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US passes anti-corruption law that effectively bans anonymous shell companies

554 points by gscott 6y ago

joe-collins 6y ago
> 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.
- SEJeff 6y ago
  It is a really good start however. No doubt under a different US administration, it stands a chance to be improved upon.
- onetimemanytime 6y ago
  it is me...or smaller companies should have the ones exempt?
  - boomboomsubban 6y ago
    Why should any company be exempt?
    - ryanlol 6y ago
      Privacy, there’s no need for this information to be public. You could already sue the anonymous shell company if you wanted to.
      - jachee 6y ago
        If a business entity going to conduct business in public, why does that entity deserve any expectation of privacy?
        capitol_ 6y ago
        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. 1: https://www.brreg.no/ https://www.brreg.no/
        hkt 6y ago
        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.
        namdnay 6y ago
        The problem is that lists the director, not the owner. So you just have a secretary in a law firm listed as the director of 200 shell companies
        tialaramex 6y ago
        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.
        6y ago
      - tt433 6y ago
        We all have the resources to sue anonymous Delaware LLCs
        simon1573 6y ago
        The cab company?
        tt433 6y ago
        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.
      - jrs235 6y ago
        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.
      - DennisP 6y ago
        None of the information is public anyway. > 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. https://www.nytimes.com/2019/07/11/business/dealbook/llc-shell-companies-money-laundering.html https://www.nytimes.com/2019/07/11/business/dealbook/llc-she...
        acrefoot 6y ago
        Files from FinCEN were leaked in September to Buzzfeed and icij.org
        DennisP 6y ago
        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.
    - deleted 6y ago
      [deleted]
    - FabHK 6y ago
      See above excellent answer by https://news.ycombinator.com/item?id=25612615 https://news.ycombinator.com/item?id=25612615: > 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.
      - twic 6y ago
        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.
        hedora 6y ago
        That makes a lot more sense. That way, to have a shell company, you need 5 owners, which is a bigger nightmare than hiring 20 employees.
  - odiroot 6y ago
    No, usually the shell companies have zero or minimal number of employees.
    - onetimemanytime 6y ago
      sure, but unless money moves through them, what's the harm? The could have done it so any one person can only have "shell" companies up to the point when x million is moved through them in any one given period.
      - odiroot 6y ago
        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.
        onetimemanytime 6y ago
        tens of hundreds of them....but if the total is more than $x a year you must declare. Anyway, the decided this way and so it is.
        HeadsUpHigh 6y ago
        There is nothing to declare because the beneficiary wasn't needed. Now it is.
- csomar 6y ago
  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?
  - danenania 6y ago
    "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.
    - coliveira 6y ago
      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.
  - giardini 6y ago
    "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.
- DennisP 6y ago
  > 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. https://www.washingtonpost.com/us-policy/2020/12/11/anonymous-shell-company-us-ban/ https://www.washingtonpost.com/us-policy/2020/12/11/anonymou...
  - coliveira 6y ago
    In other words, the law is toothless, you just need to open an illegitimate business that is operated through an investment company.
  - JumpCrisscross 6y ago
    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.
    - DennisP 6y ago
      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.
say_it_as_it_is 6y ago
What about hiding money in real estate? You don't need a bank account to hide money. This law does little more than clarify money laundering rules and regulations already in place.
- boomboomsubban 6y ago
  Don't you already need to provide your name and date of birth to personally buy real estate?
  - silverpepsi 6y ago
    And why would you buy it personally? Even the most amateur of amateur landlords are generally aware it is well worth looking into creating an LLC and buying any investment real estate with that, lest a litigious tenant take away your entire life savings by a lawsuit about something frivolous or something you had no control over.
    - boomboomsubban 6y ago
      >And why would you buy it personally? Because they refer to buying real estate as a way to avoid this law, so forming a limited liability company wouldn't work.
      - tialaramex 6y ago
        Actually the trick to corporate ownership of real estate goes like this: Suppose jurisdiction X has a tax on real estate transfers and there's a lovely castle there, Castle Y which Person A owns. Person A transfers the ownership of Castle Y to a holding corporation HoldCorp. There might be a tax for this, but there might well be some exemption, especially if Person A is willing to wait a while before... Person A wants to sell Person B the castle. Instead they sell HoldCorp. The castle never changed ownership, and no tax is paid. Later person C wants to buy the castle. They now buy HoldCorp from person B. The castle still didn't change owners and no tax is paid. If jurisdiction X tweaks their law you might need to tweak your procedure slightly. Maybe Person A must stay as non-beneficial owner for 5 years after the sale, or maybe you must use a two lawyer shell corporation in Bermuda to properly insulate HoldCorp from the taxes. A lawyer will sort this out for far less than the taxes, all of which goes in their pocket and isn't used on government services for ghastly poor people.
ddelt 6y ago
> 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. Just to confirm - am I reading this correctly in that, this massive corporate secrecy legislation does not apply to the vast majority of publicly traded corporations in the US? If they had just not included those exemptions, this would have been extremely beneficial for everyone right? Why would we want to allow anonymous corporate shell organizations which are deemed to hide funds if they are tied well known US corporations, as opposed to some shady criminals? Isn’t the crime the same either way?
- unilynx 6y ago
  If the exemption criteria are AND more than 20 people, AND 5 million, AND a physical presence, it makes some sense, as shell companies typically have few or no employees, and little actual presence other than an accountant or law firm.
  - dan-robertson 6y ago
    I think those are the criteria
- ceilingcorner 6y ago
  Considering that the vast majority of lockdowns and other COVID-response actions have been against small businesses (shut down the corner store but let Walmart stay open), it isn't particularly surprising. Politicians and corporate leaders gain nothing by supporting small business owners.
- hliyan 6y ago
  I can't speak for revenue, but physical presence and real employees are indicators of an actual corporation, rather than a shell.
- josefx 6y ago
