The US Treasury is petitioning for federal legislation in America to force companies & legal entities to release all details regarding beneficial ownership information upon each respective incorporation, in order for it to be filed with the IRS (Internal Revenue Service) in the US.
The proposal was released by Treasury Deputy Assistant Secretary Mrs Jennifer Fowler last month.
Mrs Fowler noted that the Treasury is currently in the process of introducing a new rule forcing financial institutions to perform CDD (customer due diligence) checks on all new clients of recently incorporated companies. These regulations were first published in the summer of 2014, and are still in discussions, even though they were close to being settled.
However, beneficial ownership is only one part of addressing the misuse of shell companies. The other is requiring that companies know and disclose their beneficial owners to the government at the time of company formation. Despite this there is currently no federal obligation to identify and disclose beneficial ownership information from the date a legal entity is formed.
This is ‘a longstanding weakness’ in the US anti-money-laundering regime. Mrs Fowler stated: “The consequences of the misuse of legal entities to hide beneficial ownership has been highlighted by the news last month” referring to the “Panama Papers” scandal which happened last month.
As the first stage of discussions, the Treasury announced that it will be issuing regulations requiring all foreign-owned, LLCs to disclose their beneficial owners to the IRS shortly.