Corporate Transparency Rule is Critical Step to Effectively Protecting U.S. Financial System Against Corrupt and Criminal Money Laundering
A statement from Transparency International U.S.
September 29, 2022
WASHINGTON, DC – Today, the U.S. Treasury Department released the first of three final rules to implement the Corporate Transparency Act (“CTA”), a bipartisan law passed by Congress last year to require U.S. businesses and other legal entities to report their beneficial owners (aka the individuals who, in practice, own or control these entities) to the Financial Crimes Enforcement Network (“FinCEN”).
The CTA was included as an amendment to the Fiscal Year 2021 National Defense Authorization Act in response to extensive research and other exposés documenting widespread abuse of anonymously owned companies for corrupt and criminal purposes. When passed by Congress, the law was widely touted as the most important update to U.S. anti-money laundering laws in the last twenty years.
Gary Kalman, Executive Director of Transparency International U.S. (“TI U.S.”), said the following on the release of the final rule:
The Corporate Transparency Act promised to fundamentally disrupt the ease with which corrupt and criminal actors hide and launder money. This first rule is a substantial down payment on effectively delivering on that promise.
This rule is an incredibly significant step toward holding accountable the drug cartels, human trafficking operations, Russian oligarchs, and other criminal and corrupt actors who finance their operations and lifestyles by gaining access to the U.S. financial system through the exploitation of loopholes in our anti-money laundering laws. The use of anonymous companies to move money through the U.S. has threatened our communities and undermined our security and safety.
Today’s final rule closely adheres to the text of the law and the clear bipartisan intent of Congress. The coverage, definitions, and timely reporting standards in the rule limit loopholes and opportunities to escape accountability. For additional detail, we encourage those interested to review our brief factsheet on the four major takeaways from the final rule.
Two additional rulemakings, including a critical rule regarding how users will access the information, need to be finished for the law to go into effect. We urge Treasury to move quickly on those rules and for Congress to ensure that Treasury has the resources necessary to stand up and operate the database.
Today’s rule is an encouraging sign that the Administration is moving to make full use of the authority granted to it by Congress to protect the integrity of our financial system.
Transparency International U.S. is part of the world’s largest coalition against corruption. In collaboration with national chapters in more than 100 countries, we are leading the fight to turn our vision of a world free from corruption into reality.
- Read the final rule for the first phase of the implementation of the Corporate Transparency Act;
- Read Treasury Department’s factsheet on the final rule;
- Read TI U.S.’s factsheet on 4 takeaways from the final rule;
- Read TI U.S.’s full comment to the Treasury Department on the implementation of the Corporate Transparency Act.
Gary Kalman, Executive Director, Transparency International U.S.
Telephone: +1 215 439 7090