  If I understand correctly then this forces the shell companies to report their "secret" benefactors. So it keeps the small players from hiding behind a shell because the cost of running a fake company with 20 full time employees would be prohibitive to them. The bigger ones can probably run a few of the exempt shells in parallel without loosing too much of their overall profit.
boomboomsubban 6y ago
>The act also makes “deliberate false statements or willful evasion of its requirements” a federal crime, punishable by up to three years in jail. Considering almost everyone this bill targets is a non-US citizen, this punishment doesn't seem like much of a deterrent. I'm skeptical that we'll see a string of executive extradition cases over this. It probably does make large scale civil forfeiture easier though.
- cool_dude85 6y ago
  It's my understanding that it's not uncommon for a, for example, doctor in the US to own an anonymous shell company based in the Cayman Islands or somewhere similar for tax purposes. Presumably the US-citizen doctor would be on the hook for the federal crime regardless of his shell company's location, and there's no need for extradition.
  - boomboomsubban 6y ago
    >Presumably the US-citizen doctor would be on the hook for the federal crime regardless of his shell company's location, and there's no need for extradition. This law requires providing some accurate information when forming a company in the US. A shell company in any other country would never violate this law.
- jjk166 6y ago
  The people who want to set up anonymous shell corporations may not be US citizens, but the people who are actually filing the paperwork here in the US most likely are.
  - boomboomsubban 6y ago
    It isn't clear that the people filing paperwork are at any risk from this bill.
paul_f 6y ago
The problem I have with this law, is that judges will eventually start handing this information over to creditors and sue-happy lawyers and it will have a much wider and worse impact than the current intention of containing money laundering.
- nullc 6y ago
  > that judges will eventually start handing this information over to creditors and sue-happy lawyers Nothing about this act specifies that a judicial order is required for the publication of the information. AFAICT, fincen can just give or sell it to whomever they want, and there is no consequence for unauthorized disclosure. I agree completely about the inevitable consequences. People have been way too hyped up by TV shows. In the US there is a lot more activity conducted via companies with obscure ownership for entirely lawful asset protection, personal security, and just basic privacy then there is in money laundering.
hliyan 6y ago
Transparency International helped to craft the bill: https://us.transparency.org/news/historic-anti-corruption-measures-become-law/ https://us.transparency.org/news/historic-anti-corruption-me... From their statement: "In these divided times, it is encouraging that a broad and politically diverse coalition came together to make these critical reforms a reality. We’d like to especially thank Chairman Crapo (R-ID), Ranking Member Brown (D-OH), Chairwoman Waters (D-CA), Ranking Member McHenry (R-NC), Congresswoman Maloney (D-NY), Congressman King (R-NY), Congressman Luetkemeyer (R-MO), and Congressman Cleaver (D-MO), as well as Senators Warner (D-VA), Cotton (R-AR), Jones (D-AL), Rounds (R-SD), Whitehouse (D-RI), Grassley (R-IA), Wyden (D-OR), and Rubio (R-FL) for their support."
milkshakes 6y ago
what will stop people from shifting to holding the llcs with anonymous trusts?
- hkt 6y ago
  Magnitsky sanctions, or something that forms part of the road to a much broader application of them. The US (and indeed UK and EU) has the power to squash tax havens. The big countries are not hostage to the little ones, things are the way they are because of who it benefits.
csomar 6y ago
> 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. So it seems that the cost of money laundering has gone from a few thousands dollars for a Delaware C-Corp to running a fake business that employs 20 people and has an office. The minimum to launder under this scheme is $5m per year. This seems like the government stumping on small money launderers while giving the big guys a tax: employ some people, and rent some real-estate.
- mensetmanusman 6y ago
  Wouldn’t that force every small business to hire legal experts to prove they aren’t shell companies?
  - csomar 6y ago
    Small businesses are usually LLC. This will most likely target C-Corps than anything else. But yes, this will make life hard for anyone running a remote C-Corp and does not have enough revenue to be "legitimate". This also will inflate costs for small businesses running legitimate operations: Rent will go up, Harder to recruit people and Less profit or no profit. I lived near a place like this. It was impossible to run a profitable coffee-shop or restaurant because there was lots of competition, little customers and sky-high rent costs. It seemed like 90% of the activity right there was simply fake or driven by the money laundering economy.
    - stephen_g 6y ago
      None of what you said seems to follow from what is explained in the comments above or the article. From my reading, literally all the small business has to do to be “legitimate” is to accurately disclose the beneficial owners’ names, addresses and a Government issued ID (which I assume can be foreign for foreign owners as long as it can be verified). There’s nothing about not being allowed to have an anonymous shell company that inflates the costs of legitimate business...
ransom1538 6y ago
Does anyone know if this would affect blind trusts? https://en.wikipedia.org/wiki/Blind_trust https://en.wikipedia.org/wiki/Blind_trust
FpUser 6y ago
>"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." Ho long before few smarties pool together and form rich enough criminal enterprise that can act on behalf and serve smaller fish for some extra fee. This law is most likely just for show.
- simonh 6y ago
  So instead of each bearing a small risk of getting caught against their small operation, now they are all exposed to the risks of each one of them and any of those risks coming true wipes them all out. Sounds good to me.
  - AnthonyMouse 6y ago
    > So instead of each bearing a small risk of getting caught against their small operation, now they are all exposed to the risks of each one of them and any of those risks coming true wipes them all out. Sounds good to me. That isn't the advantage you think it is. It's like getting all your criminals together to coordinate into a mutually assured destruction pact. Now you can't prosecute even low-level crime because the potential for it to affect the big fish makes it economical for the organization to respond to that with bribery, corruption, murder, infiltration of law enforcement agencies etc. It's supposed to be divide and conquer, not solidarity and mutual self-interest for all the crime.
    - simonh 6y ago
      That's probably true for organised crime generally yes, they can support each other, but we're not just talking about them being allied, but about them all throwing in together in one legally incorporated company. That's next level risky.
- hedora 6y ago
  I remember when there were lots of small mom and pop criminal gangs. Now we just have the big corporate crooks, and they’re ruining everything.
snigacookie 6y ago
Oh thanks guys for your help. I just need to hire 21 people and I’m ok. Phew.
- simonh 6y ago
  Why, what aspect of the criteria affect you otherwise?
