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FACT Calls for Strengthening of Treasury’s Anti-Money Laundering Proposal to Curb Abuse of Anonymous Companies





October 6, 2014


FACT Calls for Strengthening of Treasury’s Anti-Money Laundering Proposal to Curb Abuse of Anonymous Companies 

Coalition Provides Comments on U.S. Treasury Proposed Rule that Seeks to Fight Financial Crime by Requiring Banks to Know the Real Owners of Each Account


Washington, DC – The FACT (Financial Accountability and Corporate Transparency) Coalition submitted comments to the U.S. Treasury Department on Friday welcoming the government’s proposed rule to require U.S. banks to know the true owner of all accounts opened in their institutions as a step toward pushing dirty money out of the American financial system, while cautioning that several elements of the proposal need to be strengthened.

On July 23, 2014, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) released a Notice of Proposed Rulemaking on Customer Due Diligence Requirements for Financial Institutions that seeks to require banks to know who their customers really are.  The comment period following the announcement concluded on Friday, and FACT was among the many organizations that submitted comments.

“Treasury is taking an important step toward making it harder for corrupt politicians, drug traffickers, and terrorists to access the U.S. financial system by forcing banks to know who their customers actually are,” said Stefanie Ostfeld, Global Witness Deputy Head of U.S. Office and FACT Steering Committee member. “However, to stop the flow of dirty money into American banks, Treasury must close a gap in the proposed rule that would allow kleptocrats and other criminals to structure companies to avoid disclosing who they are to banks.”

“Requiring banks to know the true beneficial owners of each of their accounts is something that we have been advocating for years, and we are pleased that Treasury is undertaking this important rulemaking process,” said Joshua Simmons, Global Financial Integrity Policy Counsel and FACT Steering Committee member.  “Anonymous entities are the number one tool for laundering illicit proceeds, so it’s imperative that the government gets this right and makes these rules as robust as possible.  The proposed rules currently have several loopholes that could render them meaningless, but we look forward to working with the Treasury Department to ensure that the rules are strong and effective.”



The FACT Coalition is calling on Treasury to strengthen three elements of the proposed rule:


  1. The definition of “beneficial owner”

The FACT Coalition is concerned that the proposed rule only requires identification of owners with a 25% or greater ownership interest in the entity. This provides criminals with a clear guide on how to avoid anti-money laundering checks. As a compromise, the FACT Coalition proposes inclusion of all individuals with a 10% or greater equity interest, as well as a fallback provision requiring companies to list at least one individual with significant equity if none meet this threshold. FACT recommends further amending the beneficial ownership definition to include those individuals who are not technically legal owners but nonetheless exercise ownership-like control over the company.


  1. The need for collection of ownership information for existing accounts

The proposed rule also does not adequately address the importance of collecting information on existing accounts.  The coalition proposes amending the rule to mandate, instead of merely implying, that financial institutions incorporate beneficial ownership information collection into their risk assessment procedures for existing accounts.  Specifically, FACT recommends:

  • Collecting certification forms for all new accounts opened on or after January 1, 2013 (the same date under which accounts must be reported under the Financial Account Tax Compliance Act, or FATCA), and
  • Collecting certification forms for all other existing customers on a risk basis, in line with the financial institution’s risk-based approach.


  1. The need to ensure that information provided by companies is accurate

Finally, the FACT Coalition is concerned with the proposed certification form to be provided by a company representative to the financial institution.  The certification form has a very low “knowledge threshold” for certification.  When an administrative person who knows little other than the name of his/her company, the name of the CEO, and his/her immediate boss is sent to the bank to open this account, he/she is unlikely to have the requisite knowledge to fill the form out with the correct beneficial ownership information.  As drafted, the certification says that if the person filling out the form doesn’t have the requisite knowledge, they can write down whatever they happen to know.


To address this issue, the FACT Coalition recommends amending the proposed certification form to require company representatives to certify that the information was obtained “after due inquiry” and provided under penalty of perjury. FACT further proposes amending the rule to require financial institutions to take reasonable measures to ensure that they know who the beneficial owner of the legal entity is in addition to verifying the identity of listed individuals.


The full comment on the FinCEN Notice from the FACT Coalition is available online here.




Media Contact:


Nick Jacobs

FACT Coalition




Founded in 2011, the Financial Accountability and Corporate Transparency (FACT) Coalition unites civil society representatives from small business, labor, government watchdog, faith-based, human rights, anti-corruption, public-interest, and international development organizations. We seek an honest and fair corporate tax code, greater transparency in corporate ownership and operations, and commonsense policies to combat the facilitation of money laundering and other criminal activity by the legitimate financial system.