Monday, January 18, 2021

US congress updates anti-money laundering rules, bans anonymous shell companies

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The United States Senate on Friday passed a bill overhauling anti-money laundering rules and banning anonymous shell companies, a victory for law enforcement and rights groups which have long sought changes to make it easier to police illicit money flows.

The bill requires most companies to report their true beneficial owners to the government, allows greater information sharing between law enforcement and regulators, and authorises the use of new suspicious activity monitoring tools.

Cracking down on legal vehicles that allow criminals and terrorists to move money around the world has become a pressing issue for policymakers as a slew of scandals in recent years has revealed the true extent of illicit global money flows.

The US’s weak rules on disclosing corporate owners have allowed criminals to use legal entities to shuffle their cash around the world, according to the authorities.

In 2011, the World Bank found that the US each year produced nearly 10 times as many legal entities with anonymous owners as 41 tax havens combined.

“The global law enforcement and national security community will reap enormous benefits from anti-money laundering policy that stops bad actors from using shell companies to shepherd crime across international borders,” said Greg Baer, CEO of the Bank Policy Institute, which lobbied for the changes.

Friday’s bill, included as part of a broader defence funding package, was approved by the US Senate after the House of Representatives passed it earlier this week.

The bill now heads to President Donald Trump. While Trump had suggested he could veto the bill over separate policy disputes, the Senate vote of 84 to 13 provides more than the two-thirds majority needed to override a veto.

If signed into law, the bill should help banks by allowing them to share the burden of identifying and tracking potential illegal activity.

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