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
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:
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.
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.
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.
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.
WASHINGTON — After a vote on a House bill aimed at restricting anonymous shell companies was postponed at a markup last week, the legislation’s lead Democratic co-sponsor said the House Financial Services Committee will not delay the bill beyond the next markup.
Rep. Carolyn Maloney, D-N.Y., told reporters Tuesday that her bill to require companies to disclose their beneficial owners at the time of incorporation could be considered by the committee as early as the end of June, though the committee’s next markup has not yet been scheduled.