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The Corporate Transparency Act


The Senate overrode Trump’s veto of the National Defense Authorization Act earlier today, by an 81-13 vote.

Most of the chatter about the bill has focused on its provision to strike the names of Confederates from U.S. military bases and it’s $740 billion price tag. But the bill also includes “the first significant update to our anti-money laundering laws in twenty years, and one of the most important anti-corruption measures ever passed by the U.S. Congress.”

As Jeanne Whalen of The Washington Post reported a few weeks ago:

A groundbreaking measure to ban anonymous shell companies in the United States cleared Congress on Friday as the Senate joined the House in passing a defense-spending bill with a veto-proof margin.
The Corporate Transparency Act, which was tacked onto the defense bill, would require corporations and limited liability companies established in the United States to disclose their real owners to the Treasury Department, making it harder for criminals to anonymously launder money or evade taxes. The rule applies to future and existing entities alike.

The law corrects a policy that made the U.S. a key player in global corruption.

Tolerance of anonymous shell companies has long helped drug- and human- traffickers, organized crime groups and foreign kleptocrats launder their ill-gotten gains through the U.S. financial system, supporters of the legislation say. It took Michael Cohen, President Trump’s former lawyer, only a few days to set up and use an anonymous Delaware LLC to pay hush money to Stormy Daniels, in violation of campaign finance laws. [….]

The law requires anyone registering a new company to disclose the name, address and date of birth of the real owners, and an identification number for each owner, such as a driver’s license or passport number. Corporations and LLCs that already existed before the law’s adoption must disclose their ownership information to the Treasury Department within two years.

There’s no evidence that this was the real reason why Trump vetoed the bill, but it’s not outside the realm of possibility. Anonymous shell companies play a key role in the nexus that connects global money laundering to the U.S. luxury real estate market – and from which the Trump Organization has profited handsomely.

The passage of the act is good news. Key officials in the incoming Biden administration – including Jake Sullivan – have identified fighting globalized corruption and kleptocracy as a key policy goal. There’s a lot of work to do. The new ban should not only directly facilitate those efforts, but also enhance U.S. credibility when the Biden administration seeks to negotiate with crucial partners.

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