[HN Gopher] US passes anti-corruption law that effectively bans ...
___________________________________________________________________
US passes anti-corruption law that effectively bans anonymous shell
companies
Author : gscott
Score : 464 points
Date : 2021-01-02 10:45 UTC (12 hours ago)
(HTM) web link (www.independent.co.uk)
(TXT) w3m dump (www.independent.co.uk)
| bsimpson wrote:
| Am I the only person bothered that they snuck it in as a rider on
| another bill?
|
| We need more succinct, germane legislation. It's no surprise that
| the Read The Bills act never passed. These multi-hundred/thousand
| page laws are bullshit, and usually filled with pork that has
| nothing to do with the title of the bill.
|
| Congress shouldn't vote on bills they haven't read, period. If a
| bill wants to pass, it should stand on its own merits, not sneak
| in with one that can't fail.
| hliyan wrote:
| Transparency International helped to craft the bill:
| https://us.transparency.org/news/historic-anti-corruption-me...
|
| From their statement:
|
| "In these divided times, it is encouraging that a broad and
| politically diverse coalition came together to make these
| critical reforms a reality. We'd like to especially thank
| Chairman Crapo (R-ID), Ranking Member Brown (D-OH), Chairwoman
| Waters (D-CA), Ranking Member McHenry (R-NC), Congresswoman
| Maloney (D-NY), Congressman King (R-NY), Congressman Luetkemeyer
| (R-MO), and Congressman Cleaver (D-MO), as well as Senators
| Warner (D-VA), Cotton (R-AR), Jones (D-AL), Rounds (R-SD),
| Whitehouse (D-RI), Grassley (R-IA), Wyden (D-OR), and Rubio
| (R-FL) for their support."
| Chirael wrote:
| I'm curious what actual form/filing, if any, this will manifest
| as. The reason I say this is that for several years now, whenever
| you've applied for an EIN on the IRS website, they've basically
| asked for the beneficial owner(s) information anyway.
| ddelt wrote:
| > Larger companies that employ more than 20 people, have revenues
| above $5 million and a physical presence in the US, are exempt
| from the act. Churches, charities and other non-profits are also
| exempt.
|
| Just to confirm - am I reading this correctly in that, this
| massive corporate secrecy legislation does not apply to the vast
| majority of publicly traded corporations in the US? If they had
| just not included those exemptions, this would have been
| extremely beneficial for everyone right?
|
| Why would we want to allow anonymous corporate shell
| organizations which are deemed to hide funds if they are tied
| well known US corporations, as opposed to some shady criminals?
| Isn't the crime the same either way?
| dan-robertson wrote:
| What would you expect a large publicly traded corporation to
| write down as their beneficial owner? Maybe it's a bit tricky
| for firms with dual class stock like Facebook, but for most
| firms the beneficial owners are their shareholders (so
| basically a big stake for blackrock and vanguard, maybe a few
| other big stakes, and a lot of small stakes).
| tylermenezes wrote:
| Typically there's a special provision on forms for this, as
| with non-profits (which have no owners).
| dan-robertson wrote:
| Sure but I'm replying to a comment which suggests that the
| regulation shouldn't exclude large publicly traded
| companies
| unilynx wrote:
| If the exemption criteria are AND more than 20 people, AND 5
| million, AND a physical presence, it makes some sense, as shell
| companies typically have few or no employees, and little actual
| presence other than an accountant or law firm.
| dan-robertson wrote:
| I think those are the criteria
| josefx wrote:
| If I understand correctly then this forces the shell companies
| to report their "secret" benefactors. So it keeps the small
| players from hiding behind a shell because the cost of running
| a fake company with 20 full time employees would be prohibitive
| to them. The bigger ones can probably run a few of the exempt
| shells in parallel without loosing too much of their overall
| profit.
| tremon wrote:
| Also, companies with a physical presence in the USA are much
| easier to audit or prosecute.
| ceilingcorner wrote:
| Considering that the vast majority of lockdowns and other
| COVID-response actions have been against small businesses (shut
| down the corner store but let Walmart stay open), it isn't
| particularly surprising. Politicians and corporate leaders gain
| nothing by supporting small business owners.
| high_density wrote:
| > Just to confirm - am I reading this correctly in that, this
| massive corporate secrecy legislation does not apply to the
| vast majority of publicly traded corporations in the US? If
| they had just not included those exemptions, this would have
| been extremely beneficial for everyone right?
|
| why would anyone go against 'all publicly traded corporations'?
| do you believe they are inherently evil, and should be taxed?
|
| this law limits the depth of shell-company layers. it's more
| costly to add shells with this law.
| hliyan wrote:
| I can't speak for revenue, but physical presence and real
| employees are indicators of an actual corporation, rather than
| a shell.
| nickpp wrote:
| What are the unintended side-effects? I understand this is
| probably a well-meaning legislation, but:
|
| FATCA made it impossible for an American to have a bank-account
| abroad [1]
|
| PFICs made it impossible for an American to invest in non-US
| funds [2]
|
| Together with world-wide taxation, punitive departure tax when
| renouncing the citizenship and huge estate tax when finally
| passing away, seems to me that Americans are becoming prisoners
| of their own government.
|
| 1.
| https://www.democratsabroad.org/what_is_fatca_what_are_its_i...
|
| 2. https://thunfinancial.com/home/american-expat-financial-
| advi...
| trophycase wrote:
| I was thinking the same thing. Certainly an American passport
| is becoming one of the worst in the world to own.
| ur-whale wrote:
| Not the worst though, there's Eritrea.
|
| They also tax their citizens worldwide [1]
|
| [1] https://www.taxesforexpats.com/expat-tax-
| advice/Citizenship-...
| nerdponx wrote:
| I thought we left estate tax FUD back in the Bush
| administration.
| FabHK wrote:
| Well, Americans had a hard time laundering or hiding money
| abroad, but foreigners were welcome to do so in the USA. That
| has become harder now.
| nickpp wrote:
| Please note that I am not talking about anything illegal,
| just law abiding citizens who cannot do things that they
| could do before.
|
| I wonder, is the cost worth it? Was there so much laundering
| and hiding going on that it was worth losing even more
| freedoms over it?
| vinay427 wrote:
| FATCA does not make it impossible to have a bank account
| abroad. I currently live in a country known for its historical
| banking secrecy and two different large banks I walked into
| were able to open an account for me with only one extra form
| that gives them consent to share my information with the IRS.
| There was at least one employee in both branches that knew
| exactly what to do, although not every employee did so I can
| understand some Americans trying to open accounts being turned
| away.
|
| As an American that lives abroad, I naturally don't support the
| extra taxation based on citizenship when I'm already taxed in
| my country of residence. There is paperwork to file to avoid
| double taxation, but hiring a lawyer to do it will probably
| cost me more than it saves at this stage in my life.
| _trampeltier wrote:
| I think because of what the US did some years ago with
| Switzerland, some banks just try to reduce the legal risk by
| not having us customers. In the US is it not illegal to have
| a porn business, just no banc will give you an account. Here
| in Switzerland even hospitals started to refuse US customers
| because of legal risks. I guess that's the price for be the
| bully and push everybody in the world.
|
| https://www.tagesanzeiger.ch/die-angst-der-spitaeler-vor-
| der...
| milkshakes wrote:
| what will stop people from shifting to holding the llcs with
| anonymous trusts?
| hkt wrote:
| Magnitsky sanctions, or something that forms part of the road
| to a much broader application of them.
|
| The US (and indeed UK and EU) has the power to squash tax
| havens. The big countries are not hostage to the little ones,
| things are the way they are because of who it benefits.
| csomar wrote:
| > Larger companies that employ more than 20 people, have revenues
| above $5 million and a physical presence in the US, are exempt
| from the act. Churches, charities and other non-profits are also
| exempt.
|
| So it seems that the cost of money laundering has gone from a few
| thousands dollars for a Delaware C-Corp to running a fake
| business that employs 20 people and has an office. The minimum to
| launder under this scheme is $5m per year.
|
| This seems like the government stumping on small money launderers
| while giving the big guys a tax: employ some people, and rent
| some real-estate.
| someonehere wrote:
| This sounds like the same reason we have a death tax. Those
| that can't afford to setup the right paperwork are essentially
| screwed and have to pay their fair share. Meanwhile those with
| teams of lawyers have the ability to skirt paying their fair
| share. Great.
| xxpor wrote:
| Inheritance taxes don't kick in until $11.5 million.
| chrisweekly wrote:
| Where did you get that number? As the executor of my
| father's estate, I can attest to paying taxes based on a
| much lower threshold.
| sroussey wrote:
| It doubled a couple years ago, which was temporary, so
| will halve in a few years time. _That_ will catch people
| unaware.
| Godel_unicode wrote:
| Gp is talking about at the federal level, where that is
| indeed the number. You probably had to pay state taxes,
| those have much lower limits in some states.
| throwaway0a5e wrote:
| My state taxes inherited out of state real property at an
| absurd rate (I wanna say 20%, might be 15, in any case,
| that's a big chunk of change).
|
| In practice it's just a big f you to anyone who's parents
| live out of state and die owning their home and didn't have
| the foresight to put it in trust or sign it over to the
| kid(s) prior to dying.
|
| There is no justifiable purpose for this tax other than
| revenue. Property out of state has zero cost to the people
| of the state. It's a pure money grab and it's only
| affecting the middle class (because anyone who can justify
| the cost of estate planning will not be subject to this
| tax).
