The COUNTER Act, sponsored by Rep. Emanuel Cleaver, D-Missouri, was added to the bill through an amendment, and would close loopholes in the Bank Secrecy Act, increase penalties for those who break the law, and give financial institutions new tools to fulfill their obligations.
“After more than a decade of debate to bring anti-money laundering protections into the modern era, Congress just took an enormous step forward,” said Gary Kalman, executive director of the Financial Accountability and Corporate Transparency Coalition, in a statement. “Make no mistake, this is an historic vote. Anonymous companies are widely recognized as the single most dangerous and significant gap in our anti-money laundering framework. ... Treasury’s pilot efforts in collecting ownership information have already demonstrated the incredible impact of this reform.”
"This legislation stops human traffickers, corrupt government officials and revenue loss in the developing world,” stated Eric LeCompte, executive director of the group Jubilee USA. “The Senate must now pass this vital legislation."
