New Treasury Dept. rule requires banks to identify owners of shell companies that open accounts
The U.S. Treasury Department has issued a long-awaited rule for the financial industry that will require banks and other institutions to obtain ownership information for shell companies when they open accounts.
Anyone who owns at least 25 percent of the company, or controls it, must be identified under the new beneficial ownership rule announced Thursday, American Banker reports. It is officially known as the Customer Due Diligence rule.
The Obama administration is also proposing new legislation intended to combat financial crimes, including a law that would require companies to provide ownership information to the federal government, according to Reuters.
The moves are intended to address an issue highlighted by the massive so-called Panama Papers data breach at a Central American law firm known for its work on shell companies, President Barack Obama explains in a blog post.
While shell companies can be a legitimate option for businesses, such as real estate developers, that want to make purchases without revealing facts that might increase competition, shell companies can also be misused for money laundering and hiding assets to avoid paying taxes on them, the president says.
“Nobody should be able to hide in the shadows from their legal obligations, and nobody should be able to play by a different set of rules,” deputy national security adviser Wally Adeyemo said. “The Panama Papers disclosure underscored the importance of our domestic efforts and underscored the fact that more needs to be done.”
A Bloomberg/BNA Big Law Business blog post and a White House news release provide more details.
See also:
ABAJournal.com: “‘John Doe’ says he leaked law firm’s Panama Papers to show why income inequality is a big problem”
