Feinstein, Whitehouse, Grassley Introduce TITLE Act to Curb Proliferation of Anonymous Shell Corporations in U.S.
Jun 18 2019
Washington–Senator Dianne Feinstein (D-Calif.) joined Senators Sheldon Whitehouse (D-R.I.) and Chuck Grassley (R-Iowa) today to introduce legislation that would make it more difficult for criminals and foreign enemies to hide assets from law enforcement and tax authorities. The True Incorporation Transparency for Law Enforcement (TITLE) Act (S.1889) would require states to obtain information on the true owners of corporations and LLCs formed within their borders.
“Drug cartels, terrorists and foreign governments frequently use anonymous shell corporations to facilitate illegal activity ranging from money laundering to espionage to illegal foreign election contributions. This bill requires states to implement reforms that require the disclosure of actual owners, which would help close this loophole in the law.” said Feinstein.
“It is appallingly simple for a domestic criminal or a foreign strongman to set up a shell corporation in the United States to hide their ill-gotten gains,” said Whitehouse. “Bad actors from around the globe should not be able to abuse America’s legal and financial institutions to thwart law enforcement and protect criminal enterprises. The TITLE Act is a bipartisan solution that would bring sunlight and accountability to a system that has enabled corruption and lawbreaking for too long.”
“Anonymous shell corporations have long been used to conceal the identities of fraudsters, tax cheats and even foreign entities running afoul of the law. Greater transparency can prevent these abuses of our incorporation system. This legislation helps law enforcement identify and combat such abuses by requiring individual accountability from corporations’ beneficial owners,” Grassley said.
Under the TITLE Act, states would be required to make corporate ownership information available to law enforcement upon receipt of a subpoena or summons. The legislation would also extend money laundering due diligence requirements that currently apply to banks to professionals that help form business entities.
In recent years, many countries have required greater transparency in their incorporation laws. 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 identities of the true owners.
The 2016 leak of confidential documents from the Mossack Fonseca law firm in Panama, known as the “Panama Papers,” exposed shell corporations in multiple states. The Department of Justice made its first arrests related to the Panama Papers in December 2018 when it charged four individuals in a decades-long tax evasion scheme.