Kent Nishimura | Los Angeles Times | Getty pictures
The US Ministry of Finance is scraping a requirement that we will report information about its owners to the Federal Government. It is the latest turn in an on-aa-off-over saga for the young rule.
The corporate transparency law adopted in 2021 required millions of companies to report basic information about their “economic owners”. By determining who owned certain companies, the legislator tried to contain criminal activities and illegal funds that were carried out by opaque shell companies.
The rule should be effective on March 21 after months of delays in court. It led financial punishments, possibly thousands of dollars, for non -compliance.
The financial crime -enforcement network -also known as fincen, which is part of the Ministry of Finance, issued a preliminary final rule on March 21 to exclude all US citizens and US companies from the reporting obligations.
The rule is open to public comments and should be completed later this year.
“This absolutely watered down the rule”
If it says, the Fincen rule would be a significant deviation from the purpose of the company transparency law and, according to legal experts, offer gaps for criminals.
“This absolutely transforms the rule,” said Erin Bryan, partner and co-chair of the Consumer Financial Services Group in Dorsey & Whitney. “Many Shell companies will now be freed from reporting,” she added.
Some foreign companies that do business in the United States still have to submit reports, said Fincen.
Fincen estimates that this revised report request will apply to around 20,000 companies in the first year – significantly reduced by the 32.6 million companies, including certain companies, companies with limited liability and other previously estimated estimates of the report request in the first year.
Most of the western world already has such requirements, said Bryan.
Fincen refused to comment on this story.
A deregulation pressure
The change in politics is in accordance with the deregulation guideline of President Donald Trump, and Fincen Director Andrea Gacki, who took over her position in 2023, wrote in the provisional final rule.
The Trump administration had already suspended the requirements at the beginning of this month. Civil penalties could have been up to 591 US dollars a day and up to 10,000 US dollars in criminal fines and were up to two years in prison.
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The Ministry of Finance has re -evaluated the balance between the benefits of collecting [beneficial ownership information] And the regulatory stress imposed on the scope of the report rule, ”wrote Gacki.
The officials went illegal financial risks, alternative sources of information, the “burdens” of data acquisition and the public interest, she wrote.
Potential gaps
The reporting obligations are in force for certain foreign companies that were formed in another country and do business in the USA, said Bryan.
However, if these companies had an economic owner based in the USA, they are no longer obliged to report information about this person, added Bryan.
“In the world of potential Shell companies, this is a small subset that we deal with”, which still have to provide reports on economic owners, she said.
Some observers believe that the intermediate rule would easily enable criminals to grasp rock recognition.
“From that day on, criminals can avoid this national security law by simply founding and leading these front companies in the USA,” said Scott Greytak, director of Advocacy at Transparency International, a coalition against corruption.