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Speaker of the House Nancy Pelosi briefs reporters on Capitol Hill, in Washington. Speaker of the House Nancy Pelosi briefs reporters on Capitol Hill, in Washington, Nov. 13, 2020 (AP photo by J. Scott Applewhite).

Congress’ Ban on Shell Companies Is a Game-Changer Against Graft

Monday, Dec. 21, 2020

Buried within the annual National Defense Authorization Act that overwhelmingly passed Congress this month is a measure that will strengthen American anti-money laundering and anti-corruption rules. Most notably, the NDAA, as the bill is known, will require the Treasury Department to begin collecting beneficial ownership information on companies registered in the U.S., effectively banning anonymously owned companies, including shell companies that are often used as fronts for dirty money. Assuming Congress overrides President Donald Trump’s threatened veto of the law, as expected, this is a game-changer for global efforts to fight graft.

The U.S. has long lagged behind other countries in collecting corporations’ beneficial ownership information. The United Kingdom began collecting such data about its own firms in 2016 and publishes the information on a public website. The European Union adopted beneficial ownership requirements as part of its 4th and 5th Anti-Money Laundering directives—adopted in 2015 and 2018, respectively—and member countries were required to set up company registries earlier this year, though most of them failed to fully meet the deadline. More than 30 countries around the world now have some form of beneficial ownership registry requirement. ...

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