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Beneficial Ownership Transparency #32

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jblau18 opened this Issue Sep 20, 2017 · 2 comments

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jblau18 commented Sep 20, 2017

Topline Description

Increase transparency of company ownership and effective control.

Key Objective(s)

Every year, over two million legal entities are formed in the United States—with many states collecting less information from the individuals forming these entities than from people applying for a driver’s license. This anonymity facilitates domestic and foreign corruption by allowing individuals to hide their identities and their corruptly obtained assets behind the façade of a U.S. corporation. Once a U.S. corporation is formed, it can easily open one or more bank accounts, wire money, buy property like any other company, and engage in activities that launder the tainted funds. Anonymous companies are also used by drug traffickers, arms smugglers and financiers of terrorism to hid and move illicit funds.
The U.S. government has pledged to increase transparency of companies formed in the United States in various fora such as the G8 Action Plan for Transparency of Company Ownership and Control and, most recently, the G20 High Level Principles on Beneficial Ownership transparency.

Paragraph Description

Commitment:
-The administration should take the following steps to increase beneficial ownership transparency:
Collect and publish beneficial ownership information for all companies, LLCs, and partnerships upon formation.
-Financial Crimes Enforcement Network (FinCEN) must issue without delay rules proposed in 2014 requiring financial institutions to identify and verify the beneficial owners of legal entity customers. These rules needs to be stronger than those proposed by FinCEN last summer: (i) strengthening the definition of “beneficial owner” and expanding it to include individuals who control the entities through means other than a formal management position, (ii) applying the new rules to existing accounts as well as new accounts, and (iii) requiring financial institutions not only to verify the identity of the (purported) beneficial owner, but to carry out the appropriate due diligence to determine the reasonableness of the information provided to them and further due diligence to determine the money laundering risk posed by that individual.
-FinCEN should repeal the temporary exemption granted in 2002 to persons involved in real estate closings and settlements, from the PATRIOT Act’s requirement for implementation of anti-money laundering programs.
-Collect and publish beneficial ownership information of contractors and subcontractors for all federal procurements.

Measurable Metrics

Timeline:

  • Work with Congress to collect and publish beneficial ownership information for all newly formed companies, LLCs, and partnerships in the current Congress.
  • FinCEN should issue strong final rules relating to legal entity customer due diligence requirements for financial institutions in 2018.
    -FinCen should issue a notice of proposed rulemaking to close the loophole that allows individuals to launder money through anonymous real estate transactions in 2018. The rule should be finalized in 2018.
  • Amend Federal Acquisition Rules to require beneficial ownership information to be collected and published by the end of 2018.

@jblau18 jblau18 closed this Sep 28, 2017

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jalbertbowden Sep 28, 2017

Highly recommend working with Open Corporates and Open Civic Data groups around this issue. Both have done a lot of work in this space already, probably know the landscape better than anyone else, and are working towards similar goals.

jalbertbowden commented Sep 28, 2017

Highly recommend working with Open Corporates and Open Civic Data groups around this issue. Both have done a lot of work in this space already, probably know the landscape better than anyone else, and are working towards similar goals.

@jblau18 jblau18 reopened this Sep 28, 2017

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joshua-new Oct 2, 2017

The Department of the Treasury indeed should enact its proposed rules from 2014, however these rules have several shortcomings and the executive branch should do more to strengthen beneficial ownership disclosure rules. The rules would require financial institutions to request beneficial ownership data from shell companies they do business with. But there would be no method to verify this information, the rules would only apply to shell company dealings with financial institutions, and they would have no bearing on the state laws governing the formation of these shell companies.

To address these gaps, Congress has previously attempted to pass bipartisan beneficial ownership disclosure legislation, however the bill counterproductively allowed states to restrict public access to this data. If no states are required to make this data publicly available, it is unlikely that any, particularly those eager to court new businesses, would voluntarily adopt stricter disclosure rules. The White House and the Department of the Treasury should nonetheless recognize that the political will to pass such legislation exists, and engage Congress to pass legislation requiring states to collect beneficial ownership data and disclose it as transparently as possible.

joshua-new commented Oct 2, 2017

The Department of the Treasury indeed should enact its proposed rules from 2014, however these rules have several shortcomings and the executive branch should do more to strengthen beneficial ownership disclosure rules. The rules would require financial institutions to request beneficial ownership data from shell companies they do business with. But there would be no method to verify this information, the rules would only apply to shell company dealings with financial institutions, and they would have no bearing on the state laws governing the formation of these shell companies.

To address these gaps, Congress has previously attempted to pass bipartisan beneficial ownership disclosure legislation, however the bill counterproductively allowed states to restrict public access to this data. If no states are required to make this data publicly available, it is unlikely that any, particularly those eager to court new businesses, would voluntarily adopt stricter disclosure rules. The White House and the Department of the Treasury should nonetheless recognize that the political will to pass such legislation exists, and engage Congress to pass legislation requiring states to collect beneficial ownership data and disclose it as transparently as possible.

@GSA GSA locked and limited conversation to collaborators Oct 3, 2017

@philipashlock philipashlock added the 2017 label Jun 14, 2018

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