Treasury Department Takes Important Step Towards Affirming U.S. Leadership on Combating Global Money Laundering and Corruption
Washington, D.C. – Today, the Financial Accountability and Corporate Transparency (FACT) Coalition welcomes the Treasury Department’s release of the first final rule to implement the landmark Corporate Transparency Act (CTA), and urges the Treasury Department to accelerate the remaining rulemaking processes to fully implement this ground-breaking anti-money laundering reform. The rulemaking brings the U.S. one step closer to casting off its reputation as the world’s top financial secrecy jurisdiction.
“The release of this first final rule is a historic moment in the decades-long fight to rid the U.S. of dirty money,” said Ian Gary, Executive Director of the FACT Coalition. “Anonymous shell companies help kleptocrats and criminals around the world park assets and commit crimes in our country. The U.S. has fallen behind many jurisdictions in requiring the true owners of corporate and other entities to be disclosed. Congress did its part almost two years ago by passing the Corporate Transparency Act, and we urge the Treasury Department to finish the regulatory process to fully implement the law as soon as possible.”
In February, the FACT Coalition submitted a series of detailed comments in response to a proposed rule released by the Financial Crimes Enforcement Network (FinCEN), the financial crime fighting agency tasked with implementing the law. The FACT Coalition is conducting a thorough analysis of the final rule to understand the changes made in response to the hundreds of comments received during the rulemaking process.
“While we are still analyzing the final rule, it is important to emphasize the benefits of full and faithful implementation of the Corporate Transparency Act. With information on the true owners of anonymous shell companies, law enforcement agencies, financial institutions, and our allies will be able to effectively combat corruption and money laundering,” Gary said. “Faithful implementation will not only benefit the global financial system and U.S. foreign policy objectives. It will also benefit ordinary Americans who are harmed by drug trafficking, human trafficking, and other crimes enabled by anonymous shell companies.”
Further rulemakings will cover issues such as rules to govern access to the beneficial owner directory to be established by FinCEN. Timely, uncomplicated access to the information in the U.S. directory must be provided to all actors contemplated by the law. This includes partner jurisdictions involved in foreign and transnational investigations, such as those in pursuit of the assets of Russian oligarchs.
“While being behind other jurisdictions with public disclosure of beneficial owners, the U.S. also has a chance to learn from experience. Information on the true owners of entities supplied to FinCEN under this law must be reliably verified to avoid the problems we’ve seen in other jurisdictions,” Gary said. “Our beneficial ownership directory should deploy real-time and automated verification mechanisms to ensure an accurate and useful database.”
“The timely implementation of the Corporate Transparency Act is absolutely critical to fulfilling U.S. commitments on global anti-corruption, especially in the lead up to the International Anti-Corruption Conference slated to be in Washington this December,” said Tom Cardamone, President and CEO of Global Financial Integrity, a FACT Coalition member. “But as FinCEN has told Congress, its ability to deliver a timely rule hinges on its resources. As Congress punts on approving a budget for the next fiscal year, it should understand the consequences of keeping our nation’s financial crime fighters underfunded. Congress should fully fund FinCEN at $210.3 million for next fiscal year to make sure the bureau has the staff, technology, and resources it needs to protect the U.S. financial system.”
Notes to the Editor:
- Click here for FinCEN’s final rule on Beneficial Ownership Reporting Requirements, released today, implementing the Corporate Transparency Act.
- Click here for Treasury Secretary Yellen’s Statement on the Final Rule
- The effective date of the final rule is January 1, 2024. Entities formed after the effective date will be required to report within 30 days of formation. Entities formed before the effective date will have until January 1, 2025 to submit their first report. Read the FinCEN fact sheet on the final rule here.
- Click here for FACT’s February 2022 comment on the proposed first rule on the Corporate Transparency Act.
- As FinCEN’s final rule notes, “more public and anonymous corporations are created in the United States than in any other jurisdiction,” citing research by Global Financial Integrity.
- In testimony before the House Financial Services Committee in April 2022, FinCEN’s Acting Director Him Das painted a bleak appropriations picture in regard to the Corporate Transparency Act, stating, “As you are aware, we are missing deadlines. And to be blunt, we will likely continue to do so because our budget situation has required us to make significant tradeoffs among competing priorities.”