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Anonymous Shell Companies Now Forced to Disclose Their Real Owners

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The bipartisan anti-corruption measure cleared Congress with a veto-proof majority.

Washington, D.C / December 15th, 2020/ Discussions of corporate corruption, money laundering schemes, and high-end tax evasion all end up mentioning the same concept: shell companies. These are businesses and corporations that exist only on paper, with no office and no employees, but who serve as a legal tool to facilitate a variety of financial transactions. 

While the existence of shell companies by itself is legal, and a somewhat necessary consequence of the freedom granted to individuals by the Constitution, many criticized the fact that the owners of these shell companies were allowed to remain anonymous. Anonymity made shell companies a great tool for any corporation or criminal seeking to cover their tracks and evade law enforcement. And criminals may soon find themselves unable to enjoy this anonymity.

On December 11, Congress approved a groundbreaking measure that will ban anonymous shell companies in the United States. The measure is part of this year’s defense bill, which was passed by both congress and the house of representatives earlier this week with a veto-proof margin. The measure, which is part of the Corporate Transparency Act, will require that corporations established in the United States disclose their real owners to the Treasury Department. The same goes for limited liability companies (LLCs), and the rule applies to new and existing companies alike.

If it becomes law, the measure will be a groundbreaking achievement for the anti-corruption groups who have spent years lobbying for more transparency in the United States. Right now, the secrecy surrounding the country’s various shell companies is one of the reasons why the Tax Justice Network — a UK-based institution — named the United States as the second most financially secretive jurisdiction in the world, falling behind only the Cayman Islands. They ranked the US as more financially secretive than Switzerland, China, and Russia.

There are legitimate reasons why private citizens may want to own companies in anonymity, especially now that the internet has made public records easier to find, research, and browse. That’s one of the reasons why the Corporate Transparency Act doesn’t go as far as making the names of shell company owners available to the public. Instead, shell companies will be required to disclose their ownership to the Treasury Department, which will only make that information available to authorized personnel.

While some believe that this isn’t going far enough, it’s still a big step when it comes to making the United States more financially transparent, and it’ll make it harder for criminal organizations to operate within the country. Law enforcement agencies will be able to access that information, and in some cases, information may also be disclosed to allied nations in order to help their own crime investigations.

Once the bill becomes law, anyone registering a new company will be required to disclose the name, address, date of birth, and identification number — either a driver’s license or a passport number — of each owner in the company. LLCs and corporations that existed before the law went into effect will have two years to submit the same information to the Treasury Department.

Contact:

Cindy’s New Mexico LLC Formation Service

505-257-0791


(Syndicated press content is neither written, edited or endorsed by ED Times)

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