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“Historic”new anti-corruption law bans anonymous shell companies, impedes money laundering

“Historic Anti-Corruption Measures Become Law”

“the most significant update to U.S. anti-money laundering laws in a generation.”

That’s how the widely respected anti-corruption organization Transparency International summarized the Corporate Transparency Act (CTA) included in the U.S. Senate’s Friday override of President Trump’s veto of the National Authorization Act for Fiscal Year 2021.

The CTA is far too important to be overlooked in the weekend drama of the last days of the Trump Administration.

Perspective: John Kerry, as Secretary of State in 2016: “Corruption costs the global economy $2.6 trillion a year. It’s not just a disgrace and a crime. It’s also dangerous.” He alluded to the difference that sum could make for young people, “yearning for jobs and opportunity, for electricity, for education.”

No wonder that Gary Kalman, Director of the Transparency International U.S. office, was effusive in an immediate Friday TI news release:

“Ending the abuse of anonymous shell companies is a tremendous victory for all who are concerned about the harmful impacts of corruption. It’s a huge step forward in fighting illicit finance at home and wound the globe. Simply put, corporate transparency means it will be harder for corrupt leaders and other criminals to hide and move stolen money through secretly owned corporations … the provisions show that Congress now recognizes the direct link between corruption and national security…”

Many will say that it’s about time. Money laundering via shell companies has long been apparent, especially in the last several years.

Of course, the CTA passage is only half of this anti-corruption mission. Without vigorous and sustained federal implementation, it will wither – which makes the advent of the Biden-Harris Administration especially timely. The TI news release makes clear what is at stake:

“The most important anti-money provision is the collection of company ownership information. This simple change will make it harder for terrorists to launder money to fund insurrection and violence. Corrupt foreign leaders who impoverish their own countries by stealing and misdirecting public funds will find it more difficult to hide those funds. This new level of transparency will help ensure that the international aid we provide actually goes to improve stability and bolster economic and social conditions in troubled spots around the world…”

The New York TimesĀ concurred with this kind of assessment of CTA referring to it as a “landmark provision aimed at preventing the use of shell companies to evade money laundering rules.”