New Corporate Transparency Act rule will sabotage fight against money laundering without significant changes
A proposed rule implementing the Corporate Transparency Act (CTA) by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is poised to significantly sabotage the good work the bureau has done to increase corporate transparency, unless significant changes are made, CREW wrote in a comment to FinCEN.
FinCEN has the first opportunity in decades to develop the bold and comprehensive regulatory framework necessary to address our country’s disastrously deficient and outdated corporate transparency regime. But the proposed rule, as written, adds hurdles to state, local and tribal court access to beneficial ownership information, limits foreign government information sharing and restricts financial institutions’ ability to obtain information.
These restrictions undermine Congress’s intent in drafting the CTA and would make it harder for the country to develop a comprehensive approach to fighting corrupt and illegal money.
The bureau can, and must, do better. To adopt the proposed rule as drafted would be tantamount to sabotaging all of the good work that FinCEN has done over the last two years. CREW strongly encourages FinCEN to improve this inadequate and destructive rule.
CREW submitted an additional comment in March to FinCEN regarding its recent notice proposing a form it plans to use to obtain beneficial ownership information from all entities required to file under the CTA. The new form would have disastrous consequences should it be adopted. It would undermine the CTA’s purpose because it would allow filers the option of simply declaring that they do not know the identities of the beneficial owners of the corporations they are creating or managing. This would create a massive loophole in the CTA’s structure that was neither considered by Congress nor is permitted by the CTA’s plain text. FinCEN should not use this opportunity to undermine the work and intended outcomes of the CTA.