nickpp 6y ago
What are the unintended side-effects? I understand this is probably a well-meaning legislation, but: FATCA made it impossible for an American to have a bank-account abroad [1] PFICs made it impossible for an American to invest in non-US funds [2] Together with world-wide taxation, punitive departure tax when renouncing the citizenship and huge estate tax when finally passing away, seems to me that Americans are becoming prisoners of their own government. 1. https://www.democratsabroad.org/what_is_fatca_what_are_its_impacts_how_we_aim_to_reform https://www.democratsabroad.org/what_is_fatca_what_are_its_i... 2. https://thunfinancial.com/home/american-expat-financial-advice-research-articles/american-expat-pfic-uk-non-reporting-fund-investment-trap-article/ https://thunfinancial.com/home/american-expat-financial-advi...
- FabHK 6y ago
  Well, Americans had a hard time laundering or hiding money abroad, but foreigners were welcome to do so in the USA. That has become harder now.
  - nickpp 6y ago
    Please note that I am not talking about anything illegal, just law abiding citizens who cannot do things that they could do before. I wonder, is the cost worth it? Was there so much laundering and hiding going on that it was worth losing even more freedoms over it?
- nerdponx 6y ago
  I thought we left estate tax FUD back in the Bush administration.
- vinay427 6y ago
  FATCA does not make it impossible to have a bank account abroad. I currently live in a country known for its historical banking secrecy and two different large banks I walked into were able to open an account for me with only one extra form that gives them consent to share my information with the IRS. There was at least one employee in both branches that knew exactly what to do, although not every employee did so I can understand some Americans trying to open accounts being turned away. As an American that lives abroad, I naturally don't support the extra taxation based on citizenship when I'm already taxed in my country of residence. There is paperwork to file to avoid double taxation, but hiring a lawyer to do it will probably cost me more than it saves at this stage in my life.
corford 6y ago
I wonder how this affects the beneficial owners of trusts in South Dakota (who, amongst other pretty crazy shit, can stay anonymous under South Dakotan law: https://www.theguardian.com/world/2019/nov/14/the-great-american-tax-haven-why-the-super-rich-love-south-dakota-trust-laws https://www.theguardian.com/world/2019/nov/14/the-great-amer... )?
blunte 6y ago
Unless this is retroactive, won't it just secure the special place existing rich have with their anonymous shells?
- infinite8s 6y ago
  It requires that going forward all such companies must register their beneficial owners. Not a matter of retroactive application, most companies have yearly filing requirements anyway.
andrewem 6y ago
https://www.washingtonpost.com/us-policy/2020/12/11/anonymous-shell-company-us-ban/ https://www.washingtonpost.com/us-policy/2020/12/11/anonymou... has more information on this topic (and in my opinion is a better article)
kristofferR 6y ago
Effectively is a word with multiple meanings. I have my doubts that this will be effective.
nceqs3 6y ago
This legislation is a step in the right direction and it's nice to see Congress being bi-partisan for once but it still doesn't fix the major problem. The shell companies in the Caymans, Panama, Malta, Switzerland, etc. If Congress passed a law requiring that any offshore entity that transacts or interacts with a US entity must also report their true ownership to the Treasury that would be some landmark legislation.
OminousWeapons 6y ago
While I understand that this law was created with good intent and I am pleased that money laundering and corruption have been made more difficult, it angers me that one of the few tools available to afford the average person real privacy has been stripped away. There are many people who have legitimate need to hide where they live (by buying assets under a shell): victims of stalking or domestic violence; members of minority groups such as LBGT in very religious areas; reporters; public figures who are being targeted by political enemies; whistle blowers; famous people; corporate executives; high net worth individuals; anyone who angers law enforcement with legal activity; etc. In the age of public record aggregation, it is trivially easy for anyone to locate the average person, let alone someone with the privilege level of law enforcement who can do so with effectively no oversight. I don't think this is a good thing. I don't view these tools as being much different from VPNs. There are people that have legitimate uses for VPNs to hide ownership of traffic; there are people that have legitimate uses for shell companies to hide ownership of stuff. There are people that abuse VPNs; there are people that abuse shells. The vast majority of legitimate VPN users would be trivially unmasked by having a subpoena dropped on the provider. The vast majority of legitimate shell company users would be trivially unmasked by having a subpoena dropped on the registered agent. VPN users only become "anonymous" with great opsec and layering. Shell company users only become anonymous with great opsec and layering. The purpose of VPNs is to hide from every day people and to force law enforcement to put in work. The purpose of shell companies is to hide from everyday people and to force law enforcement to put in work. The fact that this community of all communities doesn't see these parallels is honestly fairly surprising to me.
- morelisp 6y ago
  Be honest: Do you really have any evidence of victims of domestic violence or LGBT people worried about discrimination using using, specifically, anonymous economically inactive shell companies to deal with those issues?
  - OminousWeapons 6y ago
    I have anecdata about victims of domestic violence using these tools. There are even entire guides for how to do so (eg Michael Bazzell's Extreme Privacy). It's hard to tell how many people are doing this when the entire purpose of doing it is to obfuscate who you are.
deleted 6y ago
[deleted]
tdaltonc 6y ago
For anyone interested in learning more about the need for this, I strongly recommend Moneyland. It really does a good job leaning in on tension between (1) privacy, (2) liberty, and (3) Rule-of-Law. All three of those are good things, but they also all step on each others toes. Here's a taste: Back in the 1960s, Swiss banks held money for Nazi war criminals, but they also held money for tax dodgers and for refugees. These groups of people all sought secrecy/privacy/confidentiality (delete as applicable), meaning the evil money washed around with the naughty money, which washed around with the scared money. All three groups of people benefited from those first eurobonds, because they provided an income on money that had previously been static, but not all three were advertised equally prominently. Swiss banks loved to claim that their bank secrecy had been designed to protect Jewish wealth from Nazi confiscation, and kept quiet about all the dictators whose money they also hoarded, or the tax dodging they facilitated. In effect, the refugees were being used to run interference for the others, and to make the Swiss banks look high-minded, rather than like the criminogenic institutions that they were. Swiss banks insisted that the reason they didn't want to reveal the details on their clients was because that would endanger the legitimate interests of people seeking protection from rapacious governments.
