FinCEN Shutting the Channels of Financial Crimes Directed through Shell Companies

  • Richard Marley
  • January 04, 2021
  • 2 minutes read
  • 3360

A major path of money laundering and tax evasion has been shut off by FinCEN with their new regulations. This new law requires the disclosure of the shell companies and their owners involved in hiding billions of dollars.

This act is known as the Corporate Transparency Act which was included in the US defense bill passed by Congress despite President Trump’s veto. 

This law has obligated the owners of the shell companies to report their identities to FinCEN- Financial Crimes Enforcement Network. Only FinCEN and the office of the US Treasury will have the access to the data and will not become public knowledge. According to the advocates of this transparency act, this is a huge step to get rid of crimes related to tax evasion and money laundering. Criminals have anonymously cleansed their black money for years. 

“For years, experts routinely ranked anonymous shell companies … as the biggest weakness in our anti-money laundering safeguards. It’s the single most important step we could take to better protect our financial system from abuse,” said Ian Gary, executive director of the FACT Coalition, which lobbied for the legislation.

According to the UN, estimately around 800 billion USD to 2 trillion USD is laundered through the financial global system every year. According to the experts, the US economy has the ability to absorb billions of dollars without being highlighted which results in converting illegal funds into legalized assets.

The director of Transparency International, Gary Kalman, said that this act is crucial for fighting crimes like money laundering. According to him, money has been flooded into the country through China and Russia for laundering through properties, art, assets. Etc. 

“By choking off access to the advanced economies, you are making it much harder. You are upping the cost and the likelihood of getting caught.”

According to the law, the failure to comply with the new legislation can result in up to two years in jail and 10,000 USD.