More than a decade after FACT Coalition member organizations began working to end anonymous companies, Congress is nearing the finish line to finally pass a bill that could do just that.
2020 is turning out to be an eventful year in the fight against corrupt financial practices.
As August recess wraps up, the prospect for action on beneficial ownership is becoming more likely. In June the Corporate Transparency Act (H.R. 2513) passed out of the House Financial Services Committee by a bipartisan vote of 43-16. It’s sister bill (S.1978) was introduced in the Senate. Two beneficial ownership transparency bills, the TITLE Act (S.1889) and a discussion draft of the ILLICIT CASH Act, have been the subject of hearings. FACT’s Executive Director Gary Kalman testified before the Senate Banking Committee in June to address, among other issues, the impact of legislation on small business. He noted that “more than three quarters of small business owners felt the tradeoff — reporting burden vs. the prevention of unfair competition from anonymous shell companies — was worth it.”
The Corporate Transparency Act (H.R. 2513), a bill to end the abuses of anonymous companies, went before the House Financial Services Committee for markup on June 11th. FACT voiced its support for the bill in a letter to the House Financial Services Subcommittee on National Security earlier this year. Over 100 other organizations signed a letter in support of the bill, more than double the number that sent a similar letter last year. In addition to the broad support collected of a decade, new letters came from the National Sheriffs’ Association (NSA), the Anti-Insurance Fraud Coalition, the American Land Title Association, over 60 national security experts and others.
This past week, FACT Coalition member Global Financial Integrity released a report with a comprehensive state-by-state comparison of what information is required to set up a company versus obtain a library card. Astonishingly, in every state, far more personal information was needed to set up a library card than a company. This is especially startling when you realize the extent to which a company—without an accountable individual attached—could be used to commit crimes with impunity.
This report came just a week after the House Financial Services Committee’s subcommittee that covers national security issues held a hearing on corporate transparency and efforts to fight money laundering. In the lead up to the hearing Representative Carolyn Maloney (D-NY) released a discussion draft of the Corporate Transparency Act of 2019, which would require the collection of beneficial ownership information. All the witnesses at the hearing supported the collection of beneficial ownership information as an important anti-corruption, anti-money-laundering tool. In fact, all but one witness who testified at hearings in this and the previous Congress in which corporate transparency was discussed have said that beneficial ownership disclosure was an important anti-money-laundering measure. In a blog discussing this month’s hearing, FACT’s Gary Kalman encouraged lawmakers to this time listen to what the witnesses have to say. Anti-human trafficking, faith, and law enforcement organizations also encouraged the committee to take action on anonymous companies.
After 2 years of bipartisan negotiations, without warning or fanfare, the leadership of the U.S. House Financial Services Committee stripped beneficial ownership provisions out of a bipartisan anti-money laundering bill and planned a Committee vote.
A decision was made to drop beneficial ownership because it was thought to be controversial and a stripped down bill would “pass easily.” However, as FACT’s executive director describes in this op-ed in the American Banker, that was simply not the case.