April 15, 2016
The U.S. Treasury Department inched closer on Friday toward finalizing a rule requiring banks to identify the legal owners of shell companies, a move it hopes will help prevent illegal financial activities such as money laundering.
The White House’s Office of Management and Budget announced it has commenced its review of the final rule, which the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) submitted earlier this week.
However, current rules do not require them to identify the true owners behind shell companies, a loophole law enforcement agencies say can hinder their investigations into activities such as money laundering and tax evasion because it gives criminals a degree of anonymity.
FinCEN does not have legal authority to regulate these corporate entities, but it does have the power to oversee many financial institutions that do business with them such as banks and stock brokers.
The rule would impose additional requirements on banks to verify the identity of the actual individuals who own and control the shell companies.