New Legislation to Assist Fight Against Money Laundering Clears First Hurdle

Published On October 28, 2019

28 October 2019: Legislation to toughen money-laundering rules made it through the US House of Representatives last week. The Senate will provide a sterner test, and the considerable opposition to the new bill, including the National Federation of Independent Business and the American Bar Association, has not given up hope of railroading the change.

The legislation exposes the use of anonymous shell companies; this would make life easier for banks who have considerable compliance obligations to relevant authorities. Opponents claim it breaches privacy and would be costly for small business compliance, all with little improvement in foiling financial and other crime. 

The legislation would require companies to reveal beneficiaries of shell companies to the Treasury Department, which could be used to identify tax evasion, money laundering, and other financial and organized crime. 

Practice now involves banks doing more diligence on shell companies, which is time-consuming and hurts relationships with clients who have to supply deeper information to their bank correspondents. 

All the big Wall Street lobby groups support the changes, including the BPI, American Bankers Association, Financial Services Forum and Securities Industry and Financial Markets Association

Opponents have made some progress in diluting the legislation. Non-profits would be exempt and the information companies would need to provide has been restricted significantly.

The Senate Banking Committee may take up the measure later this year, according to staffers and lobbyists.