|
| Edit: I'd be curious to see why people find this comment so
| disagreeable? Or is it just ideologically inconvenient to
| point this stuff out?
| Ancapistani wrote:
| > There is no justifiable purpose for this tax other than
| revenue.
|
| Isn't this the alleged purpose for all taxes?
| Broken_Hippo wrote:
| In general, if you can't afford a lawyer to set up paperwork,
| you won't have enough to trigger the tax, though. The outrage
| about the inheritance tax is generally misplaced.
|
| And to be fair, that last bit is simply the US tax system: If
| you can lawyers and accountants, you might not pay much tax.
| Unfortunately, change requires congressional action and folks
| working together.
| AnthonyMouse wrote:
| > In general, if you can't afford a lawyer to set up
| paperwork, you won't have enough to trigger the tax,
| though. The outrage about the inheritance tax is generally
| misplaced.
|
| The outrage is that it's a trap for the unwary.
| Billionaires don't pay it but family businesses who didn't
| realize they had assets in excess of the threshold do, or
| people who die young before doing the preparation.
|
| If you can avoid it just by hiring an accountant then it
| shouldn't exist.
| ouid wrote:
| Isn't the lower limit on an estate that is subect to estate
| taxes pretty high? (State rules may differ, but if you're
| talking about "the death tax", you're probably speaking
| nationally)
|
| Dying is actually subsidized for people with less than that
| who have unrealized capital gains, unless I understand the
| system wrong.
| roenxi wrote:
| > This seems like the government stumping on small money
| launderers while giving the big guys a tax...
|
| It is a little different. Using your numbers, previously $5
| million got a big player ~1,000 shell companies, now it gets
| them 1. The law would make a legal manoeuvrer several orders of
| magnitude more costly. That is more powerful than a $5 million
| per business tax.
| csomar wrote:
| The way I see it, before, he had two choices: Run a single
| money laundering operation where he recruit people, have an
| office, etc... and have a sizable amount going through it. Or
| create 1.000 shell company. Having a single shell company
| with no presence and employees move dozens of millions of
| dollars will raise eyebrows from the bank. But a 1.000 shell
| that move dozens don't.
|
| After this, he has only one choice: Run the fake business.
| JumpCrisscross wrote:
| > _This seems like the government stumping on small money
| launderers while giving the big guys a tax: employ some people,
| and rent some real-estate_
|
| I did work on this bill (my Congresswoman is its author). Let
| me defend the thresholds.
|
| The point of this bill is to require beneficial ownership
| disclosure for shell companies. Legal ownership of an entity is
| one thing. The beneficial owner is the human who ultimately
| owns and controls the entity [1].
|
| Tracing the beneficial owners of economically-active entities (
| _i.e._ not shell companies [2]) is expensive. Imagine doing
| this for Apple. You would need to look through every ETF that
| holds it to its mutual fund owners to their pension fund owners
| to their holding companies to their pensioners. That is a
| multimillion dollar exercise, largely useless and reasonably
| opposed. This expense in its extreme stopped similar
| legislation in the past. As a result, someone from Russia could
| create a BVI company that opens a Delaware LLC and gain near-
| total transactional anonymity.
|
| This bill tries to exempt economically active entities. The
| thresholds are easy to identify, reducing paperwork, while low
| with respect to most companies. (Small businesses have simple
| ownership structures and a small number of beneficial owners.)
| The bill is _not_ a general anti-money laundering bill. If you
| have employees and revenues, you are engaging in sophisticated
| money laundering. If you have a thousand shell entities, you
| are doing something else (and more common).
|
| [1] https://en.m.wikipedia.org/wiki/Beneficial_ownership
|
| [2] https://en.m.wikipedia.org/wiki/Shell_corporation
| hogFeast wrote:
| BVI has already passed the legislation to set up a beneficial
| ownership database. The battle for this ended about four
| years ago (there will be hold outs like Mauritius, and Nauru
| but they are now very small in number...beneficial ownership
| disclosure is now accepted).
|
| And btw, this will make no difference for most foreigners
| doing evil things (the ever-present "Russian"). Russia
| doesn't participate in information-sharing, money laundering
| today is largely a problem of govts choosing not to
| participate in information-sharing (and I think the
| implication is that this is anti-corruption, this globalist
| approach to corruption does nothing, it will help no-one).
| vmception wrote:
| Hi, I skimmed the bill and some explanations after finding
| out about it last night.
|
| I feel like this bill doesn't actually change anything. Look
| at your example: "Someone from Russia could create a BVI
| company that opens a Delaware LLC and gain near-total
| transactional anonymity."
|
| Your bill exempts every nominee or person paid to form the
| business. That is completely common practice, and also
| benefits the exact people you made this bill for?
|
| Let me be absolutely clear, when I think about MY user
| experience, nothing has changed? If my registered agent
| formed the business with one of their employees names, or if
| my lawyer did that, in both circumstances there would never
| be a report to the Treasury for them, and there would never
| be a report for me.
|
| I don't actually want a burdensome regulation, but I also
| don't feel Congress actually cares about this since this was
| just a rider into an actually politically charged bill, so I
| don't mind talking to you about it:
|
| How does this bill accomplish anything if it exempts
| everything that real people actually do, let alone anyone
| trying to mask ownership and control.
| JumpCrisscross wrote:
| > _Your bill exempts every nominee or person paid to form
| the business_
|
| Yes, we already know who the legal owners of entities are.
|
| Under this bill, if you pay a registered agent to form an
| LLC you control, _your_ name is recorded. That is not
| presently done. It's been pushed back on, particularly by
| the real estate industry, for decades.
| vmception wrote:
| > Under this bill, if you pay a registered agent to form
| an LLC you control, your name is recorded.
|
| Okay I misread that in the law review documents. So
| anyone acting on behalf of the beneficial owner is not
| reported, but the beneficial owner still is.
|
| This is in line with some other countries that are vying
| for respect by reforming.
|
| I don't mind it being on-file privately with the
| government, and this bill doesn't change anything with
| publicly perusable databases, nor create a new one.
| JumpCrisscross wrote:
| > _this bill doesn 't change anything with publicly
| perusable databases, nor create a new one_
|
| Correct. I have seen arguments for such databases, and
| might support it in limited cases ( _e.g._ for public
| officials). But I think, personally, beneficial ownership
| information should be afforded privacy similar to tax
| returns.
| vmception wrote:
| In what part of the formation process do you feel this
| report is to be made?
|
| Let's say if I walked to the secretary of state in
| Wyoming and paid them cash to form a new entity, where is
| the Treasury report supposed to be done? Is there a
| notification somewhere?
|
| Does the Federal Government even have a way of knowing
| when a new entity is created in all of the incorporated
| states and other semi-autonomous regions? Not all the
| states have free public databases.
|
| Is this bill going to sanction the states until they give
| information automatically about newly formed and existing
| entities?
|
| Does this apply to indigenous protectorates? Navajo
| nation has incorporation statutes, and literally any of
| other the 560+ tribes could as well.
| solotronics wrote:
| What if a lawyer hired by a company is the person
| initiating the registration?
|
| Company -> hires lawyer to register Company2 -> Company2
| -> hires lawyer to register Company3 -> etc.
| JumpCrisscross wrote:
| > _What if a lawyer hired by a company is the person
| initiating the registration?_
|
| Beneficial ownership is an old legal concept. It traces
| through entities to natural persons. Until one gets to
| the controlling humans, the search keeps running. It is a
| powerful and costly tool.
|
| So short answer: no, daisy chaining lawyers and entities
| wouldn't hide you.
| Nimitz14 wrote:
| Thank you for explaining!
| swiley wrote:
| There are a lot of types of businesses that don't need
| physical presence, software development should be the most
| obvious.
| njarboe wrote:
| Most of the value gains of companies in the current economy
| occur before a company IPO's and shares are available to the
| general public. If regular people are to be able to invest
| successfully then they will need access to invest in those
| companies. The JOBS act tried to help facilitate this, but by
| making it easier for companies to wait to IPO, it seems to
| have just made it easier for accredited investors to reap the
| benefits of their special status for even longer periods of
| time. While this law may help with shutting down some corrupt
| entities, I fear it will prevent many new possible ways for
| normal people to invest in the last remaining sector of the
| economy producing any decent returns. Would an ETF of a large
| number of start-ups be allowed under this law?
|
| Also, attaching a bunch of non related stuff to huge bills
| like defense appropriation is really an annoying to me, but I
| guess that is how the sausage gets made.
| JumpCrisscross wrote:
| > _non related stuff to huge bills like defense
| appropriation_
|
| An inspiration for this bill was mitigating circumvention
| of the Magnitsky Act. Americans using shell companies may
| evade taxes. Foreign entities using shell companies may
| evade our counterintelligence.
| anonymouse008 wrote:
| > Americans using shell companies may evade taxes.
| Foreign entities using shell companies may evade our
| counterintelligence.
|
| Americans use incorporated entities to buy assets to
| limit their personal or corporate liability in operating
| businesses. This requires all of those to be queried for
| beneficial ownership - for what reason?
|
| _Anonymous Shell corporations_ is being used
| synonymously with legitimate holding companies because it
| markets the cause well - greater tracking on who owns
| what.
| JumpCrisscross wrote:
| > _greater tracking on who owns what_
|
| This is transparently the intent of the bill.
| [deleted]
| AnthonyMouse wrote:
| > Americans using shell companies may evade taxes.
