Chances are good that if you’ve ever watched a movie or television series involving bad guys who launder money, you’re aware of the term “shell company,” which is usually one of the methods that not only Hollywood actors use to hide their funds, but also real-life criminals.
According to the Washington Examiner, using shell companies for illegal financial maneuvering just became a lot more difficult for shady actors, as the recent passing of the National Defense Authorization Act by the Senate included language that now requires increased transparency for the owners of shell companies.
The changes come under the provisions of the Corporate Transparency Act, which will prevent criminals from using shell companies to commit crimes by requiring that the names of the true owner(s) of a shell account, or the “beneficial ownership,” be reported to the Treasury Department’s Financial Crimes Enforcement Unit.
Compelling people who use shell companies to provide accurate and updated information concerning ownership is the fact that if they do not provide said information, they can face prison sentences for up to three years.
Reportedly behind the new rules were Treasury Secretary Steve Mnuchin and Democratic Sen. Mark Warner, according to the New York Post.
“In my view (and if Treasury writes bold regs), it’s even more important than the Patriot Act, best law of its kind since Bank Secrecy Act passage in 1970,” wrote Josh Rudolph on Twitter, a fellow for malign finance at the Alliance for Securing Democracy.
Apparently, the United States is the leader in the world when it comes to setting up anonymous shell companies, with over 10 times the amount than all of the traditional tax havens combined.
In other words, this type of regulation is long overdue and will hopefully prevent a future generation of bad actors from exploiting and misusing what is otherwise used as legitimate entities of corporations.