The legislation will establish reporting requirements on beneficial ownership information, which could effectively end anonymous shell companies in the US.
11 Dec 2020 – The US Senate passed the NDAA bill, including the Corporate Transparency Act. The bill goes to the President for a final signature.
1 Jan 2021 – The NDAA was passed after Congress overrode President Trump’s veto.
The US Congress on Thursday (3 December) unveiled the final legislative text for the National Defense Authorization Act (NDAA) for fiscal year 2021, the country’s annual “must-pass” defence bill.
The legislation, which includes the Corporate Transparency Act, now has provisions that will mandate that all US companies report their ultimate beneficial owners to a database maintained by FinCEN, which could effectively put an end to anonymous shell companies in the country.
Beneficial ownership information will not be made public, but it will be made available to law enforcement and financial institutions.
To date, the identification of beneficial owners was the responsibility of banks when corporations applied to open a bank account. The change will lower banks’ cost of compliance.
The provisions will also see the US strengthen its financial intelligence work, including to bolster FinCEN’s data collection and increase international cooperation between financial crime units.
The bill requires the Treasury to set priorities for AML policy among law enforcement, bank supervisors, and banks, and establish channels of communication between the three groups.
Provisions have also been added to the Bank Secrecy Act, which will enhance penalties for repeat violators, add a whistleblower provision, include antiquities to the definition of ‘financial institutions’, and include digital currency in the Act’s definition of coins and currency, notes US law firm Ballard Spahr.
The House and Senate are expected to approve the legislation before the end of the year, despite a veto threat from the president.
“Until now hiding the proceeds of all manner of illegal activity was a simple process,” said Tom Cardamone, president and CEO of Global Financial Integrity, which has spent a decade on this issue.
Transparency International said in a statement that US AML laws have not been updated in twenty years, which has made it easy for corrupt officials to hide wealth stolen from their own countries in the US and profit from the US economy.
“Up until now, the US was the easiest place in the world to set up anonymous companies where corrupt officials and other bad actors hide stolen money. It’s long past time to bring our laws into the modern era, and the US in line with other advanced economies,” the statement said.
Additional reporting from ICIJ.