Treasury Department releases new banking rules, proposed legislation to combat money laundering, end U.S. shell company secrecy: do they add up?

 New Regulations and Draft Bills Currently Being Analyzed by Global Witness

Comes Just in Advance of 5/12 Anti-Corruption Summit in UK

Washington, DC — Tonight the U.S. Department of the Treasury released a new rule and a number of proposals  to address the widespread problem of corruption and dirty money in secret U.S. shell companies exposed by the Panama Papers. The Treasury Department finalized a long-awaited rule requiring greater due diligence requirements by banks and proposed a new rule to require foreign-owned single member LLCs to register with the IRS. Treasury also released new draft legislation specifically to increase transparency of the ultimate owners of American companies and to strengthen the U.S. anti-money laundering framework.  Global Witness  will be analyzing the new regulations and legislative proposals. They have released the following statement and background for reporters and will be available for interviews.

“It is important that Treasury is taking action to address gaping loopholes in the U.S. anti-money laundering framework, which leave the U.S. wide open to the world’s dirty money, but the devil is in the details of these proposals and it is likely more will need to be done,” said Stefanie Ostfeld from Global Witness. “Requiring banks to know the ultimate owners of their customers is an important step, however there appear to be weaknesses in Treasury’s final customer due diligence rule for banks that provide would-be money launderers with a blueprint for how to structure companies to avoid detection and continue to access American banks.” 

The Treasury Department once supported bipartisan Congressional legislation that would require all Americans companies to disclose who owns them. In 2014, it proposed an alternative approach to collecting information about U.S. company ownership, but has not yet proposed specific legislation. Today’s announcement suggests that may have changed.

Global Witness and others have called on Congress to enact recently introduced bipartisan legislation that will help tackle the problem of anonymously-owned shell companies. By requiring updated disclosures about the real people who own or control American companies, law enforcement will have critical information that they need to combat all types of criminal activities.

“The recent scandal exposed by the Panama Papers underscores how anonymous companies are an urgent problem that the Administration and Congress should address by swiftly passing a strong bill that effectively ensures we know who owns and controls American companies”, said Ostfeld. "Should the Administration introduce specific legislative language for their alternative approach, the test will be whether the proposed bill allows broad access to company ownership information and that the right information is being collected at the time of incorporation and kept up to date — otherwise, the Administration risks muddying the waters by offering half-measures, which could undercut more comprehensive solutions and put the U.S. out of step with the rest of the world.”

Additional information:

The Obama Administration is also preparing for an anti-corruption summit hosted by the United Kingdom on May 12 in London whereglobal leaders aim to agree to common solutions to the global corruption crisis. This is an important opportunity for the Administration to take the following critical actions :

• Require the real estate and luxury goods sectors to perform anti-money laundering checks to keep politicians who favor the US as a safe haven for their ill-gotten gains from enjoying their fast cars, boats and planes, and big houses in our backyard.
  
• Require all companies bidding for federal contracts to report who really owns or controls them in order to significantly reduce waste, fraud and abuse of taxpayer dollars.
  

A series of petitions urging Congress and the administration to take action have also been posted here, hereand here.

For more information, or for interviews with Global Witness spokespeople, please contact Tim Rusch at 917.399.0236 / [email protected] or Andy Stepanian at 631.291.3010  / [email protected]