Rep. Maloney Statement on Obama Administration’s Action on Financial Transparency

May 6, 2016
Press Release
Congresswoman Urges Congressional Action

WASHINGTON, D.C. – Following the Obama administration’s announcement Thursday night of new rules to require financial institutions to identify and keep records of the beneficial owners of companies that employ their services, Congresswoman Carolyn B. Maloney (NY-12), a senior member of the House Financial Services Committee, and author of the Incorporation Transparency and Law Enforcement Assistance Act of 2016, released the following statement:

“The U.S. needs to no longer be one of the easiest countries in the world where criminals and corrupt officials can set up anonymous shell companies and hide behind walls of secrecy. These new rules from the Obama administration are a positive step in combatting tax evasion, money laundering, and financial crimes through the use of these shell companies here in the United States. I look forward to reviewing the final rule, but I am pleased that the administration has stepped in where the states have not and taken a stand to say that the U.S. will not be a safe haven for criminals’ finances.

“However, we still need Congressional action on this issue, and I once again call on the Financial Services Committee to give my bill, the Incorporation Transparency and Law Enforcement Assistance Act (H.R. 4450), a legislative hearing so that we can expand transparency and further reduce anonymity in shell companies. I also look forward to working with the administration on its draft bill and moving the legislative process forward.”

Background:

Incorporation Transparency and Law Enforcement Assistance Act of 2016

Criminal organizations are infamous for using shell corporations, both foreign and domestic, to open bank accounts, launder money, perpetrate fraud, and finance terrorism. The Incorporation Transparency and Law Enforcement Assistance Act will gather beneficial ownership information from companies that thus far have been able to escape oversight and thwart law enforcement.

  • Anonymous incorporation isn’t difficult for criminals to do — virtually no states require corporate applications to provide the identity of the corporation’s ultimate owner.
  • As it stands, anyone can easily manipulate the system and fund criminal activity.

 

What this bill does:

  • Directs the Treasury Department to issue regulations requiring corporations and limited liability companies formed in a state that does not already require basic disclosure, to file information about their beneficial ownership with Treasury as a backup.

 

Provides minimum disclosure requirements for states:

  • Identification of beneficial owners by name, current address, and non-expired passport or state-issued driver’s license;
  • Identification of any affiliated legal entity that will exercise control over the incorporated entity; and
  • Consistent updating of lists of beneficial owners no later than 60 days after any change in ownership.

 

Provides civil penalties for those who:

  • Submit false or fraudulent beneficial ownership information;
  • Do not provide complete or updated information; or
  • Knowingly disclose subpoena, summons, or other requests for beneficial ownership information without authorization.

 

This bill will offer the transparency law enforcement needs to investigate these kinds of financial crimes.

  • It is narrowly tailored so as not to be overly burdensome on either incorporating entities or the states themselves.
  • The bill’s language is so narrow that most corporations are already exempt from the bill’s requirements, including companies that are already regulated by federal banking regulators and companies with over 20 employees, because these types of companies are very unlikely to open bank accounts to hide or move criminal funds or to hold illegal assets.

 

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