The US Congress has just passed a law requiring owners of shell companies, widely used to hide billions of dollars, to reveal their identities.
Le Monde avec AFP
The United States has just passed a new law requiring owners of shell companies, widely used to hide billions of dollars, to reveal their identity, closing the door to a popular method of money laundering and tax evasion.
The Corporate Transparency Act is part of a defense budget law widely passed in Congress on Friday January 1, despite a Donald Trump’s veto. Under this text, the owners of shell companies must now give their identity to an agency of the US Department of the Treasury, the Financial crimes enforcement network (FinCEN).
Only the treasury and the forces of the order will have access to this information, which will therefore always be protected from the general public. But for the advocates of transparency, this is a significant first step against corruption, organized crime and tax evasion. “For years, experts have consistently classified shell companies as the biggest flaw in our anti-money laundering systems,” notes Ian Gary, executive director of the FACT coalition, which has worked for this law. “This is the most important step we could take to better protect our financial system from abuse.”
One of the easiest countries to launder money
The Nations United States estimate that between $ 800 billion and $ 2 trillion is laundered globally each year. While much attention has been focused on tax havens like Panama or the Cayman Islands, experts argue that the size of the US economy, and therefore its ability to absorb billions of dollars relatively unnoticed, has had it made central to turning illicit funds into clean money.
In early 2020, the Tax Justice Network organization ranked the Cayman Islands and the United States as the champions for enabling the concealment of finances from the eyes of the law and taxes. According to Gary Kalman, the American director of the NGO Transparency International, the new law is “fundamental” in the fight against money laundering.
Despite the geopolitical tensions, he points to the arrival of flows of money from China and Russia, because according to him, the United States is one of the easiest places for the laundering, through property, business assets, or even art. “We are the place in the world where it is easiest to set up a public limited company,” Kalman told Agence France-Presse (AFP) before the law was passed. “We are heaven for all corrupt regimes and criminals who want to hide their money.” By forcing business owners to disclose their identities, the United States is setting a “standard” for the global financial system, he said.
The adopted law punishes the non-disclosure of the identity of these owners with sentences of up to two years in prison and 10,000 dollars. According to FACT, cash transactions are expected to drop sharply. The real estate sector, prized by foreigners for bringing large sums of money into the American economy, but also the pharmaceutical sector, luxury goods, or industrial equipment, should be affected.
The law is not perfect, according to analysts. The database will not be open to the public or the media, although the latter have been the source of the biggest revelations on these subjects, as in the case of the Panama Papers. However, the Treasury and the police have limited capacity to dive into these files. “We think this database should be public,” asserts Gary Kalman.