lumost 6y ago
The biggest observation I have of the US is that corruption is rampant at all levels, often performed through simplistic manipulation of the legal system by moneyed parties. Consumers and small businesses get screwed by companies to big to sue. Senators magically make 10s of millions while in office despite “blind” trusts. Regulators live in a revolving door with their industries. Hell even doctors get paid for over prescribing medication. Anti corruption measures like these are exactly what the US needs.
- AnthonyMouse 6y ago
  I would trade these in a second for anti-corruption measures that actually did something about the problems you're complaining about.
- coliveira 6y ago
  The problem is that the legislation above does nothing against the kind of corruption you mentioned, because it is well supported in US legislation. For example, lobbying is nothing more than legalized corruption.
  - lumost 6y ago
    The legislation above does eliminate one common form of legal corruption which blocked enforcement and other legal actions by obfuscating who you need to bring action against. In many cases, hiding the identity of the actors behind a shell corp was sufficient to hide the crime. e.g. a foreign government could donate to a super pac by way of a shell corp. In order to prosecute such behavior one would need. 1. The list of all donations 2. The ownership information of all donations I can't exactly send out a mass lawsuit against all donors asking them to prove that they are in fact American.
bogomipz 6y ago
I am curious if this will actually have an affect on real estate then in urban areas such as NYC, SF, Miami etc? So much of the "luxury condo" stock in these places is owned by anonymous shell companies[1]. In fact it seems that much of the luxury condo building boom of the last 20 years is almost predicated on the existence of the anonymity of such shell companies. [1] https://www.washingtonpost.com/news/wonk/wp/2016/04/12/how-secretive-shell-companies-shape-the-u-s-real-estate-market/ https://www.washingtonpost.com/news/wonk/wp/2016/04/12/how-s...
samirillian 6y ago
Transparency International strikes me as one of those branding strategies where actually the opposite of the name is the case (cf. OpenAI). All these issues are too complicated for >99% of the population to actually understand well enough to say if it's "good" or "bad" _in the final analysis_. Read the Wikipedia on the organization and tell me if these seem like transparent people. https://en.wikipedia.org/wiki/Transparency_International https://en.wikipedia.org/wiki/Transparency_International
pfdietz 6y ago
Is this why Trump vetoed it?
- SV_BubbleTime 6y ago
  Not even on the radar for why he vetoed it, but you knew that and just wanted to make a dig for echo chamber points. Just like Independent did when they wrote “Donald Trump had originally vetoed the $740bn defence bill containing the anti-corruption measures”... but asking for integrity when there is a chance to dig at Trump is just apparently asking too much. Don’t you find it all so tiring? Don’t you want to be better than what you accuse “the other side” of?
  - rsynnott 6y ago
    I mean, Trump has personally benefited from anonymous shell companies (Essential Consultants LLC; it was unmasked because Cohen is Not a Very Good Lawyer; there's also one associated with his re-election campaign), so it doesn't seem _that_ outlandish a question... His stated reasons for vetoing weren't particularly credible.
    - SV_BubbleTime 6y ago
      Can you provide any source at all that Trump was even aware of this provision? Any comments he made on disliking it? I’d accept anything at all that even gave the slightest credence to your assertion. Because otherwise... it’s just projecting a fault where there is no evidence of one as revenge for some hurt feelings you have, after all, any think bad directed at a bad man is a good thing right? So what if you are making it up, it’s “always ok to punch a Nazi”, right?
      - rsynnott 6y ago
        To be clear, no-one knows why Trump vetoed in the first place (his first two excuses were clearly not particularly credible; one could believe them if one liked, of course, but it’s not unreasonable to be sceptical of them). So one is left with speculation. This seems plausible, though obviously no-one can say for sure. It’s perfectly reasonable to speculate on reasons when someone does something weird, and risky (ultimately, he was overridden) for no obvious reason.
bsimpson 6y ago
Am I the only person bothered that they snuck it in as a rider on another bill? We need more succinct, germane legislation. It's no surprise that the Read The Bills act never passed. These multi-hundred/thousand page laws are bullshit, and usually filled with pork that has nothing to do with the title of the bill. Congress shouldn't vote on bills they haven't read, period. If a bill wants to pass, it should stand on its own merits, not sneak in with one that can't fail.
generalizations 6y ago
Looks like this is going to require existing companies to submit information about the beneficial owner as well. That's going to be interesting.
Chirael 6y ago
I’m curious what actual form/filing, if any, this will manifest as. The reason I say this is that for several years now, whenever you’ve applied for an EIN on the IRS website, they’ve basically asked for the beneficial owner(s) information anyway.
throwaway41597 6y ago
How will this affect patent trolling? I feel it's a small, good step even though the issue is much larger. I mean, there has been shell companies filing for patent infringement in the past, hasn't it?
- 1vuio0pswjnm7 6y ago
  Intellectual Ventures for example makes extensive use of shell companies.1 However, the database proposed to created under this bill will be "nonpublic at FinCEN". 1 http://www.plainsite.org/tags/index.html?id=640 http://www.plainsite.org/tags/index.html?id=640
tftp7 6y ago
Under this new law, how would I go about purchasing a house anonymously? I should have no obligation to tell the government where I live.
sjtindell 6y ago
In technology we are coming to accept that no matter how solid your security is, there are just too many attackers and someone will get in. We need to tackle our tax code and similar systems the same way. We need to design the systems to be robust to this kind of trickery from the start, not chase and plug loopholes after the fact. Particularly when the incentives are so off - the private industry accountants and lawyers getting around the rules are paid more, have more fun, and enjoy more prestige than those on defense.
neodypsis 6y ago
My team and I created a C-corp using Stripe Atlas with the aim of being able to use the Stripe payments platform. In our country, processing mobile payments is expensive and the service fails every now and then. So far we haven't been able to open a bank account, though. All the "new" information mentioned in this article we have already provided when registering the C-corp with Atlas, so I'm not sure if we need to do something else. Has anyone experienced something similar?
RaymondDurk 6y ago
Does anyone have resources on what can be done now that this has passed? While I understand the intent of this bill it was a good privacy measure for spinning up new business units. I know there is a 20 person exception but if you are under that, it sounds like you'll need to do a ton of leg work then spin up the company.
CryptoPunk 6y ago
This is a shameful violation of contract rights.

