By Congresswoman Carolyn B. Maloney
In 2016, a massive leak of 11.5 million documents from the Panamanian law firm Mossack Fonseca exposed a global network of offshore shell companies, many of which were used for money laundering, tax evasion, fraud, and even sanctions evasion. Bad actors around the world — including associates of Vladimir Putin and Xi Jingping — had been going to Panama to create shell companies to hide their money.
These documents, known as the “Panama Papers,” were shocking. But one question stood out: Of all the people who were named in the Panama Papers, why were so few of them from the United States? The reason, it’s sad to say, is that Americans don’t have to go to Panama to create anonymous shell companies — they can easily set up anonymous shell companies right here in the U.S.!
Corporations and LLCs are formed at the state level in the U.S., and no U.S. state currently requires companies to disclose their true, beneficial owners. This means that the U.S. is the world capital of anonymous shell companies — and is a hub for not just money laundering, but also terrorist financing. Yes, that’s right — the same terrorist groups that attack the U.S. are also using the U.S. financial system to move their money, and to finance their operations. It’s appalling, and it has to end.
To combat these abuses and end the illicit use of anonymous shell companies, I having been working on legislation, the Corporate Transparency Act, for over a decade. It finally passed the House last October, and was included in the House-passed National Defense Authorization Act (NDAA) for Fiscal Year 2021. That legislation is currently being negotiated by House and Senate conferees and I am working to make sure that Congress finally passes this bipartisan bill to strengthen our national security and crack down on money laundering and organized crime.
Beyond the impacts for law enforcement, this bill will directly affect us here at home by lowering housing costs in New York City. Kleptocrats and criminals routinely park their illicit money in luxury real estate in New York City, which limits the availability of housing and drives up housing costs for ordinary New Yorkers. You see this vividly when you drive through parts of NYC at night — entire buildings have no lights on, because no one actually lives in these apartments; they were purchased purely to hide money, and to act as a bank account. This removes valuable housing that could go to hardworking New Yorkers from the market, and drives up housing costs for everyone. But my bill will put an end to this practice once-and-for-all. Put simply, my bill would lower housing costs for ordinary New Yorkers.
This is one of the most pressing national security problems we face in this country, because anonymous shell companies are the vehicle of choice for money launderers, criminals, and terrorists. Because of its bipartisan, common sense approach, the Corporate Transparency Act has the support of more 130 good-government organizations, the entire law enforcement community, the financial industry, and the real estate industry.
We’re the only advanced country in the world that doesn’t already require disclosure of this information — and frankly, it’s an embarrassment. We must must fix this in the final NDAA.