The media myth about the USA’s latest legislation
Trump’s other big thing, which had no purpose except to cause trouble, was to reject an impossibly large body of legislation that bundled many different things into one massive pile. The result of this policy, which we have seen over and over again, is that if there is one part of the bundle that people don’t like, they will disrupt the entire bundle, and often very useful legislation is lost.
In this case, what concerns us is that there were parts of the bundle that Trump didn’t like and so he was prepared to defund the US Government, including all CoVid-19 support payments for millions of Americans and, importantly, to block two financial crime measures.
This brings us to the media myth about the USA’s latest money laundering legislation.
The will he-won’t he brinkmanship carried on. And on. He eventually signed off on parts of the bundle and then on more parts. It was in the later group that the financial crime measures were passed.
At Division F of the National Defence Authorisation Act for fiscal year 2021 there is the ″Anti-Money Laundering Act of 2020.″
Because it was in the news a lot, a lot of people commented on it. Most of them, including many who are regarded as experts, kept going on about the government ″banning anonymous shell companies.″
Al jazeera 11 Dec 2020 ″US Congress bans shell companies…″
Vox 4 Jan 2021 ″The US bans anonymous shell companies ….″
Lexology 4 Jan 2021– in an article penned by a US law firm – ″Congress passes anti-money laundering legislation banning anonymous shell companies.″
Reuters (this is embarrassing as I’m a consulting editor for one of their units) 11 December 2020 ″U.S. Congress bans anonymous shell companies.″
There are hundreds of examples and across networks such as LinkedIn literally thousands of people posting such statements or ″liking″ them.
So, let’s set the record straight once and for all:
1. The new law will not ban shell companies. Not at all. Not even a tiny bit. Anyone that says it does, doesn’t know what a shell company is.
2. The new law requires only that some, but not all, companies declare to FinCEN who owns or controls more than 25% of the shares in a relevant company. The Act requires a ″reporting company″ to declare – at the time of registration or formation – the identity of relevant shareholders. There is also a requirement to update information when changes occur. Failure to do so, or the provision of false or incomplete information is an offence.
This is not the place to go into the Act in detail. Suffice it to say that it’s very complex, it’s going to require huge changes within government and it’s going to require significant changes across the regulatory regime – although many of those changes are mandated under other parts of the enormous Act.
So, will the Act prevent anonymous companies? No.
On paper, it’s possible but avoidance will be remarkably simple and evasion even easier.
Worse, the FinCEN register will not be public. So the USA has obfuscated the fact that it has avoided one of the most important aspects of a company ownership register: that it be open.
By putting it within FinCEN, which is itself a division of the US Treasury, the data is, by default, secret and only limited access can be obtained to it. And even those to whom permission is granted are subject to conditions.
Frankly, it’s a very high profile dog’s dinner, a pig’s ear, a.. well, basically, it’s doesn’t do what so many people falsely claim it does and, in this specific area, what it does do it doesn’t do properly.