A bipartisan Senate bill, the Incorporation Transparency and Law Enforcement Assistance Act, and a companion House bill, would help end the secrecy surrounding shell companies. The legislation would require companies to disclose information about the real people who own or control them. Knowing the “beneficial owners” of such entities would better enable law enforcement to pursue terrorist cells, financial crime, and drug cartels.
Anonymous shell companies are a global problem. Yet, while critics often point blame at the corporate secrecy provided by places like the British Virgin Islands, Panama, and Lichtenstein, weak laws in many U.S. states make the U.S. an attractive place to establish anonymous shell companies. In fact, a study of 150 cases of large-scale corruption showed that American shell companies were used more often than those of any other country. And since the U.S. has a reputation for strong regulation and good governance, such companies automatically acquire an air of legitimacy, regardless of the potential illegitimacy of their activities.
The bill being considered by Congress won’t apply to anonymous shell companies based outside the U.S. But by passing this law, the U.S. can take the lead in pushing for an international standard that requires that anonymous shell companies disclose who owns or controls them, thereby removing the secrecy and legitimacy of these opaque, and often criminal, entities.
Rare is the Congressional bill whose upsides so lopsidedly outweigh its downsides. With one piece of legislation, Congress can make significant inroads to combat terrorism, drug trafficking, illegal arms deals, corruption, money laundering, and tax evasion.
It’s a no-brainer, and Congress should move quickly to pass it.
| 