554 points by gscott 6y ago

> 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.

SEJeff 6y ago
It is a really good start however. No doubt under a different US administration, it stands a chance to be improved upon.
onetimemanytime 6y ago
it is me...or smaller companies should have the ones exempt?
- boomboomsubban 6y ago
  Why should any company be exempt?
  - ryanlol 6y ago
    Privacy, there’s no need for this information to be public. You could already sue the anonymous shell company if you wanted to.
    - jachee 6y ago
      If a business entity going to conduct business in public, why does that entity deserve any expectation of privacy?
      - capitol_ 6y ago
        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. 1: https://www.brreg.no/ https://www.brreg.no/
        hkt 6y ago
        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.
        namdnay 6y ago
        The problem is that lists the director, not the owner. So you just have a secretary in a law firm listed as the director of 200 shell companies
        tialaramex 6y ago
        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.
        6y ago
    - tt433 6y ago
      We all have the resources to sue anonymous Delaware LLCs
      - simon1573 6y ago
        The cab company?
        tt433 6y ago
        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.
    - jrs235 6y ago
      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.
    - DennisP 6y ago
      None of the information is public anyway. > 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. https://www.nytimes.com/2019/07/11/business/dealbook/llc-shell-companies-money-laundering.html https://www.nytimes.com/2019/07/11/business/dealbook/llc-she...
      - acrefoot 6y ago
        Files from FinCEN were leaked in September to Buzzfeed and icij.org
        DennisP 6y ago
        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.
  - deleted 6y ago
    [deleted]
  - FabHK 6y ago
    See above excellent answer by https://news.ycombinator.com/item?id=25612615 https://news.ycombinator.com/item?id=25612615: > 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.
    - twic 6y ago
      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.
      - hedora 6y ago
        That makes a lot more sense. That way, to have a shell company, you need 5 owners, which is a bigger nightmare than hiring 20 employees.
- odiroot 6y ago
  No, usually the shell companies have zero or minimal number of employees.
  - onetimemanytime 6y ago
    sure, but unless money moves through them, what's the harm? The could have done it so any one person can only have "shell" companies up to the point when x million is moved through them in any one given period.
    - odiroot 6y ago
      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.
      - onetimemanytime 6y ago
        tens of hundreds of them....but if the total is more than $x a year you must declare. Anyway, the decided this way and so it is.
        HeadsUpHigh 6y ago
        There is nothing to declare because the beneficiary wasn't needed. Now it is.
csomar 6y ago
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?
- danenania 6y ago
  "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.
  - coliveira 6y ago
    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.
- giardini 6y ago
  "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.
DennisP 6y ago
> 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. https://www.washingtonpost.com/us-policy/2020/12/11/anonymous-shell-company-us-ban/ https://www.washingtonpost.com/us-policy/2020/12/11/anonymou...
- coliveira 6y ago
  In other words, the law is toothless, you just need to open an illegitimate business that is operated through an investment company.
- JumpCrisscross 6y ago
  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.
  - DennisP 6y ago
    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.

