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Beneficial Ownership Legislation Proposal
April 04, 2014
01:05 PM EDT
Every year, money launderers, corrupt officials, tax evaders, and drug lords exploit legal loopholes to create anonymous shell companies to hide millions of dollars offshore. President Obama strongly believes that we cannot allow these abuses to continue, both in other countries and here in the United States. That's why he has put forward a proposal to close these loopholes with the goal of making anonymous shell corporations a thing of the past under U.S. law.
The White House announced last month as part of the President’s budget a legislative proposal to help law enforcement investigate the use of shell companies that are set up to engage in illegal activity, including the laundering of illicit proceeds. The President’s proposal would require all companies formed in any state to obtain a federal tax employee identification number. This proposal would require the Internal Revenue Service to collect information on the beneficial owner of any legal entity organized in any state, and would allow law enforcement to access that information. This proposal builds on the leadership of Senator Carl Levin (D-MI), who has long been an advocate for shuttering these tax loopholes and promoting greater corporate transparency in the United States and abroad.
In addition, the proposal would permit the IRS to share beneficial ownership information with law enforcement officials to identify and investigate criminals who form and misuse U.S. corporate structures to launder criminal proceeds and finance terrorism through the international banking system. Such sharing would advance criminal investigations and successful prosecution of money laundering and terrorist financing cases and assist in identifying criminal proceeds and assets.
President Obama has been a longtime supporter of corporate transparency. As a Senator, he supported Senator Levin’s proposal to identify and collect beneficial ownership information at the time a company is formed. And most recently, he and his fellow G-8 leaders agreed at the June 2013 summit in the United Kingdom that a lack of knowledge about who ultimately controls, owns, and profits from companies enables tax evasion and money laundering across borders. Leaders at that time committed to take steps to require companies to obtain and hold information on who really owns and controls them, also known as their beneficial ownership, and to ensure that this information is available in a timely fashion to law enforcement. The United States, in its June 2013 Action Plan for Transparency of Company Ownership and Control, committed to advocating for comprehensive legislation to require identification and verification of beneficial ownership information.
The proposal released in the budget is the next step in advancing greater transparency and anticorruption efforts in the United States. We look forward to working with Congress to draft the legislation and get this important proposal signed into law.