The United States took a big step forward in 2020 with the Corporate Transparency Act, buried within the vast National Defense Authorization Act. One industry group calls it the “biggest financial crime and compliance update since the 2001 U.S.A. Patriot Act.” The law requires companies in the United States to tell the Treasury Department about their ultimate beneficial owners, making it harder to anonymously launder money or dodge taxes. Campaigners had wanted that information to be available to everyone, but there were opposing views, including from Treasury. And because of pressure from some financial groups, not all investment vehicles are covered in the legislation.
The law represents “a powerful victory against a magnet for criminals of all stripes,” notes the Association of Certified Financial Crime Specialists, since “shell companies have been linked to organized criminal money laundering and drug trafficking syndicates, massive frauds, grand corruption, tax evasion and terror finance.” But there’s more to do. The wide-ranging review that the White House has begun will raise issues in financial services, tech, business, national security, immigration, and trade.