> 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.
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?
"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.
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.
"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.
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.
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.
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).
> 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.
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.
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.
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.
> 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.
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.
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.
> 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.
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.
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.
Here in Norway the register of who operates a company is public information in Brønnøysundregistrene [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.
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.
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.
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.
Those seem like extremely non-negligible exemptions. Which is not to say that this law is useless, but it could use more teeth.