The U.S. House of Representatives Committee on Financial Services scheduled a June 14th markup on the Counter Terrorism and Illicit Finance Act (HR 6068) (CTIFA), which has been stripped of provisions that would require collection of beneficial ownership information at the time of company formation, a necessary step to address this widely-recognized and well-documented vulnerability in the U.S. AML regime. A November 2017 version of the same bill included a section to address this critical issue.
The CTIFA was originally introduced to compel national registration of beneficial owners of all US legal entities, has been amended by the deletion of all its transparency clauses.
It originally included an amendment to establish a national directory of beneficial owners of legal entities, corporations and limited liability companies, administered by the US Treasury's FinCEN (Financial Crimes Enforcement Network). Civil and criminal penalty provisions were included, to force compliance.
However, these clauses were eliminated from the bill on June 12th, just before it was passed to the House Financial Services Committee for 'mark-up'.
The new version of the bill merely requires the US Comptroller General to 'submit a report evaluating the effectiveness of the collection of beneficial ownership information under the Customer Due Diligence regulation, as well as the regulatory burden and costs imposed on financial institutions subject to it.'
The Customer Due Diligence regulation, which came into force in May this year, forces all US banks to verify the identity of new business customers' beneficial owners. It was introduced at the Treasury's behest to improve the US' legislative grip on beneficial ownership identification, but is acknowledged to leave considerable gaps, notably the need to make companies know and disclose their beneficial owners to the government at the time of company formation.
Maybe that's because Congress wants to keep the US as the 2nd Largest Tax Haven or maybe largest tax even in the world?
Read more at: Tax Times blog