say_it_as_it_is 6y ago

What about hiding money in real estate? You don't need a bank account to hide money. This law does little more than clarify money laundering rules and regulations already in place.

boomboomsubban 6y ago
Don't you already need to provide your name and date of birth to personally buy real estate?
- silverpepsi 6y ago
  And why would you buy it personally? Even the most amateur of amateur landlords are generally aware it is well worth looking into creating an LLC and buying any investment real estate with that, lest a litigious tenant take away your entire life savings by a lawsuit about something frivolous or something you had no control over.
  - boomboomsubban 6y ago
    >And why would you buy it personally? Because they refer to buying real estate as a way to avoid this law, so forming a limited liability company wouldn't work.
    - tialaramex 6y ago
      Actually the trick to corporate ownership of real estate goes like this: Suppose jurisdiction X has a tax on real estate transfers and there's a lovely castle there, Castle Y which Person A owns. Person A transfers the ownership of Castle Y to a holding corporation HoldCorp. There might be a tax for this, but there might well be some exemption, especially if Person A is willing to wait a while before... Person A wants to sell Person B the castle. Instead they sell HoldCorp. The castle never changed ownership, and no tax is paid. Later person C wants to buy the castle. They now buy HoldCorp from person B. The castle still didn't change owners and no tax is paid. If jurisdiction X tweaks their law you might need to tweak your procedure slightly. Maybe Person A must stay as non-beneficial owner for 5 years after the sale, or maybe you must use a two lawyer shell corporation in Bermuda to properly insulate HoldCorp from the taxes. A lawyer will sort this out for far less than the taxes, all of which goes in their pocket and isn't used on government services for ghastly poor people.

ddelt 6y ago

> 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. Just to confirm - am I reading this correctly in that, this massive corporate secrecy legislation does not apply to the vast majority of publicly traded corporations in the US? If they had just not included those exemptions, this would have been extremely beneficial for everyone right? Why would we want to allow anonymous corporate shell organizations which are deemed to hide funds if they are tied well known US corporations, as opposed to some shady criminals? Isn’t the crime the same either way?

unilynx 6y ago
If the exemption criteria are AND more than 20 people, AND 5 million, AND a physical presence, it makes some sense, as shell companies typically have few or no employees, and little actual presence other than an accountant or law firm.
- dan-robertson 6y ago
  I think those are the criteria
ceilingcorner 6y ago
Considering that the vast majority of lockdowns and other COVID-response actions have been against small businesses (shut down the corner store but let Walmart stay open), it isn't particularly surprising. Politicians and corporate leaders gain nothing by supporting small business owners.
hliyan 6y ago
I can't speak for revenue, but physical presence and real employees are indicators of an actual corporation, rather than a shell.
josefx 6y ago
If I understand correctly then this forces the shell companies to report their "secret" benefactors. So it keeps the small players from hiding behind a shell because the cost of running a fake company with 20 full time employees would be prohibitive to them. The bigger ones can probably run a few of the exempt shells in parallel without loosing too much of their overall profit.

boomboomsubban 6y ago

>The act also makes “deliberate false statements or willful evasion of its requirements” a federal crime, punishable by up to three years in jail. Considering almost everyone this bill targets is a non-US citizen, this punishment doesn't seem like much of a deterrent. I'm skeptical that we'll see a string of executive extradition cases over this. It probably does make large scale civil forfeiture easier though.

cool_dude85 6y ago
It's my understanding that it's not uncommon for a, for example, doctor in the US to own an anonymous shell company based in the Cayman Islands or somewhere similar for tax purposes. Presumably the US-citizen doctor would be on the hook for the federal crime regardless of his shell company's location, and there's no need for extradition.
- boomboomsubban 6y ago
  >Presumably the US-citizen doctor would be on the hook for the federal crime regardless of his shell company's location, and there's no need for extradition. This law requires providing some accurate information when forming a company in the US. A shell company in any other country would never violate this law.
jjk166 6y ago
The people who want to set up anonymous shell corporations may not be US citizens, but the people who are actually filing the paperwork here in the US most likely are.
- boomboomsubban 6y ago
  It isn't clear that the people filing paperwork are at any risk from this bill.

paul_f 6y ago

The problem I have with this law, is that judges will eventually start handing this information over to creditors and sue-happy lawyers and it will have a much wider and worse impact than the current intention of containing money laundering.

nullc 6y ago
> that judges will eventually start handing this information over to creditors and sue-happy lawyers Nothing about this act specifies that a judicial order is required for the publication of the information. AFAICT, fincen can just give or sell it to whomever they want, and there is no consequence for unauthorized disclosure. I agree completely about the inevitable consequences. People have been way too hyped up by TV shows. In the US there is a lot more activity conducted via companies with obscure ownership for entirely lawful asset protection, personal security, and just basic privacy then there is in money laundering.