|
| This is a general problem with the tax code. Fix what
| Apple does, which needs to be done anyway, and you don't
| have this problem.
|
| > Foreign entities using shell companies may evade our
| counterintelligence.
|
| Isn't a foreign counterintelligence service just going to
| list a straw man as the beneficial owner?
| jancsika wrote:
| Digression-- why is it 2021 and I'm reading a 1990s-style
| forum that has no automated way to authenticate the
| "JumpCrisscross" identity?
| MichaelZuo wrote:
| There might be something to having an option for an
| authenticated identity, to a reasonable degree of
| certainty. Maybe charge a fee for a special badge to cover
| the extra administrative hassle?
| rsync wrote:
| What kind of authentication of a user do you have in mind ?
|
| Further, in what manner is 'jancsika' authenticated, to
| anyone, and why do you consider that negative ?
| [deleted]
| baybal2 wrote:
| > The bill is not a general anti-money laundering bill. If
| you have employees and revenues, you are engaging in
| sophisticated money laundering.
|
| So, sophisticated money laundering is explicitly legally
| allowed?
| sdenton4 wrote:
| Not really, you just need different tools to deal with it.
| Why expect a single law to fix everything?
| tehjoker wrote:
| This is great (and thanks!), but if congress really cared
| about this stuff, they would have big teams at the IRS
| working on tracing sophisticated money laundering. As it is,
| those teams are underfunded, headed by revolving doors of
| people, and threatened whenever they do something bigcos
| don't like.
| jcfrei wrote:
| Thanks for outlining the thoughts that went into this. To me
| this once again exemplifies why a blockchain for assets is
| the way to go. And by that I don't mean an ethereum or
| bitcoin (or insert popular coin here) type of blockchain. I
| mean a public ledger run by regulators that keeps track of
| all assets. If enough regulators adopt such a model and allow
| tax collectors to access its data then that lookup for the
| ultimate beneficial owners becomes much more feasible.
| DeafSquid wrote:
| How do I downvote on here?
| derivagral wrote:
| I think the threshold is still 500 karma for that.
| mikeyouse wrote:
| When you get (iirc) 501 "karma " a downvote button
| appears next to the upvote one.
| traeregan wrote:
| You need at least 501 karma to use that feature.
| Triv888 wrote:
| > This bill tries to exempt economically active entities.
|
| A company with 5 emplyees is not active?
| jxf wrote:
| A company with 5 employees is very unlikely to have a
| complicated ownership structure and so wouldn't be
| hamstrung by the act.
|
| You are penalized if you are small, complicated, and
| anonymous. You aren't penalized _just_ for being small, or
| complicated, or anonymous.
| [deleted]
| acrefoot wrote:
| I appreciate the intentions behind this bill, and I'm sure
| we'll find far more corruption than we ever expected through
| this bill.
|
| I'm reminded of the Patriot Act, and the ways the data
| collected were used (beneficially), and abused (for personal
| reasons) by people trusted with high-level clearance. How is
| access being limited and audited to the data collected by
| this new bill?
|
| I feel the same way about the government grant system relying
| on the DUNS system (run by a private company) for business
| registration. I also feel this way about credit agencies like
| Experian and Equifax being the trusted source of truth on
| creditworthiness for Fannie Mae loans, and collecting records
| on essentially all Americans (no consumer choice and limited
| opt-out) which inevitably gets leaked. The liability of
| Experian and Equifax should have been their entire
| businesses, not a few slaps on the wrist and the offer of
| credit monitoring for just a year.
|
| With all that in mind, I want to know--when this bill is
| implemented, how is this not inevitably going to result in
| abuses or harmful massive leaks? Or do you just assume that
| entities below a certain threshold of activity don't deserve
| privacy or some level of property obscurity to help people
| avoid criminal attention?
|
| The kind of info this bill is collecting could be easily be
| used by identity thieves. Sharing this info with foreign
| entities makes the problem worse.
|
| Civil forfeiture started off with good intentions, but in
| many places has a serious lack of recourse and oversight.
| There have been some reports that it's abused as a quick way
| for police departments to pad their budgets. Those doing the
| seizing don't even need to prove guilt of a person, since
| civil forfeiture is a dispute between police and _property_ ,
| not police and a suspected person. Sure, these policies let
| police cripple the more clever criminals that they had
| trouble bringing to justice, but it also gets used all the
| time in ways against people (I guess against property) that
| would reasonably argue innocence.
| [deleted]
| JumpCrisscross wrote:
| > _how is this not inevitably going to result in abuses or
| harmful massive leaks?_
|
| There probably will be abuses and leaks---I don't think
| anyone should trust the government with population-wide
| data that is catastrophic if compromised. But on the ladder
| of OPM data and IRS tax records to _e.g._ potato
| registries, beneficial ownership data isn't _that_
| sensitive. Many countries make it a matter of public record
| with few ill effects. (Counterpoint: Sweden makes tax
| records public record. The IRS being compromised would be a
| big deal.)
|
| The church, charity and non-profit exemption is the hole of
| the bulldozer path that had to be left to protect private
| civic discourse. This _will_ be abused by the wealthy and
| powerful. But as a result, there will be no comprehensive
| database of _e.g._ donors to prison reform or LGBT causes.
| vkou wrote:
| > Counterpoint: Sweden makes tax records public record.
| The IRS being compromised would be a big deal.
|
| It would be a big deal only because it would shatter
| current expectations. As you've mentioned, society would
| operate just fine if everyone's tax records were public.
| The aversion that people feel towards it is largely
| cultural - if they were brought up in a different western
| society, they wouldn't feel that way.
| jadeddrag wrote:
| Do you know, will the beneficial ownership disclosure
| information be available to the public, including available
| to litigious lawyers?
| 2Gkashmiri wrote:
| Cool. Ive always wanted to ask this to someone in the us. I
| am from India and here the government department that manages
| companies has rules put in where all companies necessarily
| put all directorships as public info. Same for an interesting
| idea. You cannot have more than two layers of companies. A
| bunch of people cannot form a company and then buy/setup a
| subsidiary below it beyond 2 levels. Same for each human
| director lists all directorships in all companies.
|
| What benefit does anonymity provide ? Its not like your
| phone/address has to be made public. Just a name/id. This
| transparent system is working here without any issues, why
| cant it work with you guys?
| printercable wrote:
| How is this bill going to affect US entrepreneurs operating
| legitimate businesses incorporated in Delaware (or similar
| jurisdictions) who are just trying to protect their privacy?
| csomar wrote:
| So this bill is the beneficial ownership paper for the US? Am
| I the only one who think this requirement is as stupid as it
| gets. If you are a money launderer are you going to make an
| accurate disclosure? How does the US/Authorities check the
| validity of these disclosures?
|
| As someone who went through the BO pain, I think it only
| added more paperwork load to small business/guys like me.
| wombatpm wrote:
| Government wants the information for tax purposes. If I
| sell a multi million dollar condo in Chicago, taxes have to
| be paid. If I sell an LLC that owns the same condo, no
| taxes are paid.
| JumpCrisscross wrote:
| These laws have precedence, and the precedence shows
| benefits [1][2]. It would have also mitigated historical
| harms [3].
|
| Note that American compliance is de-centralised. A $5+
| million entity attracts a different level of scrutiny from
| banks, corporate registers and brokers than a no-revenue
| entity with an overseas signatory.
|
| [1] https://knowledgehub.transparency.org/assets/uploads/he
| lpdes...
|
| [2] https://open.cmi.no/cmi-
| xmlui/bitstream/handle/11250/2475354...
|
| [3] https://www.jstor.org/stable/90012622
| csomar wrote:
| My question might be stupid since you seem to be more
| versed in this subject. But if I incorporate in the US,
| how does the government/relevant bodies know that I am
| who I say I am in the BO?
| theptip wrote:
| The same way any company performs anti-fraud checks.
|
| And how this is done - check the provided information
| against a known-good database (there are plenty of
| services that you can pay for here). Perform random spot
| checks. Make sure that the UBO is filing taxes for this
| entity's earnings. Etc.
|
| I'm not claiming it's perfect; fraud detection is a hard
| problem, and it's also pretty obscure if you haven't had
| to deal with it at your own company.
| someguydave wrote:
| I believe it is a criminal act under this law to lie
| about it (there are other laws that make it illeagal to
| lie on government forms), so you would be committing a
| paperwork process crime which USG loves to enforce.
| Signing the false form would literally be mailing
| evidence of a crime to FinCen.
| mtnGoat wrote:
| But if you are already a criminal... Would that matter?
| jjk166 wrote:
| Al Capone committed a lot of crimes besides tax evasion,
| but he went to prison for the crime he could be convicted
| of.
|
| The more offenses someone commits, the more likely
| they'll make a mistake committing one of them and get
| caught. Yeah most money launderers will have no moral
| qualms about lying on a form, but someone already on the
| fence might be dissuaded if the risk of getting convicted
| increases.
| mtnGoat wrote:
| True, lots of kingpins go down for off center charges.
| paulryanrogers wrote:
| My guess is that many people don't consider themselves
| all out criminals, just 'regular' folks skirting the
| edges of legality. So doing something undeniably illegal
| and on the record may discourage taking an action.
|
| Or even if consciously criminal then one would want to
| minimize risk of getting discovered.
| mtnGoat wrote:
| My point was related to those already practicing money
| laundering. They already know it's illegal, what's one
| more criminal act? Once you are invested, it's not a
| problem.
