Carolyn Maloney  •  12th Congressional District   •   May 3, 2019

Reps. Maloney, King, and Malinowski Introduce Bipartisan Corporate Transparency Act

Legislation would crack down on anonymous shell companies and allow law enforcement to “follow the money”

Congresswoman Carolyn B. Maloney (D-NY), Congressman Peter King (R-NY), and Congressman Tom Malinowski (D-NJ) today introduced H.R. 2513, The Corporate Transparency Act to require companies to disclose their true, beneficial owners at the time the company is formed to prevent bad actors from using anonymous shell companies to thwart law enforcement and hide their illicit activities.

“It is absurd that the US allows criminals to launder their money here. We’re the only advanced country in the world that doesn’t already require disclosure of beneficial ownership information and my Corporate Transparency Act will change that,” said Congresswoman Maloney. “Anonymous shell companies have become the preferred vehicle for money launderers, criminal organizations, and terrorist groups and we’re letting these bad actors get away with criminal actions even though law enforcement has asked us to fix this gaping hole in our criminal code. I’m proud to once again introduce this bill with my friend Rep. King, and with Rep. Malinowski, and am hopeful that we can pass it with bipartisan support.”

“Criminals are taking advantage of state laws by establishing firms – often without a physical presence or business activity – to access our banking system,” said Congressman King. “The Corporate Transparency Act targets this problem by requiring a company that has the characteristics of a shell corporation to disclose who benefits from the company’s operations and makes that information available only to law enforcement. This simple requirement would enable law enforcement to stop money from flowing across our borders to terrorist organizations.”

“For too long, we’ve allowed dictators and kleptocrats to hide their stolen wealth in shell companies and real estate on American soil,” said Rep. Malinowski. “Our lax rules have enabled these corrupt foreign actors to escape accountability and even to buy political influence in our country. Requiring companies to disclose their beneficial ownership is one of the strongest steps we can take to advance democracy abroad and protect it at home.”

The criminal and the corrupt use anonymous companies to escape accountability,” said Gary Kalman, Executive Director of the FACT Coalition. “Drug cartels use the secrecy to fuel the opioid epidemic, human traffickers to entrap women and children, rogue nations to evade sanctions and corrupt foreign leaders to threaten our national security. The Corporate Transparency Act will provide a critically important tool to protect communities and the nation from those who would do us harm.”   

BACKGROUND

Anonymous incorporation isn’t difficult for criminals to do — no U.S. states currently require companies to provide the identities of the company’s true, beneficial owners. This makes it very easy for criminals and other bad actors to manipulate the system and launder or hide money via anonymous shell companies.

What This Bill Does:

  • Requires corporations and limited liability companies disclose their true, beneficial owners to FinCEN at the time the company is formed.
  • Establishes minimum beneficial ownership disclosure requirements: must provide beneficial owners’ name, date of birth, current address, and driver’s license or non-expired passport number.
  • Requires companies to file annually with FinCEN a list of its current beneficial owners, as well as a list of any changes in beneficial ownership that occurred during the previous year.
  • Provides civil and criminal penalties for persons who willfully submit false or fraudulent beneficial ownership information, or who knowingly fail to provide complete or updated beneficial ownership information.

Provides Much-Needed Transparency While Avoiding Excessive Burdens:

  • Beneficial ownership information collected by Treasury or the states will only be available to: (1) law enforcement; and (2) financial institutions, with customer consent, for purposes of complying with their “Know Your Customer” requirements under Anti-Money Laundering law.
  • It is narrowly tailored so as not to be overly burdensome to either businesses or the states themselves — the bill targets companies that are more likely to be shell companies.
  • Many companies are already required to disclose their beneficial owners, such as Federally regulated banks, credit unions, investment advisers, broker-dealers, state-regulated insurance companies, churches, and charitable organizations. As such, these companies are exempt from the bill’s requirements.
  • Companies with over 20 employees and over $5mm in gross receipts or sales, and which have a physical presence in the U.S., are also exempt from the bill’s requirements, because companies that employ this many people and that have legitimate, business-related income are very unlikely to be anonymous shell companies that were created to hide or launder illicit funds.

As always, your concerns remain my top priority. Please do not hesitate to email me through my website.

Sincerely,

Carolyn B. Maloney Member of Congress

https://maloney.house.gov/contact-me/email-me

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