hliyan 6y ago

Transparency International helped to craft the bill: https://us.transparency.org/news/historic-anti-corruption-measures-become-law/ https://us.transparency.org/news/historic-anti-corruption-me... From their statement: "In these divided times, it is encouraging that a broad and politically diverse coalition came together to make these critical reforms a reality. We’d like to especially thank Chairman Crapo (R-ID), Ranking Member Brown (D-OH), Chairwoman Waters (D-CA), Ranking Member McHenry (R-NC), Congresswoman Maloney (D-NY), Congressman King (R-NY), Congressman Luetkemeyer (R-MO), and Congressman Cleaver (D-MO), as well as Senators Warner (D-VA), Cotton (R-AR), Jones (D-AL), Rounds (R-SD), Whitehouse (D-RI), Grassley (R-IA), Wyden (D-OR), and Rubio (R-FL) for their support."

milkshakes 6y ago

what will stop people from shifting to holding the llcs with anonymous trusts?

hkt 6y ago
Magnitsky sanctions, or something that forms part of the road to a much broader application of them. The US (and indeed UK and EU) has the power to squash tax havens. The big countries are not hostage to the little ones, things are the way they are because of who it benefits.

csomar 6y ago

> 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. So it seems that the cost of money laundering has gone from a few thousands dollars for a Delaware C-Corp to running a fake business that employs 20 people and has an office. The minimum to launder under this scheme is $5m per year. This seems like the government stumping on small money launderers while giving the big guys a tax: employ some people, and rent some real-estate.

mensetmanusman 6y ago
Wouldn’t that force every small business to hire legal experts to prove they aren’t shell companies?
- csomar 6y ago
  Small businesses are usually LLC. This will most likely target C-Corps than anything else. But yes, this will make life hard for anyone running a remote C-Corp and does not have enough revenue to be "legitimate". This also will inflate costs for small businesses running legitimate operations: Rent will go up, Harder to recruit people and Less profit or no profit. I lived near a place like this. It was impossible to run a profitable coffee-shop or restaurant because there was lots of competition, little customers and sky-high rent costs. It seemed like 90% of the activity right there was simply fake or driven by the money laundering economy.
  - stephen_g 6y ago
    None of what you said seems to follow from what is explained in the comments above or the article. From my reading, literally all the small business has to do to be “legitimate” is to accurately disclose the beneficial owners’ names, addresses and a Government issued ID (which I assume can be foreign for foreign owners as long as it can be verified). There’s nothing about not being allowed to have an anonymous shell company that inflates the costs of legitimate business...

ransom1538 6y ago

Does anyone know if this would affect blind trusts? https://en.wikipedia.org/wiki/Blind_trust https://en.wikipedia.org/wiki/Blind_trust

FpUser 6y ago

>"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." Ho long before few smarties pool together and form rich enough criminal enterprise that can act on behalf and serve smaller fish for some extra fee. This law is most likely just for show.

simonh 6y ago
So instead of each bearing a small risk of getting caught against their small operation, now they are all exposed to the risks of each one of them and any of those risks coming true wipes them all out. Sounds good to me.
- AnthonyMouse 6y ago
  > So instead of each bearing a small risk of getting caught against their small operation, now they are all exposed to the risks of each one of them and any of those risks coming true wipes them all out. Sounds good to me. That isn't the advantage you think it is. It's like getting all your criminals together to coordinate into a mutually assured destruction pact. Now you can't prosecute even low-level crime because the potential for it to affect the big fish makes it economical for the organization to respond to that with bribery, corruption, murder, infiltration of law enforcement agencies etc. It's supposed to be divide and conquer, not solidarity and mutual self-interest for all the crime.
  - simonh 6y ago
    That's probably true for organised crime generally yes, they can support each other, but we're not just talking about them being allied, but about them all throwing in together in one legally incorporated company. That's next level risky.
hedora 6y ago
I remember when there were lots of small mom and pop criminal gangs. Now we just have the big corporate crooks, and they’re ruining everything.

snigacookie 6y ago

Oh thanks guys for your help. I just need to hire 21 people and I’m ok. Phew.

simonh 6y ago
Why, what aspect of the criteria affect you otherwise?

nickpp 6y ago

What are the unintended side-effects? I understand this is probably a well-meaning legislation, but: FATCA made it impossible for an American to have a bank-account abroad [1] PFICs made it impossible for an American to invest in non-US funds [2] Together with world-wide taxation, punitive departure tax when renouncing the citizenship and huge estate tax when finally passing away, seems to me that Americans are becoming prisoners of their own government. 1. https://www.democratsabroad.org/what_is_fatca_what_are_its_impacts_how_we_aim_to_reform https://www.democratsabroad.org/what_is_fatca_what_are_its_i... 2. https://thunfinancial.com/home/american-expat-financial-advice-research-articles/american-expat-pfic-uk-non-reporting-fund-investment-trap-article/ https://thunfinancial.com/home/american-expat-financial-advi...

FabHK 6y ago
Well, Americans had a hard time laundering or hiding money abroad, but foreigners were welcome to do so in the USA. That has become harder now.
- nickpp 6y ago
  Please note that I am not talking about anything illegal, just law abiding citizens who cannot do things that they could do before. I wonder, is the cost worth it? Was there so much laundering and hiding going on that it was worth losing even more freedoms over it?
nerdponx 6y ago
I thought we left estate tax FUD back in the Bush administration.
vinay427 6y ago
FATCA does not make it impossible to have a bank account abroad. I currently live in a country known for its historical banking secrecy and two different large banks I walked into were able to open an account for me with only one extra form that gives them consent to share my information with the IRS. There was at least one employee in both branches that knew exactly what to do, although not every employee did so I can understand some Americans trying to open accounts being turned away. As an American that lives abroad, I naturally don't support the extra taxation based on citizenship when I'm already taxed in my country of residence. There is paperwork to file to avoid double taxation, but hiring a lawyer to do it will probably cost me more than it saves at this stage in my life.

