Blow against shell companies in the usa

Blow against dummy companies in the usa

Delaware border shield in a 2014 photo.Image: Ken Lund, CC BY-SA 2.0

US Senate passes bill against shell companies. With the state of Delaware, this also affects the political home of the Biden family

In the final days of Donald Trump’s term, the US Congress overrode a veto by the outgoing president and passed a new law that will have far-reaching consequences for companies in the country. It’s about the CTA, the Corporate Transparency Act, which has so far received little attention in the German press.

Accordingly, from now on all companies operating in the United States must disclose their true owners. Until now, drug, arms and human traffickers, tax evaders and kleptocrats of all kinds could register dummy companies with fictitious names in financial havens to hide and launder their money. This works splendidly on the Cayman Islands and the Bahamas – but also in the Netherlands and Ireland – and so far especially in the U.S.A.

Because the United States has been the world’s second-biggest money launderer, according to the Tax Justice Network, behind the Cayman Islands and ahead of Switzerland. Especially in the state of Delaware, which for years was represented in the Senate by the new U.S. President Joe Biden, money laundering facilities could be set up in the blink of an eye.

Sham company for hush money to porn actress

Michael Cohen, Trump’s former lawyer, needed only a few days to set up a "Limited Liability Company" in Delaware for the payment of hush money to porn actress Stormy Daniels. It can be done without criminal energy. The investigative journalist Natasha del Toro has also registered a company in Delaware in the name of her cat Suki, without providing her own name or identification. 240 US dollars in fees was enough. For one year, she can talk about her cat with the dummy company "She Sells Sea Shells LLC" Conduct banking business, hire workers and ie invoices that are recognized by the tax authorities, or. were.

The CTA is part of the Financial Crimes Enforcement Network (FinCen). After that, all companies will have to file personal data and ID copies of their owners and beneficiaries. Exempt from this requirement are entities subject to other government oversight, such as banks and businesses with more than 20 permanent employees that report gross receipts of at least five million dollars on their tax returns. Violations are punishable by a fine of $500 per day or imprisonment for up to two years.

The new law passed with bipartisan votes in the Senate, Trump filed on 23. December 2020 still vetoed because it did not remove liability protections for social media companies. The House of Representatives had nevertheless affirmed it five days later, the Senate on 1. January.

public excluded from control

Non-governmental organizations, with the support of labor unions, had pushed for this new regulation. Even the coarse parties no longer had an argument to reject it. In the end, even the banks and the US Chamber of Commerce were no longer against it.

Unfortunately, the CTA only gives law enforcement agencies and banks the right to see information about the owners, but not the public, "which guarantees the best fight against corruption", according to Clark Gascoigne, Deputy Director of the Financial Accountability and Corporate Transparency Coalition. In his opinion "The CTA, with its limited public access, is a compromise".

For geopolitical reasons, the U.S. has long wanted to know who is in the business with them. In contrast to the European Union, where stock corporations function with bearer shares, registered shares are the rule on the other side of the Atlantic. In Europe, not even the governments know who owns the DAX companies, for example.

The biggest players today are U.S. asset managers such as BlackRock, State Street and Vanguard, most of whom handle their investments below the reporting threshold, often enough through dummy companies. In the future, they will probably turn to the Netherlands, Ireland and Luxembourg, since the European Union is making no effort to curb the business of money launderers, tax evaders and kleptocrats, for example by having European financial authorities recognize only those limited liability companies whose owners are known.

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