| jounker wrote:
| Your lie has to pass scrutiny. Your lawyer also had to be
| willing to lie on paper. The companies who set up these
| fake corporations (with bogus boards) now have to supply
| a real person. If they don't make an attempt to verify
| this information, then they become criminally liable too.
| paulryanrogers wrote:
| It still seems to raise their risk profile as the shells
| are more likely to get discovered unless they meet these
| new thresholds.
| Digit-Al wrote:
| Something I think you are missing is that at the moment
| if the government is investigating potential money
| laundering and the trail leads to a shell company then
| the trail ends there. With the new law, if the company is
| registered to someone that doesn't exist then a felony
| has been committed and they can probably seize all the
| assets of the company.
|
| If the criminals risk forfeiting their money they may
| look to other avenues instead of using American shell
| companies.
|
| I very much doubt anyone is under the illusion that this
| will stop criminals trying to launder money through
| American companies, it just makes it easier to seize
| assets of potential laundering operations and to
| investigate sources.
| [deleted]
| pas wrote:
| > If you are a money launderer are you going to make an
| accurate disclosure? How does the US/Authorities check the
| validity of these disclosures?
|
| Someone has to file the paperwork. If you willingly misfile
| it, then you are an accomplice. The various offices that
| manage these papers also try to do minimal checks. Also if
| the filer is a professional agent/attorney they have strict
| requirements to keep various details about their clients.
| (Which are protected by attorney-client privilege, but if
| there's sufficient evidence then a judge can issue a
| warrant, so the investigation can try to follow the trail.
| So either the attorney was duped or it was complicit.)
| mtnGoat wrote:
| Exactly, just find another Patsy too put down as the
| beneficial owner and use them as a proxy. Cartels and
| people with money/power, don't ask you to do this for them,
| they tell you. This bill lacks teeth in so many ways.
| Requesting honesty from criminals is silly. Expecting the
| banking industry that has lobbied for this secrecy to play
| along, is also silly.
|
| This is already happening and had been for years.
|
| Source; I know people who laundered money for years in the
| Caribbean. One of the Patsy's is paying a lot of tax debt
| for the shell that was in his name.
| mrkstu wrote:
| But making that 'patsy' the legal owner also increases
| the actual owner's risk profile. The Patsy has greater
| control and can redirect the money and is the legal
| 'owner' of the assets. That forces the non-legal owner to
| use someone they trust implicitly and someone closer to
| them generally, making them easier to tie back in a legal
| case.
| NoOneNew wrote:
| Just wanted to say thank you for chiming in about the bill. I
| know some folks are jumping your shit, but it's nice to read
| a boots on the ground perspective. Sounds like this was a
| bill about managing proper red flags, minimize false
| positives and not creating a slippery slope. From my
| understanding, that's where a lot of push back from the past
| has been.
| zbrozek wrote:
| Piling on to the thank-you wagon. My cousin works at the
| GAO and often has interesting stories about policy nuance
| that would be really difficult to realize without that
| inside perspective.
| anonymouse008 wrote:
| If the above is true:
|
| >If you have employees and revenues, you are engaging in
| sophisticated money laundering. If you have a thousand shell
| entities, you are doing something else (and more common).
|
| Isn't it easier (and more effective to the goal) to query the
| attorney of record, Articles of Organization filer,
| registered agent (etc from the Secretary of State), and have
| a more stringent eye on what they do, rather than taking
| personal identities to the Treasury?
|
| The fault is not the individual, it's the supporting system
| that allows for thousands of anonymous LLCs to be coordinated
| - that only can happen through a support structure - that
| should be easy to identify through the current data.
|
| Edit: also, yes, as another comment mentioned, thank you for
| chiming in. Very rarely do people get to speak to decision
| makers and advisors in these positions - this is real
| democracy at work.
| anonymouse008 wrote:
| I'll add a second bit of context - a well respected member
| of Congress once told me, paraphrased "we do not regulate
| out in front. We are America. We are usually behind when it
| comes to regulations. We are free."
|
| So, this legislation feels like a break from that
| consciousness.
|
| Instead of playing cat and mouse with these entities -
| which the above quote illustrates as the American
| legislative way - we are going for the jugular of this
| issue.
| zepto wrote:
| Anonymous shell companies have been a problem for
| decades, to the point that they are a standard trope in
| movies and TV. How is this 'regulating out front'?
| anonymouse008 wrote:
| Because the methods these shell companies employ to
| coordinate give off a greater signal in the 21st century
| datasets -- going the personal identifier route, you're
| able to target people based on personal affiliations. The
| goal is admirable -- however, this act as a solution is
| hasty (opportunistic) and disguised itself as "protecting
| against (insert threat)."
| zepto wrote:
| I'm not sure how this answers the question. How is it
| hasty when the problem is decades old?
| anonymouse008 wrote:
| Hasty (maybe I should say opportunistic) because it's
| ideological reasoning to pass is capitalizing on the
| current zeitgeist (which I believe to be leaning more
| antithetical to the quote above). Again, the reason this
| bill is intriguing is because the problem can be solved
| through other methods - albeit more effortful. You don't
| really need beneficial identifiers on these types of
| companies to get who's doing bad things.
| JumpCrisscross wrote:
| > _Isn 't it easier (and more effective to the goal) to
| query the attorney of record, Articles of Organization
| filer, registered agent (etc from the Secretary of State),
| and have a more stringent eye on what they do_
|
| Formation documents and registered agents track legal
| ownership. An attorney may have a line to the beneficial
| owner. Or it may be to another attorney. Either way, that
| is protected by attorney-client privilege.
|
| There is nobody logging beneficial ownership. The closest
| are banks, which started requiring beneficial ownership
| information only last year. Unbanked entities are dark.
|
| Put another way, this bill is putting that "more stringent
| eye" on the system.
| [deleted]
| OminousWeapons wrote:
| It sounds like this information will be available to people
| at banks and law enforcement without a subpoena. Is this the
| case? If so, this represents an enormous threat to privacy.
| It should not be possible for people at a bank or law
| enforcement to do a db query without judicial consent, find
| out everything someone owns, and illegally leak that data to
| their friend / reporter / relative / lawyer / PI who asked. I
| don't care if that makes their work harder or more expensive;
| unless someone has reasonable suspicion that a person is
| engaging in illegal activity, there are good reasons for that
| data to be private.
| madhadron wrote:
| Why wouldn't beneficial ownership of a company be entirely
| public data?
| OminousWeapons wrote:
| TL;DR I agree with the intent of this law but I disagree
| with the exact implementation.
|
| There are groups of people who have legitimate safety
| concerns (victims of domestic violence and stalking,
| members of law enforcement, victims of abuse from law
| enforcement, public figures potentially subject to
| political violence such as the people certifying voting
| in this recent election, high net worth individuals,
| corporate officers of companies some people have beef
| with, activists, LGBT in very religious areas, reporters,
| whistle blowers, etc) who are using these tools as part
| of a DIY witness protection program to safeguard
| themselves against violence and intimidation. This is
| undermined if people can trivially unmask the
| beneficiaries of companies used to obfuscate purchases of
| assets such as a house or car. I agree that this data
| should be available to law enforcement during an
| investigation (ie with a subpoena), but allowing bank
| employees or any member of law enforcement to trivially
| access it whenever they want opens up the door to abuses
| and leaks (selling access or granting access to friends,
| contacts, or others intent on doing the owners harm). It
| also assumes blanket trust in those with privileged
| access and there have been many instances in the past of
| this trust being abused. It should require more than
| knowing or being a cop or a bank employee with access to
| be able to DOX or come after someone who is not breaking
| the law but wants to remain private.
| jksmith wrote:
| I may be off base here, but what if I'm a super-rich dude
| who starts a company that exists solely to send the SPCA,
| St.Judes and Shriner's Hospital a million a month because
| of those gut-wrenching commercials, but I want to remain
| completely anonymous about it?
| [deleted]
| jlokier wrote:
| Isn't that dealt with by running a non-profit? "Churches,
| charities and other non-profits are also exempt."
|
| If you need a a commercial company to make money before
| handing it over, here in the UK it is common to set that
| up as a subsidiary of the non-profit. Charities do it all
| the time, a subsidiary company runs the charity shops,
| and gives the profit to the parent charity. This allows
| the shops to be run more like a commercial operation,
| with fewer constraints than a charity is required to
| follow, then when the money is handed up to the charity
| those constraints apply to how it is spent or distributed
| to other charities.
| [deleted]
| toomuchtodo wrote:
| Thank you for your efforts.
| DeafSquid wrote:
| Ok well fuck you and your employer. You just fucked up a
| bunch of people's privacy
| samename wrote:
| How's that?
| andrewem wrote:
| Do you know if the beneficial ownership information is
| (likely to be) subject to the Freedom of Information Act? I
| ask because this kind of information can be in the public
| interest.
|
| Edit: the Washington Post article on this says " The general
| public won't have access to the ownership data, a
| disappointment to anti-corruption campaigners, who say public
| scrutiny would help combat criminal activity."
|
| https://www.washingtonpost.com/us-
| policy/2020/12/11/anonymou...
| syshum wrote:
| It is a good thing for privacy though, people use business
| entities like this for legitimate purposes to protect their
| privacy so the world does not know where they live, the car
| they drive, etc etc etc
|
| The is the problem with "anti-corruption" efforts, is that
| always hurts people that have legitimate reasons or simply
| desire to live anonymous lives
| da_big_ghey wrote:
| I wish more people considered this. Lots of people keep
| pushing to get rid of cash, for example, because it will
| "reduce terrorism" or "reduce money laundering" or
| whatever. But I like using cash, because I don't want my
| bank, or an anti-money-laundering authority, or anyone
| else to know what I buy, when, why, how much, or from
| whom. It has nothing to do with illegal activity, or
| buying drugs, or whatever.
