July 30, 2021 20:45

New Law Will Aid Money-Laundering Probes

For years, then-federal prosecutor Daniel Alonso led teams searching through a maze of anonymously owned corporate entities to expose criminal activity. “It required all kinds of shoe-leather investigating to identify who was really behind these shell companies,” he says. “You’d have to subpoena bank records and lawyers, as well as human sources, and even then you frequently hit a dead end.” Thanks to an overhaul of U.S. money laundering laws, locating the proceeds from foreign bribery, drug trafficking and financing for terrorists could be as easy as a few keystrokes, the Associated Press reports. Legislation passed by Congress last month after a decade-long fight is the most sweeping banking reform of its kind since the Patriot Act after the Sept. 11, 2001, terrorist attacks. For the first time, shell companies must provide the names of their owners or face stiff penalties. The information will be stored in a confidential database accessible to federal law enforcement and shared with banks may be unwitting accomplices to corruption.

The Corporate Transparency Act was tucked into a defense spending bill. Introduced by Rep. Carolyn Maloney (D-NY), it faced opposition from banks and business groups worried about red tape as well as states such as Delaware and Wyoming, which reap revenues from the registration every year of nearly two million corporations and limited liability companies. A string of international financial scandals involving soccer’s governing body FIFA and the 1MDB development bank from Malaysia, as well as the so-called Panama Papers, softened criticism by revealing the prominent role played by secretive shell companies in hiding proceeds from illicit activity. The new law seeks to strengthen controls by creating a registry at the Treasury Department with the names of the true owners of domestically-created shell companies and foreign ones conducting business in the U.S.

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