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Monday, December 28, 2020

Vetoed Defense Authorization Bill Contained Ban on Shell Companies Used for Money Laundering, Including by Trump and Russians

Thank you, Heather Cox Richardson, for pointing this out in last night's "Letters from an American"  (Subscribe here.)  Here's what she wrote: 

The National Defense Authorization Act this year does something else, though, that seems to me of far more importance to the president than the naming of military bases.

It includes a measure known as the Corporate Transparency Act, which undercuts shell companies and money laundering in America. The act requires the owners of any company that is not otherwise overseen by the federal government (by filing taxes, for example, or through close regulation) to file a report that identifies each person associated with the company who either owns 25% or more of it or exercises substantial control over it. That report, including name, birthdate, address, and an identifying number, goes to the Financial Crimes Enforcement Network (FinCEN). The measure also increases penalties for money laundering and streamlines cooperation between banks and foreign law enforcement authorities.

America is currently the easiest place in the world for criminals to form an anonymous shell company which enables them to launder money, evade taxes, and engage in illegal payoff schemes. The measure will pull the rug out from both domestic and international criminals that take advantage of shell companies to hide from investigators. When the International Consortium of Investigative Journalists dug into leaked documents from FinCEN this fall, they discovered shell companies moving money for criminals operating out of Russia, China, Iran, and Syria.

Shell companies also mean that our political system is awash in secrecy. Social media giants like Facebook cannot determine who is buying political advertising. And, as Representative Tom Malinowski (D-NJ) noted, shell companies allow “foreign bad actors” to corrupt our system even more directly. “[I]t’s illegal for foreigners to contribute to our campaigns,” he reminded Congress in a speech for the bill, “but if you launder your money through a front company with anonymous ownership there is very little we can do to stop you.”

We know the Trump family uses shell companies: Trump’s fixer Michael Cohen used a shell company to pay off Stormy Daniels, and just this month we learned that Trump’s son-in-law Jared Kushner approved a shell company that spent more than $600 million in campaign funds.

The new requirements in the NDAA apply not just to future entities, but also to existing ones.


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