|
| My parents and grandparents told me about the days before
| centralized documentation. A birth certificate was
| sufficient documentation, and of course those could be
| changed. One could lie about his birthday and not get
| caught. These days, no one is a person at all unless the
| government says he is, and even then, he is only the
| person the government says he is: I knew someone who was
| a transgender; she couldn't call herself a woman in many
| contexts until the government said so. This idea of
| constantly proving that you are who you claim to be,
| backed by government verification, strikes me as a bad
| direction to go.
| buckminster wrote:
| I agree, but I feel that measures that are only available
| to the wealthy (like putting your finances behind an
| anonymous corporation) are making things worse. The
| powerful, who are in the best position to bring about
| change, are shielded from the consequences of the
| pervasive loss of privacy and so have little reason to do
| anything about it.
| syshum wrote:
| The limits here speak to the exact opposite, it did not
| take a whole lot of money (a few hundred dollars) to
| create a fictitious entity to hold your home or other
| property so that is does not appear on public property
| tax records.
|
| This was not a tool "only for the wealthy" and since the
| limits of the law are fairly low before the law no longer
| applies it is clear this law IS NOT targeting "the
| wealthy"
| syshum wrote:
| >>I wish more people considered this.
|
| Modern US Society is losing alot of things that used to
| be a foundation. Privacy is one of them.
|
| In general people today agree with the "if you have
| nothing to hide you have nothing to fear" rhetoric,
| generally accepting that "only bad people" want or desire
| privacy, and the government is only their to "protect
| good people from bad people"
|
| It is all a lie ofcourse but that is where we are as a
| society, and I am not seeing anything on the horizon to
| change this
|
| Largely we (the US) are moving to a more Authoritarian,
| collectivist society, leaving behind our Individualist
| libertarian roots
| spiritplumber wrote:
| "if you have nothing to hide you have nothing to fear"
| only works if it applies all around. Declassify all the
| things, then we can have this talk...
| dvtrn wrote:
| Doesn't FOIA only apply to government agencies, not
| companies and corporations?
| wmf wrote:
| This law requires ownership to be reported to FinCEN, a
| government agency. So it's natural to ask if a FOIA to
| FinCEN could get this information. It probably won't work
| though.
| judge2020 wrote:
| probably not, it'd be like asking the IRS for information
| on taxpayers. You won't be able to get your neighbor's
| AGI over the past four years, but you probably could get
| some summary or overall statistics on the income of
| people in your city or state.
| andy_ppp wrote:
| I think what you're saying is the wealthy have made it too
| complicated to tax them effectively or even find out what
| they are doing with their assets.
| JumpCrisscross wrote:
| > _the wealthy have made it too complicated to tax them
| effectively or even find out what they are doing with their
| assets_
|
| Complexity comes into play on the cost calculation. Wealthy
| people with complicated structures doing little revenue
| with few or no employees may find this law onerous. Most
| people, including the wealthy, will be done listing
| themselves, their spouse and a few outside investors.
| hliyan wrote:
| I think you're mistaken. This is about anti-money-
| laundering, not tax.
| curryst wrote:
| They're one and the same. The purpose of money laundering
| is to pay the taxes on illegally acquired money so you
| can spend it legitimately. If the IRS wasn't going to
| come after you for tax fraud, I don't see the point in
| laundering. Just deposit that crap in the bank.
| pif wrote:
| No, you are wrong.
|
| The purpose of money laundering is to prevent government
| from getting too curious about where that money is coming
| from.
| tartoran wrote:
| That's what the parent is saying. In a nutshell by taxing
| money it becomes legitimate. The trick lies in not
| drawing any scrutiny on the business itself, I believe it
| is basically attempting to make the said business appear
| as ordinary as possible.
| Slikey wrote:
| I am not a US citizien but I'd still like to thank you for
| taking time out of your day to explain. I wish politics would
| generally be more transparent about their intentions but I
| guess it wouldn't be politics then. It's always hard to find
| out the intentions of thresholds and numbers as the models
| behind them are never communicated through the media.
| nickpp wrote:
| What is the estimated cost for the regulatory compliance?
| Considered that the burden will fall on small business, have
| you considered the impact on global competitiveness? Is that
| impact worth the benefits of this legislation?
|
| If you are wrong and later discover unexpected side-effects,
| what is the mechanism and cost of fixing or removing this
| regulation?
| chollida1 wrote:
| What additional burden do you think the bill puts on small
| businesses?
| csomar wrote:
| > The act also makes "deliberate false statements or
| willful evasion of its requirements" a federal crime,
| punishable by up to three years in jail.
| zepto wrote:
| The relevant words being 'deliberate' and 'willful',
| meaning the prosecution will have to prove your intent
| beyond reasonable doubt.
|
| If there is no crime to point to beyond misfiling, there
| will be no case for willful intent.
| generalizations wrote:
| As someone else pointed out, those words seem ripe for
| exploitation by prosecutors looking for a plea-bargain.
| zepto wrote:
| As I have replied elsewhere, that's only a problem if
| they have something else on you.
|
| Legitimate businesses don't have to stress about a
| clerical error landing them in jail.
| generalizations wrote:
| Better to have a well written law on the side of the
| civilian than a badly written one that can be enforced on
| the whim of a bureaucrat. At least, that's the way I see
| it.
| twic wrote:
| This sounds a lot like the "people with significant
| control" rules in the UK:
|
| https://www.gov.uk/guidance/people-with-significant-
| control-...
|
| I am a director of a small and mostly inactive company. We
| had to fill in a form when these rules came in. We have to
| fill in a form when we change directors or shareholders,
| which happens every few years. We have to fill in an annual
| confirmation that the information is up to date. All of
| this takes a matter of minutes. The cost is negligible.
| csomar wrote:
| > The cost is negligible.
|
| It is not. It adds stress. When this was added (where I
| operate), I had to call in an accountant to do the
| paperwork because the penalty is prison time, and not a
| fine. This additional stress and paperwork just keeps
| compounding (there is a new paperwork every one or two
| years now). Then you have the small fee for that
| particular paperwork (should have been free?) and the
| accountant fee. It just keeps adding up, and for a single
| or very small business it's becoming unsustainable.
| twic wrote:
| In my experience of doing this, the cost was negligible.
| If you freaked out and spent a lot of money on it, that's
| your business.
|
| > the penalty is prison time, and not a fine
|
| You aren't going to prison for an honest mistake. _mens
| rea_ , innit.
|
| As some solicitors say [1]:
|
| > It is a criminal offence not to:
|
| > * Take reasonable steps to find out if there is anyone
| who is a PSC and identify them to Companies House
|
| > * Give notice to the registrar of companies of an entry
| alteration or note in a company's PSC register within 14
| days of any change being made
|
| > The sanctions for such offences are a fine or possible
| imprisonment.
|
| > In the event that you do not comply with your PSC
| requirements Companies House will contact your business
| and give you an opportunity to rectify the position,
| before proceeding to enforcement action.
|
| https://www.gl.law/insight/news/criminal-effects-psc-
| regulat...
| generalizations wrote:
| You seem like someone who isn't risk-averse. Personally,
| I like to know that what I'm doing doesn't put me at the
| mercy of an annoyed / overworked bureaucrat. I don't
| think it's only police officers who sometimes enforce
| where they shouldn't.
| zepto wrote:
| "the penalty is prison time"
|
| Penalty for what? There is usually a pretty large
| distinction between misfiling as part of a crime, and
| misfiling as mere clerical error.
|
| I don't know where you operate.
|
| Perhaps it's so corrupt that officials will use any
| excuse to jail people who don't pay them, but if this is
| the kind of locale in which you operate, a regulation
| like this would seem to be the least of your worries.
| AnthonyMouse wrote:
| You're thinking about this as though the system is free
| of uncertainty and prosecutors didn't use overcharging to
| extract plea bargains.
|
| If doing something could allow the prosecutor to
| plausibly charge you with this, even if you wouldn't be
| convicted, you now have to be counseled in doing it to
| avoid that possibility, otherwise you could be coerced
| into pleading guilty to something you didn't do because
| the alternative is prohibitively expensive legal defense
| from a questionable charge with a low risk of a high
| penalty.
|
| Businesses are risk averse with things like this, so now,
| because of the possible implications, they'll hire a
| lawyer/accountant to deal with it, increasing compliance
| costs on many innocent people.
| twic wrote:
| > You're thinking about this as though the system is free
| of uncertainty and prosecutors didn't use overcharging to
| extract plea bargains.
|
| In the UK, they don't, because we don't have plea
| bargains.
| dragonwriter wrote:
| > In the UK, they don't, because we don't have plea
| bargains.
|
| Various UK sources seem to think you do, and cite
| specific government guidelines for the practice, e.g.:
|
| https://www.inbrief.co.uk/court-proceedings/plea-
| bargaining/
| zepto wrote:
| Not really. I totally agree that _if_ you have committed
| some kind of crime, then this could be part of
| overcharging you.
|
| My point is that _if this is all they have_ then they
| don't have a case, so legitimate businesses don't need to
| stress about about clerical errors landing them in jail.
