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To enhance transparency for law enforcement, amongst other purposes, the Administration committed to work with Congress to
enact legislation to require disclosure of beneficial ownership information of legal entities at the time of company formation.
Media reports and law enforcement continue to highlight the misuse of legal entities such as shell companies that mask the
identity of illicit actors and facilitate access to the international financial system. Law enforcement agencies and DOJ uniformly
view the lack of beneficial ownership information as a major impediment to criminal investigations, and called for having
this information available for investigative purposes. The Administration was focused on this issue for several years before
the launch of the Plan. Treasury, in close cooperation with DOJ and the Department of Homeland Security, drafted and cleared
three Administration legislative proposals in April, June, and September 2010 requiring transparency of legal entity ownership.
Although this proposal was not introduced in Congress, Treasury worked with Senator Carl Levin on, and welcomed, S. 1483,
Incorporation Transparency and Law Enforcement Assistance Act, a bill that sought to ensure that persons who form a corporation
in the United States must disclose the beneficial owners of the corporation. Despite the evident illicit finance risks associated
with misuse of legal entities, a comprehensive legislative solution has not been achieved to date. As it committed to do,
the Administration has continued to promote beneficial ownership as a priority initiative. However, the Administration has
encountered significant challenges surrounding passage of comprehensive legislation. A number of business and other groups
are strongly opposed to S.1483 and similar legislation. Many of these groups have expressed concerns that this legislation
would be burdensome to the States, costly to administer, and hamper legitimate company formation services. While progress
on legislation addressing company formation remains difficult, Treasury, along with other relevant agencies, made strides
in initiatives aimed at improving the global anti-money laundering/counter the financing of terrorism (AML/CFT) standard governing
beneficial ownership, through the Financial Action Task Force (FATF). Further, the Administration is regularly engaging key
foreign partners on a bilateral basis to stress the importance of this issue. In addition, Treasury issued an Advance Notice
of Proposed Rulemaking on Customer Due Diligence (CDD) and Beneficial Ownership (ANPRM) for Financial Institutions, soliciting
public comment on a wide range of issues related to customer due diligence, including an obligation to collect beneficial
ownership information of legal entities customers. Subsequently, Treasury undertook extensive private sector engagement and
town hall meetings with a wide range of stakeholders. All the relevant information gathered, through written comments as well
as public engagements, has informed the development of proposed CDD rule text, which Treasury anticipates issuing in the near
future. With competing priorities, a risk exists that initiatives to enhance the transparency of company formation could lose
momentum. In light of this fact, the Administration is adapting its approach and exploring several complementary initiatives.
First, in this context, the Administration is currently monitoring the status of company formation legislation, which has
yet to be introduced in this Congress, to assess whether there is a viable course of action. Second, Treasury has begun to
explore whether there are existing legal authorities such as the Internal Revenue Code and the Bank Secrecy Act, which could
be leveraged to obtain beneficial ownership information for a segment of legal entities formed in the United States. Third,
because company formation is regulated at the State level, the Administration may consider further engagement with Secretaries
of State and civil society to build support for individual State-based initiatives to improve transparency. Finally, because
financial transparency directly impacts the international financial systems, the Administration is working through such fora
as the G8 and FATF to raise awareness and improve implementation of the international AML/CFT standards.
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As a critical element of a broader strategy to safeguard the international financial system from such abuse of legal entities,
the Administration will advocate for legislation that will require the disclosure of meaningful beneficial ownership information
for corporations at the time of company formation.
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