June 28, 2017

Whitehouse Introduces Bipartisan TITLE Act to Address Proliferation of Anonymous Shell Corporations in U.S.

Senator Sheldon Whitehouse today joined colleagues from both sides of the aisle to introduce legislation that would make it more difficult for criminals and foreign enemies to hide assets from tax authorities and law enforcement.  The True Incorporation Transparency for Law Enforcement (TITLE) Act would address corporate transparency loopholes exposed by the Panama Papers.

“Whether you’re a greedy criminal or a power-hungry foreign adversary, shell corporations are a great tool for hiding ill-gotten gains, masking fraud, or concealing covert influence campaigns,” said Whitehouse.  “It’s time to end the anonymous ownership that lets bad actors skirt American law enforcement.”

The bipartisan bill would require states to obtain information on the true owners of corporations and LLCs formed under state law and to make the information available to law enforcement upon receipt of a subpoena or summons.  It would also extend money laundering due diligence requirements that currently apply to banks to professionals that help form business entities. 

“I commend Senator Whitehouse for working to provide law enforcement with tools to root out corrupt and criminal organizations,” said Colonel Hugh T. Clements, Jr., Chief of the Providence Police Department.  “This legislation will allow us to identify criminals exploiting our financial system to stash away money.” 

In recent years, many countries have required greater transparency in their incorporation laws, while the United States has lagged behind, rendering it one of the most attractive places in the world to set up dummy corporate entities.  Currently, applicants can form corporations and other business entities anywhere in the United States without disclosing the people who really own the companies.  The 2016 leak of confidential documents from the Mossack Fonseca law firm in Panama exposed shell corporations in multiple states.  The Department of Justice is investigating possible crimes, including tax evasion. 

“Anonymous companies have been used for a wide range of dangerous and illicit activities, including as fronts for rogue countries to evade sanctions, to cloak arms dealers shipping weapons into conflict zones, to fuel the opioid crisis, to engage in human trafficking, to rip off Medicare, and to undermine the safety of our troops through the sale of faulty equipment,” said Gary Kalman, Executive Director of the Financial Accountability and Corporate Transparency (FACT) Coalition.  “This bill comes at a critical time.  There has never been more momentum behind the effort to end anonymous companies than there is right now.” 

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