Bills to End Anonymous U.S. Shell Companies

Bills are being introduced in Congress that would make anonymous shell companies illegal. These won’t pass in the near future, such is the state of money in politics, but there’s value to raising awareness about these types of issues. The press release by the U.S. PIRG doesn’t mention the phenomenon of dark money explicitly, but of course dark money is much of the problem. The lack of transparency in realms of power often means that public accountability becomes more difficult while existing corruption deepens.

If enacted, these bills would give law enforcement an important tool for investigating a number of crimes that are facilitated by money laundering through anonymous shell companies. The U.S. is the second easiest country in which to incorporate a business without listing the real owners and beneficiaries of the company’s operations. In some states, getting a library card requires more identifying information than incorporating a company.

“Consumer scams, defrauding taxpayers, tax evasion, secretive campaign spending, corruption, sanctions evasion, drug trafficking, and human trafficking are all facilitated by anonymous shell companies,” said Allie Robins, U.S. PIRG Tax and Budget Associate.

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U.S. PIRG has worked in conjunction with the Financial Accountability and Corporate Transparency (FACT) Coalition to advocate for the establishment of a law that would require the government to collect information about the identities of the real, “beneficial” owners of companies operating in the U.S. If enacted, the Corporate Transparency Act would:

Establish minimum beneficial ownership disclosure requirements that would mandate that a company must provide beneficial owners’ names, current addresses, and legal identification upon incorporation.

Require the Treasury Department to collect beneficial ownership information if a state opts to not enact its own procedures.

Provide civil penalties for persons who submit false or fraudulent beneficial ownership information, or who fail to provide complete or updated beneficial ownership information.