| [deleted]
| mensetmanusman wrote:
| Wouldn't that force every small business to hire legal experts
| to prove they aren't shell companies?
| fortran77 wrote:
| That's my worry, too. For my 3 person consulting business we
| already have to spend about 8 hours a week on "compliance".
| tylermenezes wrote:
| No, it will force small businesses in a handful of states to
| provide their beneficial owners, as they already do in most
| states and when opening bank accounts nationwide.
| jadeddrag wrote:
| Probably a dumb question, but are the disclosures only
| available to the government (federal?), or will the
| disclosures be available to the general public (and
| litigious lawyers) too?
| sroussey wrote:
| Government only.
| csomar wrote:
| Small businesses are usually LLC. This will most likely
| target C-Corps than anything else. But yes, this will make
| life hard for anyone running a remote C-Corp and does not
| have enough revenue to be "legitimate". This also will
| inflate costs for small businesses running legitimate
| operations: Rent will go up, Harder to recruit people and
| Less profit or no profit. I lived near a place like this. It
| was impossible to run a profitable coffee-shop or restaurant
| because there was lots of competition, little customers and
| sky-high rent costs. It seemed like 90% of the activity right
| there was simply fake or driven by the money laundering
| economy.
| stephen_g wrote:
| None of what you said seems to follow from what is
| explained in the comments above or the article. From my
| reading, literally all the small business has to do to be
| "legitimate" is to accurately disclose the beneficial
| owners' names, addresses and a Government issued ID (which
| I assume can be foreign for foreign owners as long as it
| can be verified).
|
| There's nothing about not being allowed to have an
| anonymous shell company that inflates the costs of
| legitimate business...
| csomar wrote:
| > literally all the small business has to do to be
|
| These are the most dangerous words ever. Especially that
| this requirement is probably ineffective. It is a small
| paperwork, yes, but it is there. A couple years later, it
| is reviewed and judged to be ineffective and new
| requirements are added to this paperwork.
|
| Then we end up with hundreds of paperwork to fill and
| submit just to be able to run a business.
| blinding-streak wrote:
| > This also will inflate costs for small businesses running
| legitimate operations
|
| It's inherently obvious you didn't read the article at all.
| None of what you state is true. Just do yourself a favor
| and read the article.
| coliveira wrote:
| Also, look at the second sentence: churches, charities and
| other non-profits are isent. Creating a church was already a
| great business, now it will be even better.
| taurath wrote:
| Considering how many churches are money laundering for say
| televangelists, they could probably use some competition
| tpoacher wrote:
| Exactly! This kind of legislature is pointless. Either fix
| everything at once, or don't. There's zero point in making
| small incremental changes that do not benefit everyone, and
| still allow a proportion of thugs to get away with it. It is
| obviously a political stunt by a government desperate to score
| some 'wins' on its way out.
| tpoacher wrote:
| For what it's worth, this was supposed to be an "agreement
| onto absurdity" satirical response, to point out the flaw of
| following parent's reasoning to its natural conclusion.
|
| Though, given people didn't pick up on the sarcasm, at the
| very least I'm glad it's at least being downvoted instead of
| upvoted!
| namdnay wrote:
| > Either fix everything at once, or don't. There's zero point
| in making small incremental changes that do not benefit
| everyone
|
| ?! That's an interesting perspective, especially on a
| software development forum :)
| js8 wrote:
| Most (new) laws have loopholes. The solution is to close the
| loopholes, not abandon laws.
| cerebellum42 wrote:
| > Either fix everything at once, or don't. There's zero point
| in making small incremental changes that do not benefit
| everyone
|
| Have you ever had any look at how laws actually get passed in
| the US and pretty much any country with some sort of
| democratically legitimized government?
|
| Your demand in any of these systems would simply lead to no
| laws getting passed at all, most of the time, total
| legislative gridlock. Legislature is an incremental process
| by nature, and especially so in systems of government where
| the interests of more than one side are represented, so
| compromises have to be made at every step of the way.
| launderthis wrote:
| its simply the cost of enforcement. The tax will help make sure
| the public is getting a cut, you cant just have a shell company
| on the backs of the american system without paying some locals.
| The tax will help fund enforcement efforts for better security,
| some of these "big" companies will be corrupt and there will be
| more money to help catch these bad actors. Also there probably
| has been some data done on how these shell companies run and
| with this one law you take out 90% of corruption.
|
| There might be some good actors that get caught in this too and
| have to go out of business. If there is such thing as a good
| shell company???
|
| You cant catch every drug dealer so you either focus on the big
| offenders and make them pay or you make drugs legal. I think
| its better for society if we do the former. Drugs are
| unhealthy.
| corford wrote:
| I wonder how this affects the beneficial owners of trusts in
| South Dakota (who, amongst other pretty crazy shit, can stay
| anonymous under South Dakotan law:
| https://www.theguardian.com/world/2019/nov/14/the-great-amer...
| )?
| lumost wrote:
| The biggest observation I have of the US is that corruption is
| rampant at all levels, often performed through simplistic
| manipulation of the legal system by moneyed parties. Consumers
| and small businesses get screwed by companies to big to sue.
| Senators magically make 10s of millions while in office despite
| "blind" trusts. Regulators live in a revolving door with their
| industries. Hell even doctors get paid for over prescribing
| medication.
|
| Anti corruption measures like these are exactly what the US
| needs.
| AnthonyMouse wrote:
| I would trade these in a second for anti-corruption measures
| that actually did something about the problems you're
| complaining about.
| coliveira wrote:
| The problem is that the legislation above does nothing against
| the kind of corruption you mentioned, because it is well
| supported in US legislation. For example, lobbying is nothing
| more than legalized corruption.
| lumost wrote:
| The legislation above does eliminate one common form of legal
| corruption which blocked enforcement and other legal actions
| by obfuscating who you need to bring action against.
|
| In many cases, hiding the identity of the actors behind a
| shell corp was sufficient to hide the crime. e.g. a foreign
| government could donate to a super pac by way of a shell
| corp. In order to prosecute such behavior one would need.
|
| 1. The list of all donations 2. The ownership information of
| all donations
|
| I can't exactly send out a mass lawsuit against all donors
| asking them to prove that they are in fact American.
| nceqs3 wrote:
| This legislation is a step in the right direction and it's nice
| to see Congress being bi-partisan for once but it still doesn't
| fix the major problem. The shell companies in the Caymans,
| Panama, Malta, Switzerland, etc. If Congress passed a law
| requiring that any offshore entity that transacts or interacts
| with a US entity must also report their true ownership to the
| Treasury that would be some landmark legislation.
| samirillian wrote:
| Transparency International strikes me as one of those branding
| strategies where actually the opposite of the name is the case
| (cf. OpenAI).
|
| All these issues are too complicated for >99% of the population
| to actually understand well enough to say if it's "good" or "bad"
| _in the final analysis_.
|
| Read the Wikipedia on the organization and tell me if these seem
| like transparent people.
|
| https://en.wikipedia.org/wiki/Transparency_International
| tdaltonc wrote:
| For anyone interested in learning more about the need for this, I
| strongly recommend Moneyland. It really does a good job leaning
| in on tension between (1) privacy, (2) liberty, and (3) Rule-of-
| Law.
|
| All three of those are good things, but they also all step on
| each others toes.
|
| Here's a taste: Back in the 1960s, Swiss banks held money for
| Nazi war criminals, but they also held money for tax dodgers and
| for refugees. These groups of people all sought
| secrecy/privacy/confidentiality (delete as applicable), meaning
| the evil money washed around with the naughty money, which washed
| around with the scared money. All three groups of people
| benefited from those first eurobonds, because they provided an
| income on money that had previously been static, but not all
| three were advertised equally prominently.
|
| Swiss banks loved to claim that their bank secrecy had been
| designed to protect Jewish wealth from Nazi confiscation, and
| kept quiet about all the dictators whose money they also hoarded,
| or the tax dodging they facilitated. In effect, the refugees were
| being used to run interference for the others, and to make the
| Swiss banks look high-minded, rather than like the criminogenic
| institutions that they were.
|
| Swiss banks insisted that the reason they didn't want to reveal
| the details on their clients was because that would endanger the
| legitimate interests of people seeking protection from rapacious
| governments.
| boomboomsubban wrote:
| >The act also makes "deliberate false statements or willful
| evasion of its requirements" a federal crime, punishable by up to
| three years in jail.
|
| Considering almost everyone this bill targets is a non-US
| citizen, this punishment doesn't seem like much of a deterrent.
| I'm skeptical that we'll see a string of executive extradition
| cases over this.
|
| It probably does make large scale civil forfeiture easier though.
| cool_dude85 wrote:
| It's my understanding that it's not uncommon for a, for
| example, doctor in the US to own an anonymous shell company
| based in the Cayman Islands or somewhere similar for tax
| purposes. Presumably the US-citizen doctor would be on the hook
| for the federal crime regardless of his shell company's
| location, and there's no need for extradition.
| boomboomsubban wrote:
| >Presumably the US-citizen doctor would be on the hook for
| the federal crime regardless of his shell company's location,
| and there's no need for extradition.
|
| This law requires providing some accurate information when
| forming a company in the US. A shell company in any other
| country would never violate this law.
| jjk166 wrote:
| The people who want to set up anonymous shell corporations may
| not be US citizens, but the people who are actually filing the
| paperwork here in the US most likely are.
| pfdietz wrote:
| Is this why Trump vetoed it?
