Capitol Report: Washington moves closer to raising the curtain on anonymous shell companies

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Washington is getting closer to taking the wraps off anonymous shell companies, with the House set to vote this week on legislation that would do exactly that.

Supporters of the Corporate Transparency Act and a related bill in the Senate, the ILLICIT CASH Act, are sounding optimistic and highlighting how the measures have scored significant backing from Republicans and Democrats.

But the National Federation of Independent Business is leading a coalition that’s urging lawmakers to vote “no” on the House bill, claiming it would saddle small businesses with $5.7 billion in compliance costs over a decade.

The Corporate Transparency Act would require that corporations and limited liability companies disclose their owners’ names, birth dates, addresses and driver’s licence or passport numbers to the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN. Its original co-sponsors are two Democrats — Rep. Carolyn Maloney of New York and Rep. Tom Malinowski of New Jersey — and one Republican — Rep. Peter King of New York.

On the Senate side, the ILLICIT CASH Act has four Democratic co-sponsors and four Republican ones, including Democratic Sen. Mark Warner of Virginia and GOP Sen. Tom Cotton of Arkansas. The measure’s lengthy full name is the Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings Act.

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The chances are “quite high” that the Senate will support raising the curtain on anonymous shell companies after the House gives its OK, said Greg Baer, the Bank Policy Institute’s CEO, in an interview. “You have eight senators on the Senate Banking Committee — four Republicans, four Democrats, which these days is quite unusual — jointly introduce legislation.” In addition to the Bank Policy Institute, groups supporting the legislative efforts range from the National District Attorneys Association to Amnesty International USA.

Bipartisanship has been in short supply this year, and House Democrats’ decision last month to launch an impeachment inquiry into President Donald Trump has helped reinforce predictions that there won’t be major progress this year on many issues.

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Meanwhile, the NFIB — known for its index of small-business optimism — blasted the Corporate Transparency Act on Monday, saying it would treat owners of small businesses as criminals. “We are supportive of efforts to curb money laundering, terrorism and other criminal activities, but this bill is not the answer,” said Brad Close, NFIB’s senior vice president for public policy, in a statement. “Small business owners cannot afford the additional compliance costs or serious privacy risks that come with this legislation.”

In a similar vein, a recent Wall Street Journal editorial against the House bill argued that it “eases the burden on banks and dumps it on small businesses.”

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