A bipartisan bill that aims to prevent individuals from using anonymous shell corporations to engage in illicit activities such as fraud, money laundering, terrorist financing or sex trafficking was recently introduced in the Senate by U.S. Sens. Marco Rubio (R-FL) and Ron Wyden (D-OR).
“For too long criminals have been able to hide behind shell companies to finance terrorism, launder money and defraud the government at the expense of American taxpayers,” Wyden said. “This kind of lawlessness could be directed by individuals with access to the highest levels of government. Congress must give state and federal enforcers the information they need on day one to effectively cut off the flow of dark money to extremely dangerous people.”
Currently, the owners of a limited liability company (LLC), also known as shell corporations, are not required to be disclosed under state incorporation laws.
To remedy this, the Corporate Transparency Act would require the beneficial owners of U.S.-based shell corporations to appropriately disclose their identities, which will provide law enforcement entities adequate investigative information when probing potential financial crimes.
Should any individual fail to disclose the necessary information as required in the legislation, they would be subject to financial penalties or jail time.
“Unsurprisingly, anonymity can lend itself well to hiding nefarious activity,” Rubio said. “We must work to ensure that law enforcement has the basic information, tools, and authorities at its disposal to identify and disrupt illicit activities affecting our communities and our national security, whether its human trafficking, healthcare fraud, transnational corruption, or terrorism financing.”