| OminousWeapons wrote:
| While I understand that this law was created with good intent and
| I am pleased that money laundering and corruption have been made
| more difficult, it angers me that one of the few tools available
| to afford the average person real privacy has been stripped away.
| There are many people who have legitimate need to hide where they
| live (by buying assets under a shell): victims of stalking or
| domestic violence; members of minority groups such as LBGT in
| very religious areas; reporters; public figures who are being
| targeted by political enemies; whistle blowers; famous people;
| corporate executives; high net worth individuals; anyone who
| angers law enforcement with legal activity; etc. In the age of
| public record aggregation, it is trivially easy for anyone to
| locate the average person, let alone someone with the privilege
| level of law enforcement who can do so with effectively no
| oversight. I don't think this is a good thing.
|
| I don't view these tools as being much different from VPNs. There
| are people that have legitimate uses for VPNs to hide ownership
| of traffic; there are people that have legitimate uses for shell
| companies to hide ownership of stuff. There are people that abuse
| VPNs; there are people that abuse shells. The vast majority of
| legitimate VPN users would be trivially unmasked by having a
| subpoena dropped on the provider. The vast majority of legitimate
| shell company users would be trivially unmasked by having a
| subpoena dropped on the registered agent. VPN users only become
| "anonymous" with great opsec and layering. Shell company users
| only become anonymous with great opsec and layering. The purpose
| of VPNs is to hide from every day people and to force law
| enforcement to put in work. The purpose of shell companies is to
| hide from everyday people and to force law enforcement to put in
| work. The fact that this community of all communities doesn't see
| these parallels is honestly fairly surprising to me.
| morelisp wrote:
| Be honest: Do you really have any evidence of victims of
| domestic violence or LGBT people worried about discrimination
| using using, specifically, _anonymous economically inactive
| shell companies_ to deal with those issues?
| closeparen wrote:
| I know a mildly famous family that got some attention from
| stalkers in the past and now owns their house under a shell
| company.
| OminousWeapons wrote:
| I have anecdata about victims of domestic violence using
| these tools. There are even entire guides for how to do so
| (eg Michael Bazzell's Extreme Privacy). It's hard to tell how
| many people are doing this when the entire purpose of doing
| it is to obfuscate who you are.
| wmf wrote:
| This beneficial owner information isn't intended to be public
| record; it's only for law enforcement.
| morelisp wrote:
| Cops are substantially over-represented among domestic
| abusers so _if_ this is an effective tool for victims then
| this would still be a concern.
|
| Whether or not it's effective should be pretty easy to check
| since this is already legal in some states but not others. Or
| it should be much easier for abuse victims in the US compared
| to e.g. Nordic countries where corporate ownership
| information is fully public. Since I find no evidence of such
| a difference it would seem this is just the usual case of
| rich people using actually disadvantaged people as a cover
| for their bullshit.
|
| (Though I feel like there's maybe a more direct solution to
| this aspect, maybe something with a nice slogan you can chant
| at marches...)
| wmf wrote:
| Yeah, innocent people hiding from the police isn't the
| right solution.
| blunte wrote:
| Unless this is retroactive, won't it just secure the special
| place existing rich have with their anonymous shells?
| infinite8s wrote:
| It requires that going forward all such companies must register
| their beneficial owners. Not a matter of retroactive
| application, most companies have yearly filing requirements
| anyway.
| generalizations wrote:
| Looks like this is going to require existing companies to submit
| information about the beneficial owner as well. That's going to
| be interesting.
| ransom1538 wrote:
| Does anyone know if this would affect blind trusts?
|
| https://en.wikipedia.org/wiki/Blind_trust
| FpUser wrote:
| >"Larger companies that employ more than 20 people, have revenues
| above $5 million and a physical presence in the US, are exempt
| from the act."
|
| Ho long before few smarties pool together and form rich enough
| criminal enterprise that can act on behalf and serve smaller fish
| for some extra fee. This law is most likely just for show.
| simonh wrote:
| So instead of each bearing a small risk of getting caught
| against their small operation, now they are all exposed to the
| risks of each one of them and any of those risks coming true
| wipes them all out. Sounds good to me.
| AnthonyMouse wrote:
| > So instead of each bearing a small risk of getting caught
| against their small operation, now they are all exposed to
| the risks of each one of them and any of those risks coming
| true wipes them all out. Sounds good to me.
|
| That isn't the advantage you think it is. It's like getting
| all your criminals together to coordinate into a mutually
| assured destruction pact. Now you can't prosecute even low-
| level crime because the potential for it to affect the big
| fish makes it economical for the organization to respond to
| that with bribery, corruption, murder, infiltration of law
| enforcement agencies etc.
|
| It's supposed to be _divide and conquer_ , not _solidarity
| and mutual self-interest for all the crime_.
| hedora wrote:
| I remember when there were lots of small mom and pop criminal
| gangs. Now we just have the big corporate crooks, and they're
| ruining everything.
| bogomipz wrote:
| I am curious if this will actually have an affect on real estate
| then in urban areas such as NYC, SF, Miami etc? So much of the
| "luxury condo" stock in these places is owned by anonymous shell
| companies[1]. In fact it seems that much of the luxury condo
| building boom of the last 20 years is almost predicated on the
| existence of the anonymity of such shell companies.
|
| [1]
| https://www.washingtonpost.com/news/wonk/wp/2016/04/12/how-s...
| snigacookie wrote:
| Oh thanks guys for your help. I just need to hire 21 people and
| I'm ok. Phew.
| simonh wrote:
| Why, what aspect of the criteria affect you otherwise?
| paul_f wrote:
| The problem I have with this law, is that judges will eventually
| start handing this information over to creditors and sue-happy
| lawyers and it will have a much wider and worse impact than the
| current intention of containing money laundering.
| throwaway41597 wrote:
| How will this affect patent trolling? I feel it's a small, good
| step even though the issue is much larger. I mean, there has been
| shell companies filing for patent infringement in the past,
| hasn't it?
| [deleted]
| andrewem wrote:
| https://www.washingtonpost.com/us-policy/2020/12/11/anonymou...
| has more information on this topic (and in my opinion is a better
| article)
| kristofferR wrote:
| __Effectively __is a word with multiple meanings. I have my
| doubts that this will be effective.
| joe-collins wrote:
| > Larger companies that employ more than 20 people, have revenues
| above $5 million and a physical presence in the US, are exempt
| from the act. Churches, charities and other non-profits are also
| exempt.
|
| Those seem like extremely non-negligible exemptions. Which is not
| to say that this law is useless, but it could use more teeth.
| DennisP wrote:
| > the law also exempts some entities from the disclosure
| requirements, including domestic investment funds that are
| advised and operated by a registered investment adviser.
| Gascoigne said that exemption was the result of lobbying by the
| private-equity and hedge-fund sectors.
|
| https://www.washingtonpost.com/us-policy/2020/12/11/anonymou...
| JumpCrisscross wrote:
| Note that RIAs have to file paperwork with the SEC and are
| subject to its regulation. I would still prefer they be
| subject to the law. But it's night and day from a Nevada LLC,
| which doesn't even require ID to form, buying up hundreds of
| millions of dollars of property.
| DennisP wrote:
| Ok but if they're not required to submit ownership
| information for shell companies, it seems the only
| practical impact is that RIAs get gatekeeper revenue.
| coliveira wrote:
| In other words, the law is toothless, you just need to open
| an illegitimate business that is operated through an
| investment company.
| onetimemanytime wrote:
| it is me...or smaller companies should have the ones exempt?
| boomboomsubban wrote:
| Why should any company be exempt?
| FabHK wrote:
| See above excellent answer by
| https://news.ycombinator.com/item?id=25612615:
|
| > Tracing the beneficial owners of economically-active
| entities (i.e. not shell companies [2]) is expensive.
| Imagine doing this for Apple. You would need to look
| through every ETF that holds it to its mutual fund owners
| to their pension fund owners to their holding companies to
| their pensioners.
| twic wrote:
| The UK version of this rule doesn't exempt large
| companies, it exempts small shareholders. You don't have
| to declare anyone who owns less than 25% of the company.
| hedora wrote:
| That makes a lot more sense. That way, to have a shell
| company, you need 5 owners, which is a bigger nightmare
| than hiring 20 employees.
| ryanlol wrote:
| Privacy, there's no need for this information to be public.
|
| You could already sue the anonymous shell company if you
| wanted to.
| DennisP wrote:
| None of the information is public anyway.
|
| > The information about the true owners would not be
| publicly available, however. FinCEN could release
| information only after receiving a proper request from a
| local, state, tribal or federal law enforcement agency,
| or a request by a foreign country. That means ownership
| information would not be publicly available to identify
| who is actually behind an investment.
|
| https://www.nytimes.com/2019/07/11/business/dealbook/llc-
| she...
| acrefoot wrote:
| Files from FinCEN were leaked in September to Buzzfeed
| and icij.org
| DennisP wrote:
| I'm just saying I don't think privacy was a motivation
| for the exemptions. Would policymakers have considered
| the possibility of FinCEN leaks? That'd be pretty
| unusual, since usually they assume it's fine for
| government agencies to collect as much information as
| possible.
| jachee wrote:
| If a business entity going to conduct business in public,
| why does that entity deserve any expectation of privacy?
| capitol_ wrote:
| Here in Norway the register of who operates a company is
| public information in Bronnoysundregistrene [1]
|
| It's convenient but it also generates a huge amount of
| telephone spam and fake invoices fraud attempts. So I
| could see the argument of keeping that information
| private.
