Treasury Department Cracks Down On Shell Companies

The Treasury Department is implementing harsher reporting requirements for shell companies.

“The rule will help close the loopholes that undermine US national security, bolster economic fairness and protect the integrity of our financial system,” said Treasury Secretary Janet Yellen.

Reuters explained:

A new rule would implement reporting provisions under the Anti-Money Laundering Act of 2020, aimed at expanding data on who actually owns or controls a company and closing loopholes in existing US law.

The proposed rule would require affected companies to report their identity to the Financial Crimes Enforcement Network (FinCEN), as well as the name, birth date, address and a unique identifying number for each of its owners.

FinCEN said the proposed rule reflected the Biden administration’s push to crack down on shell companies used to launder the proceeds from corruption, drug and arms trafficking or terrorist financing.

A Treasury official told Reuters that recent laundering activity through shell companies includes a Russian arms dealer selling weapons to a terrorist group and a Venezuelan treasurer receiving over $1 billion in bribes. The official added that White House officials will highlight their regulatory efforts at the upcoming “Summit for Democracy,” which has provoked controversy over the attendance — and absence — of certain nations.

Pakistan, for instance, will be invited, although the State Department noted in 2020 that the country witnesses “unlawful or arbitrary killings by the government or its agents, including extrajudicial killings; forced disappearance by the government or its agents; torture and cases of cruel, inhuman, or degrading treatment or punishment by the government or its agents.” 

Among Eastern European nations, Poland was invited while Hungary and Turkey were not — a decision that the Hungarian Embassy in Washington called “disrespectful.”

“Hungarian-American relations were at their peak during the Trump presidency, and it is clear from the list of the invited countries that the summit will be a domestic political event,” the embassy said in a statement. “Therefore countries that were on friendly terms with the previous administration were not invited.”

Other landmark moves by Yellen during her first year in office include the nomination of the Treasury Department’s first “Counselor for Racial Equity.” Appointee Janis Bowdler will “be charged with coordinating Treasury’s efforts to advance racial equity including engaging with diverse communities throughout the country and to identify and mitigate barriers to accessing benefits and opportunities with the Department.”

“The American economy has historically not worked fairly for communities of color,” explained Yellen. “The pandemic threw a spotlight on this inequity; people of color were often the first to lose their jobs and businesses. Treasury must play a central role in ensuring that as our economy recovers from the pandemic, it recovers in a way that addresses the inequalities that existed long before anyone was infected with COVID-19.”

“I could not be more humbled by the historic opportunity to serve as the U.S. Department of the Treasury’s first Counselor for Racial Equity,” said Bowdler. “I have spent my entire career working in solidarity with Black, Latinx, AAPI, Native communities, and other communities of color to dismantle the structural and institutional racism that perpetuates the racial wealth divide.”

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