Incorporation Transparency and Law Enforcement Act

Congresswoman Maloney has introduced the Incorporation Transparency and Law Enforcement Assistance Act, H.R. 6098. The bill would require the states to obtain information about the true ownership of a corporation when they allow its creation. As some have put it, this bill is a “no-brainer”, and it is fairly straightforward. It would require that the person creating the corporation to state the “beneficial owner” of the corporation and provide some form of identification.

Although this is as straightforward as it sounds, the implications for law enforcement are broad reaching. Criminal organizations are infamous for using shell corporations, both foreign and domestic, to open bank accounts, launder money, perpetrate fraud, and finance terrorism. It isn’t difficult for them to do so. Virtually no states require people applying to create corporations to provide the identity of the corporate owner. In fact, 48 of 50 states, except for Alabama and Alaska, allow for the unfettered creation of an anonymous corporate entity. As a result, just about anyone can easily manipulate the system to fund criminal activity.

Here is an example from a recent investigation in NY by the Manhattan District Attorney. The office announced investigations involving the movement of funds through banks in NY by entities controlled by the Iranian Military. In at least two cases, domestic shell companies were opened in two different states to further secret Iranian interests. Through a NY shell company, individuals working on behalf of the government of Iran were able to move funds to secret accounts held in offshore jurisdictions. Shockingly, the offshore government was able to give the Manhattan DA more information about the ownership of the NY entity than the state of NY could.

Although the DA does not contend that requiring a declaration of beneficial ownership would have stopped this activity, it would have been a start. If the declaration of beneficial ownership had been required, any falsification would at least have served as an extra tool for law enforcement to shut down the entity and prosecute the perpetrators.    

The bill introduced will provide the kind of transparency that law enforcement needs to investigate financial crimes. However, it is narrowly drafted so that it is not overly burdensome on either states or incorporating entities. In fact, most corporations, including companies that are already regulated by federal banking regulators and companies that are over 20 employees, would be exempt from the bill’s requirements. This bill is meant to capture beneficial ownership information from companies that are able to escape regulation and oversight through other federal entities.  

Senator Levin has introduced a similar bill in the Senate, and President Obama was the lead sponsor when he was a U.S. Senator. It is supported by numerous law enforcement associations, including the Federal Law Enforcement Officers Association, the Fraternal Order of Police, the National Association of Assistant United States Attorneys, the National Narcotic Officers’ Associations Coalition, the United States Marshals Service Association, and the Association of Former ATF Agents.

More on Incorporation Transparency and Law Enforcement Act

Jul 20, 2020 Press Release

Washington, DC — Congresswoman Carolyn B. Maloney (D-NY) today spoke on the House floor in favor of an en bloc amendment to H.R. 6395, the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 which includes her bill, H.R.2513, the Corporate Transparency Act of 2019.

Jul 10, 2020 Newsletter

Dear Friend, 

 

May 20, 2020 Press Release

NEW YORK, NY — Congresswoman Carolyn B. Maloney (D-NY), primary sponsor of H.R. 2513, the Corporate Transparency Act, today joined the Wilson Center’s Kennan Institute for its Webcast: How Congress  is Taking on Global Kleptocracy and Corruption. The Congresswoman’s remarks, as prepared for delivery, are below.

Thank you so much for inviting me to join you today.

Feb 7, 2020 Newsletter

Dear Friend,

Before we talk about happenings in the House of Representatives this week, I want to address the conclusion of President Trump’s impeachment trial.

Dec 23, 2019 Newsletter

Dear Friend,

What a year we’ve had! It’s hard to believe that 2019 is coming to an end. With a new year—and decade—ahead, I wanted to take a look back at all that we accomplished together this year. We got a lot done working for the American people, including:

Nov 1, 2019 Newsletter

Dear Friend,

 

This week in Washington, DC, the House approved a resolution outlining the rules for the next stages of the impeachment inquiry. We also passed a bill to impose sanctions on Turkey for its invasion of northern Syria, a resolution to affirm our country’s recognition of the Armenian Genocide, and bills to protect our public lands.

 

Oct 25, 2019 In The News

The U.S. House of Representatives on Tuesday passed an overhaul of U.S. anti-money laundering rules more than a decade in the making.

Oct 22, 2019 Press Release
WASHINGTON, DC – Today, the House of Representatives passed Congresswoman Carolyn B. Maloney’s (D-NY) bipartisan HR 2513 - Corporate Transparency Act. The Congresswoman introduced the bill in May with Congressmen Peter King (R-NY) and Tom Malinowski (D-NJ). Congressman Emanuel Cleaver’s COUNTER Act was added to HR 2513 via a manager’s amendment.
Oct 22, 2019 In The News

The House on Tuesday passed legislation aimed at cracking down on the use of anonymous shell companies for illicit activities.

The bill passed by a vote of 249-173. Twenty-five Republicans joined most Democrats in voting for the bill, while five Democrats voted against it.s

The vote comes after the House Financial Services Committee advanced the measure in June.

Sep 18, 2019 In The News

Convicted Russian national Viktor Bout spent years perfecting the art of international arms smuggling. At the height of his powers, he boasted a clientele that ranged from Central African dictators and their cronies, to warlords ransacking Libya, to the Taliban in Afghanistan. Bout’s trafficking rings ran circles around investigators, humanitarians—anyone trying to stem the tide of illicit arms drenching global pockets of instability.