|
| I still think that it's better to have it public, but it
| generates some additional problems that needs to be
| handled.
|
| 1: https://www.brreg.no/
| hkt wrote:
| We have the same thing in the UK, Companies House. Anyone
| who is a director has their address in public. It doesn't
| generate much spam though as we don't do phone numbers or
| email addresses, and companies who spam people who aren't
| opted in to spam can be fined.
| namdnay wrote:
| The problem is that lists the director, not the owner. So
| you just have a secretary in a law firm listed as the
| director of 200 shell companies
| tialaramex wrote:
| By law Companies House requires that "Persons with
| Significant Control" be listed. PSCs are small numbers of
| specifically humans (not corporations) who, somehow, in
| effect control the company. The PSC entries are supposed
| to list all such humans (assuming any individual humans
| have "significant" control which they wouldn't at e.g. a
| publicly traded company) and only those humans.
|
| The law is in practice fairly toothless, Companies House
| has typically insisted that it simply doesn't have the
| funding to pursue errors even though it's illegal to make
| false filings - despite a large volume of obviously bogus
| information in their system every year.
|
| It did find the money exactly once in recent years, to
| prosecute one person. That one person was making a point
| of how toothless it is, by creating bogus data that was
| embarrassing to named politicians. What an excellent way
| to make their point for them.
| cnorthwood wrote:
| No, Companies House also requires you to declare "persons
| with significant control" in the ltd company, which
| includes the owners. (for example, this is my company
| https://find-and-update.company-
| information.service.gov.uk/c...)
| tialaramex wrote:
| For quite some years now the rule for Companies House is
| that a director may provide an office address and that's
| what is shown in the public records. Companies House will
| still ask for their home address, but it isn't public.
|
| There are actually three levels: A public address
| available to anybody who knows how to enquire, an address
| available to a large number of authorised users,
| including Credit Reference Agencies, numerous government
| agencies and so on, and finally a home address intended
| primarily for law enforcement (e.g. if the director is to
| be arrested it wouldn't do for police to have no idea
| where they live). You can set them all to be the same,
| but you don't have to.
|
| The reason for the last extra grade is that in the UK
| there are businesses which are legal but broadly
| unpopular. For example, somebody is breeding animals that
| will be used for medical research. Historically
| protesters have harassed the directors of firms like
| that, vandalized their homes and cars, physically
| attacked them, or threatened their lives. Such directors
| are entitled to request that their home addresses be
| suppressed from most uses for this reason.
| tt433 wrote:
| We all have the resources to sue anonymous Delaware LLCs
| simon1573 wrote:
| The cab company?
| tt433 wrote:
| To give some meat to my post, some landlords of low
| income housing abuse Delaware's unusual business
| regulations to obscure their identities and operate
| illegal roach motels in other states; these same people
| make excuses about how they're at risk of being harassed
| by the same tenants they underserve and evict, and
| therefore feel justified in hiding their identities.
|
| Edit for clarity: the tenants can't sue, being low
| income. My original post about suing anonymous shell
| companies was facetious.
| jrs235 wrote:
| I disagree. Tit for tat. quid pro quo. If you want the
| privileges provided (limited liability) and recognized by
| the government, then I have no problem if privacy is
| given up in exchange.
| [deleted]
| odiroot wrote:
| No, usually the shell companies have zero or minimal number
| of employees.
| onetimemanytime wrote:
| sure, but unless money moves through them, what's the harm?
|
| The could have done it so any one person can only have
| "shell" companies up to the point when x million is moved
| through them in any one given period.
| odiroot wrote:
| They do move money but, because it's so easy and
| relatively cheap to open them, they can split the flows
| into tens of hundreds of them. So you have fractions of a
| million moving at once, not a big lump sum.
| onetimemanytime wrote:
| tens of hundreds of them....but if the total is more than
| $x a year you must declare.
|
| Anyway, the decided this way and so it is.
| HeadsUpHigh wrote:
| There is nothing to declare because the beneficiary
| wasn't needed. Now it is.
| csomar wrote:
| It is not useless. Countries _love_ money laundering when the
| money is coming from overseas and the crime happened not in
| their jurisdictions. It 's free money that circulates in the
| economy, pays some taxes and help their exchange rate. The only
| reason some of these money laundering hot spots (like Hong Kong
| or the Emirates) started clamping down on these operations is
| that the USA and Europe pressured them to. Switzerland removed
| its secrecy because of FATCA, not because they wanted to.
|
| This law passed because 1. The regulator do not care about
| small guys; 2. They don't think small guys are moving that much
| money and are more trouble than profit; and 3. It looks like
| they are doing something. It also helps employ some people and
| maintain big cities real-estate by fake restaurants or shops.
| Ever wondered how some of these joints are able to pay rent and
| employees with so little customers?
| danenania wrote:
| "Ever wondered how some of these joints are able to pay rent
| and employees with so little customers?"
|
| I have _always_ wondered about this. In Manhattan, for
| example, you fairly frequently hear about restaurants that
| seem to be popular and busy all the time closing because they
| couldn 't keep up with rent increases. And yet it's also
| somehow full of corner stores, gift shops, laundromats, pizza
| places, Chinese restaurants, lunch buffets, etc. etc. that no
| one ever seems to go into and have 2 stars on Yelp, but are
| still there year after year.
|
| I figured that in some cases it could be a family that owns
| the building or a sweetheart lease deal or whatever, but
| there are just so many that it doesn't seem to add up.
| coliveira wrote:
| In many cases they own the location and think it is a
| reasonable way to defer property costs, which maintaining
| ownership. But you're right, there are also shady operators
| that are making money in illegal ways.
| giardini wrote:
| "small guys" ? Like the Roman Catholic Church, which likely
| has been moving it's money and holdings, just as it moves its
| guilty priests around, to hide them all so the pedophile
| lawsuits cannot get to it?
|
| Exempting churches was a terrible, terrible mistake.
| coliveira wrote:
| Completely agree, especially because in this country is so
| each to open a new "church". One thing is to have
| legitimate churches, like the catholic or the protestant
| (whatever you think of them), another is to allow the
| creation of new "churches" so easily. It is a recipe for
| money laundering and a platform for con men (most of them
| are known as TV preachers).
| kenned3 wrote:
| Exempting churches was a terrible, terrible mistake.
|
| especially from a country with clear "separation of church
| and state" rules, except "in god we trust" on the money.
|
| No surprise they granted the churches the exemption, and
| stronly agree they should NOT have gotten the exemption
| given their own well documented corruption.
| ianai wrote:
| It probably wouldn't get bipartisan support without the
| exception though. It's not perfect legislation and none
| is, but at least it's a start.
| coliveira wrote:
| Of course, evangelicals are the biggest beneficiaries of
| church fraud. They open a new "church" every day, for the
| purpose of hiding their money producing assets: seminar
| companies, show business, book publishing, TV and radio.
| SEJeff wrote:
| It is a really good start however. No doubt under a different
| US administration, it stands a chance to be improved upon.
| say_it_as_it_is wrote:
| What about hiding money in real estate? You don't need a bank
| account to hide money. This law does little more than clarify
| money laundering rules and regulations already in place.
| boomboomsubban wrote:
| Don't you already need to provide your name and date of birth
| to personally buy real estate?
| silverpepsi wrote:
| And why would you buy it personally? Even the most amateur of
| amateur landlords are generally aware it is well worth
| looking into creating an LLC and buying any investment real
| estate with that, lest a litigious tenant take away your
| entire life savings by a lawsuit about something frivolous or
| something you had no control over.
| boomboomsubban wrote:
| >And why would you buy it personally?
|
| Because they refer to buying real estate as a way to avoid
| this law, so forming a limited liability company wouldn't
| work.
| tialaramex wrote:
| Actually the trick to corporate ownership of real estate
| goes like this:
|
| Suppose jurisdiction X has a tax on real estate transfers
| and there's a lovely castle there, Castle Y which Person
| A owns.
|
| Person A transfers the ownership of Castle Y to a holding
| corporation HoldCorp. There might be a tax for this, but
| there might well be some exemption, especially if Person
| A is willing to wait a while before...
|
| Person A wants to sell Person B the castle. Instead they
| sell HoldCorp. The castle never changed ownership, and no
| tax is paid.
|
| Later person C wants to buy the castle. They now buy
| HoldCorp from person B. The castle still didn't change
| owners and no tax is paid.
|
| If jurisdiction X tweaks their law you might need to
| tweak your procedure slightly. Maybe Person A must stay
| as non-beneficial owner for 5 years after the sale, or
| maybe you must use a two lawyer shell corporation in
| Bermuda to properly insulate HoldCorp from the taxes. A
| lawyer will sort this out for far less than the taxes,
| all of which goes in their pocket and isn't used on
| government services for ghastly poor people.
| [deleted]
| theginger wrote:
| It deals with company registration, so if anyone had the
| ability to hide real estate deals via a shell company they
| would be just as impacted.
| highenergystar wrote:
| It's not a bad law - but will probably catch high income
| professionals and small business owners who're trying to hide
| assets from tax authorities, shield them from legal liability
| or in the event of divorce etc. Sophisticated crooks will
| probably setup as business trading cos who will swap
| businesses and/or high value real estate and recognize those
| as revenue - and can probably use the transaction to claim
| depreciation and/or section 1031 tax benefits
| infinite8s wrote:
| Well the whole point is to prevent people from hiding
| assets from tax authorities.
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