BEFORE YOU GO...
Check how Shufti Pro can verify your customers within secondsRequest Demo
FACT has urged the treasury department to impose crucial changes to draft regulations and implement the landmark corporate transparency act.
FACT (Financial Accountability and Corporate Transparency) Coalition has published a report that urges the treasury department to make critical changes in its proposed regulations. The guidelines deal with access to protocols of the true BOs (Beneficial Owners) of anonymous firms to be established under the CTA (Corporate Transparency Act).
While FACT welcomes the proposed rule from FinCEN (Financial Crimes Enforcement Network) as a crucial step towards the landmark transparency law, FinCEN needs to make substantive enhancements to realise the transformative promise of the CTA fully. Clarifying these provisions about access to important data is necessary to end the abuse of anonymous entities for laundering dirty money using the US financial system.
“The Corporate Transparency Act represents nearly a decade of tireless work by a bipartisan group of lawmakers, experts, and advocates, and its passage in 2021 was the most substantial legislative anti-money laundering victory of this generation,” said Ian Gary, executive director of the FACT Coalition.
He added, “In order to realise the promise of this achievement, it is absolutely critical that FinCEN make important changes on the road to faithful implementation.”
“As currently drafted, this second rule has the potential to unnecessarily complicate access to the beneficial ownership database established under the CTA to a degree that could seriously impact the efficacy of the law as a whole. The Treasury Department should substantially revise this proposed rule to address weaknesses that, if left in place, would undermine U.S. national security and global leadership in the fight against corruption.”
“Secrecy and shell companies help kleptocrats squander and steal public funds,” said Arvind Ganesan, director of economic justice and rights at Human Rights Watch.
He added, “Injecting transparency into ownership is key to stopping them from enriching themselves at the expense of their peoples’ rights. The Treasury Department’s final access rule must make it easy for our foreign and domestic law enforcement partners to access this information.”
FACT’s suggestions also mentioned concerns for draft forms proposed by FinCEN in January, through which the reporting firms would submit their beneficial ownership to the CTA directory. As written, the forms include fields that would allow a reporting entity “to simply claim not to be able to determine statutorily required identifying information for each beneficial owner.” If left unmarked, the FinCEN form will functionally make BO reporting under the CTA.
“FinCEN only gets one shot at this final rule,” said Gary. “At a time when the Biden Administration has raised the profile of the international fight against corruption, Treasury’s FinCEN needs to avoid stumbling this close to the finish line. The language and intent of the CTA are clear: collected beneficial ownership information should be accurate, complete, and useful to authorised users. FinCEN’s second final rule to implement the CTA must reflect that.”