New R.E. Law Targets Money Laundering
WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) today issued an Advance Notice of Proposed Rulemaking (ANPRM) to solicit public comment on a wide range of questions related to the implementation of the beneficial ownership information reporting provisions of the Corporate Transparency Act (CTA).
This ANPRM is the first in a series of regulatory actions that FinCEN will undertake to implement the CTA, which is included within the Anti-Money Laundering Act of 2020 (AML Act).
The AML Act is part of the F.Y. 2021 National Defense Authorization Act, which became law on Jan. 1, 2021.
The CTA amended the Bank Secrecy Act to require corporations, limited liability companies, and similar entities to report certain information about their beneficial owners (the individual natural persons who ultimately own or control the companies).
This new reporting requirement will enhance the national security of the U.S. by making it more difficult for malign actors to exploit opaque legal structures to launder money, finance terrorism, proliferate weapons of mass destruction, traffic humans and drugs, and commit serious tax fraud and other crimes that harm the American people.
The CTA requires FinCEN to maintain the reported beneficial ownership information in a confidential, secure, and non-public database.
Corporate Transparency Act
The Corporate Transparency Act targets criminals who scoop up high-priced homes and commercial properties through anonymous shell companies in order to help stop the flow of illicit cash into real estate.
The Act requires true owners of shell companies to identify themselves to the FinCEN. Anonymous companies are the vehicle of choice for the criminal and the corrupt to launder illicit funds with impunity.
Shell companies are legal. They become criminal when they are used for criminal purposes – things like tax evasion or money laundering.
Every wonder why some high-priced luxury houses or why valuable commercial properties remain vacant for long periods of time?
According to the U.S. Treasury Department; many are part of overseas money launders, seeking to “wash” their illicit cash thru porous banking and real estate system. The Act is a milestone, as it represents some of the most sweeping anti-corruption legislation enacted in decades.
Furthermore, the CTA authorizes FinCEN to disclose beneficial ownership information subject to appropriate protocols and for specific purposes to several categories of recipients, such as federal law enforcement.
Finally, the CTA requires FinCEN to revise existing financial institution customers due to diligence regulations concerning beneficial ownership to consider the new direct reporting of beneficial ownership information.