U.S. legislation that would require legal entities to disclose the identity of their true owners to the Treasury Department for the first time won bipartisan support in a key congressional hearing Tuesday.
The Corporate Transparency Act, the latest version of a longstanding plan to close what many view as the largest gap in U.S. anti-money laundering rules, cleared the House Financial Services Committee by voice vote Tuesday, five weeks after its introduction by Reps. Carolyn Maloney (D-NY), Tom Malinowski (D-NJ) and Peter King (R-NY). The measure passed 43-16 in a recorded vote taken Wednesday.
Under the bill, individuals who own at least 25 percent of a U.S. corporation or limited liability company, have “substantial control” over that legal entity or derive substantial benefit from it would have to disclose their name, birthdate, address and passport or other ID number to the department’s Financial Crimes Enforcement Network, or FinCEN.
Filers would have to provide the data at the time of incorporation and reverify or update it each year.
The bill would also direct FinCEN to revise its customer due diligence rule to eliminate any requirements made “unnecessary or duplicative” by the new database. Financial institutions are the collector and repository of ownership data under the current version of the CDD rule, which took effect in May 2018.
FinCEN would supervise access to the database by state, local and foreign investigators and prosecutors, as well as financial institutions seeking to comply with the CDD rule.
That Maloney’s bill cleared committee with some degree of bipartisan support constitutes a “major event” in light of the fact that similar proposals have been in the works for more than a decade, John Byrne, former vice president of ACAMS, told moneylaundering.com.
“The goal is simple, you want the beneficial ownership information,” said Byrne, now vice chairman of AMLRight Source, a consultancy based in Cleveland. “If you get it directly from the beneficial owners, there is no need for the banks.”
The legislation still faces opposition from senior Republican lawmakers, industry groups and civil rights advocates on both the left and right of the political spectrum.
During the markup Tuesday, Rep. Patrick McHenry (R-NC), the committee’s ranking member, praised Maloney for pulling the bill from consideration last month and working with Republicans to bolster its privacy safeguards.
But the measure still falls short of ensuring privacy, he said.
“This legislation does not require the judicial process to gain access to the beneficial ownership information,” said McHenry, who separately criticized Treasury officials for not responding to his requests for “non-anecdotal” evidence of why a new government-administered database of private citizens’ data is necessary.
Similar legislation began circulating in the Senate on Monday.
Contact Valentina Pasquali at firstname.lastname@example.org
UPDATE: Adds to the second paragraph to reflect that committee members approved the Corporate Transparency Act in a voice vote Tuesday and a recorded vote Wednesday.
|Topics :||Anti-money laundering , Know Your Customer , Counterterrorist Financing|
|Source:||U.S.: Congress , U.S.: FinCEN , U.S.: Department of Treasury|
|Document Date:||June 11, 2019|