In response to the Panama Papers — the more than ten million leaked documents from the Panamanian law firm, Mossack Fonseca, that exposed illicit financial activity and tax evasion through the use of anonymous offshore shell companies — the White House announced on May 6th that it would end the use of anonymous corporations in the United States and require disclosure of beneficial owners when foreigners deposit money or buy assets in the United States.
The White House announced that it plans to:
- Issue the Treasury Department’s final rule to require financial institutions to obtain and verify the identity of beneficial owners of a company, including individuals who control or own more than 25 percent.
- Support a bill to require U.S.-formed companies to disclose the beneficial owners at the time of formation or ownership transfer.
- Require single-member limited liability companies and other foreign-owned U.S. entities to obtain a tax identification number and share ownership and transaction data with the Internal Revenue Service.
- Expand jurisdiction of prosecutors to pursue money launderers for acts committed in other countries.
- Allow use of high-speed administrative subpoenas in money-laundering cases rather than grand jury subpoenas.
- Increase access to U.S. bank records located abroad and expand admissibility rules for the records.
According to the White House, “these efforts are critical to preventing criminals from using the global financial system to launder proceeds from corruption or other illegal activities, finance criminal activity or even terrorism, evade international sanctions regimes, or evade taxes.”
“The United States remains the world leader in the fight against dirty-money from drug traffickers, terrorists, and corrupt politicians only because we have laws that work in the real world, said Michael Kohn, President of the National Whistleblower Center, adding that “the trick to our success are laws that grant whistleblower confidentiality and offer rewards to the whistleblowers who provide information that expose fraudulent transactions.”