The measure was passed by the Senate by 84-13 votes under the National Defense Authorization Act, which the House approved earlier this week. Trump promised to veto the Defense Act – one of the few laws passed every year – as it does not include his request to remove social media company liability. Trump also opposes a clause ordering the renaming of military bases for Confederate leaders.
The ban on anonymous Shell companies had been going on for years as supporters slowly formed a coalition of Democrats, Republicans, law enforcement officers, and even corporate groups that originally opposed the idea, such as the U.S. Chamber of Commerce.
“We are on the verge of celebrating the most significant win against money laundering in a generation, in large part due to widespread and growing support for reform,” said Clark Gascoigne, senior policy advisor with the FACT Coalition, an alliance of anti – Corruption groups that helped move the legislation forward.
In the United States, nearly 2 million state companies and limited companies are registered each year. Few states today require corporations to disclose their true owners, with Delaware and a few others turning anonymous company registration into big business.
This is one of the reasons the UK-based Tax Justice Network has declared the United States the second largest financially secret jurisdiction in the world after the Cayman Islands and ahead of Switzerland.
Delaware Secretary of State Jeffrey Bullock last year endorsed the corporate transparency bill, calling it a “fair, bipartisan compromise” that would make it the responsibility of the federal government to collect the property-status approach.
Tolerance of anonymous Shell companies has long helped drug and human traffickers, organized crime groups, and foreign kleptocrats launder their illicit profits through the U.S. financial system, advocates of the legislation say. It took Michael Cohen, Donald Trump’s former attorney, just a few days to set up and use an anonymous Delaware LLC to hush Stormy Daniels in violation of campaign finance laws.
Rep. Carolyn B. Maloney (DN.Y.), who introduced the legislation to the House in 2009 and resubmitted it every year, said U.S. Shell companies had helped corrupt foreign leaders and criminals anonymously buy luxury homes in their district . which includes Manhattan.
“If you drive through my neighborhood at night, you will find a lot of apartment buildings with no lights,” Maloney said during a press conference this week to mark the passage of the house. “They were only bought to hide money and act as a bank account.”
The new law requires anyone registering a new business to disclose the name, address, and date of birth of the actual owners, as well as an identification number for each owner such as a driver’s license or passport number.
Anyone who willfully misrepresentation, including attorneys who assist in company registration, will be punished with fines of up to $ 10,000 and imprisonment of up to two years.
The Treasury Department’s Financial Crimes Enforcement Network collects the data and provides property data to law enforcement agencies and banks upon request.
The legislation has limitations. The general public does not have access to the property data, a disappointment for anti-corruption activists who say public scrutiny would help fight criminal activity.
In some cases, allied nations can request property information to aid their own investigations, said Gary Kalman, director of the US office of Transparency International, a major supporter of the legislation.
In another transparency setback, the law also exempts some companies from disclosure requirements, including domestic mutual funds that are advised and operated by a registered investment advisor. Gascoigne said the exemption was the result of lobbying by the private equity and hedge fund sectors.
The database should help prosecutors build cases against criminal groups nationwide, said Frank Russo, director of government and legislative affairs at the National District Attorneys Association.
The lack of such a database is undermining efforts in Florida today to combat human trafficking networks in illegal massage parlors, Russo said.
Investigators “cannot find out who is funding and paying for these operations” because the ringleaders are hiding behind anonymous Shell companies, he said.
Senator Sherrod Brown, D-Ohio, a key Senate bill supporter, as well as Senator Mike Crapo, R-Idaho and others, said shell companies made everything from sex trafficking to fentanyl pushers possible in his state.
“This is a really big deal to get there and, as you know, it took a long time,” Brown said during Thursday’s news conference, hoping that the Republican Senators would “stay strong” and vote to defeat any Trump- Override veto. if necessary.
The banking industry has become a major proponent of the legislation in recent years after realizing that it would help banks identify the real owners of all accounts, as required in the Obama era.
The legislation allows banks to access the treasury owner database to review information about new customers requesting accounts.
Other industrialized nations are also taking action against anonymous Shell companies, responding to fears of terrorist financing and public outrage over corruption and tax evasion. The European Union has instructed all member states to create public databases by 2020 in which the real owners of the companies are disclosed. Britain mandated the same in 2016.