corford 6y ago

I wonder how this affects the beneficial owners of trusts in South Dakota (who, amongst other pretty crazy shit, can stay anonymous under South Dakotan law: https://www.theguardian.com/world/2019/nov/14/the-great-american-tax-haven-why-the-super-rich-love-south-dakota-trust-laws https://www.theguardian.com/world/2019/nov/14/the-great-amer... )?

blunte 6y ago

Unless this is retroactive, won't it just secure the special place existing rich have with their anonymous shells?

infinite8s 6y ago
It requires that going forward all such companies must register their beneficial owners. Not a matter of retroactive application, most companies have yearly filing requirements anyway.

andrewem 6y ago

https://www.washingtonpost.com/us-policy/2020/12/11/anonymous-shell-company-us-ban/ https://www.washingtonpost.com/us-policy/2020/12/11/anonymou... has more information on this topic (and in my opinion is a better article)

kristofferR 6y ago

Effectively is a word with multiple meanings. I have my doubts that this will be effective.

nceqs3 6y ago

This legislation is a step in the right direction and it's nice to see Congress being bi-partisan for once but it still doesn't fix the major problem. The shell companies in the Caymans, Panama, Malta, Switzerland, etc. If Congress passed a law requiring that any offshore entity that transacts or interacts with a US entity must also report their true ownership to the Treasury that would be some landmark legislation.

OminousWeapons 6y ago

While I understand that this law was created with good intent and I am pleased that money laundering and corruption have been made more difficult, it angers me that one of the few tools available to afford the average person real privacy has been stripped away. There are many people who have legitimate need to hide where they live (by buying assets under a shell): victims of stalking or domestic violence; members of minority groups such as LBGT in very religious areas; reporters; public figures who are being targeted by political enemies; whistle blowers; famous people; corporate executives; high net worth individuals; anyone who angers law enforcement with legal activity; etc. In the age of public record aggregation, it is trivially easy for anyone to locate the average person, let alone someone with the privilege level of law enforcement who can do so with effectively no oversight. I don't think this is a good thing. I don't view these tools as being much different from VPNs. There are people that have legitimate uses for VPNs to hide ownership of traffic; there are people that have legitimate uses for shell companies to hide ownership of stuff. There are people that abuse VPNs; there are people that abuse shells. The vast majority of legitimate VPN users would be trivially unmasked by having a subpoena dropped on the provider. The vast majority of legitimate shell company users would be trivially unmasked by having a subpoena dropped on the registered agent. VPN users only become "anonymous" with great opsec and layering. Shell company users only become anonymous with great opsec and layering. The purpose of VPNs is to hide from every day people and to force law enforcement to put in work. The purpose of shell companies is to hide from everyday people and to force law enforcement to put in work. The fact that this community of all communities doesn't see these parallels is honestly fairly surprising to me.

morelisp 6y ago
Be honest: Do you really have any evidence of victims of domestic violence or LGBT people worried about discrimination using using, specifically, anonymous economically inactive shell companies to deal with those issues?
- OminousWeapons 6y ago
  I have anecdata about victims of domestic violence using these tools. There are even entire guides for how to do so (eg Michael Bazzell's Extreme Privacy). It's hard to tell how many people are doing this when the entire purpose of doing it is to obfuscate who you are.

deleted 6y ago

[deleted]

tdaltonc 6y ago

For anyone interested in learning more about the need for this, I strongly recommend Moneyland. It really does a good job leaning in on tension between (1) privacy, (2) liberty, and (3) Rule-of-Law. All three of those are good things, but they also all step on each others toes. Here's a taste: Back in the 1960s, Swiss banks held money for Nazi war criminals, but they also held money for tax dodgers and for refugees. These groups of people all sought secrecy/privacy/confidentiality (delete as applicable), meaning the evil money washed around with the naughty money, which washed around with the scared money. All three groups of people benefited from those first eurobonds, because they provided an income on money that had previously been static, but not all three were advertised equally prominently. Swiss banks loved to claim that their bank secrecy had been designed to protect Jewish wealth from Nazi confiscation, and kept quiet about all the dictators whose money they also hoarded, or the tax dodging they facilitated. In effect, the refugees were being used to run interference for the others, and to make the Swiss banks look high-minded, rather than like the criminogenic institutions that they were. Swiss banks insisted that the reason they didn't want to reveal the details on their clients was because that would endanger the legitimate interests of people seeking protection from rapacious governments.

lumost 6y ago

The biggest observation I have of the US is that corruption is rampant at all levels, often performed through simplistic manipulation of the legal system by moneyed parties. Consumers and small businesses get screwed by companies to big to sue. Senators magically make 10s of millions while in office despite “blind” trusts. Regulators live in a revolving door with their industries. Hell even doctors get paid for over prescribing medication. Anti corruption measures like these are exactly what the US needs.

AnthonyMouse 6y ago
I would trade these in a second for anti-corruption measures that actually did something about the problems you're complaining about.
coliveira 6y ago
The problem is that the legislation above does nothing against the kind of corruption you mentioned, because it is well supported in US legislation. For example, lobbying is nothing more than legalized corruption.
- lumost 6y ago
  The legislation above does eliminate one common form of legal corruption which blocked enforcement and other legal actions by obfuscating who you need to bring action against. In many cases, hiding the identity of the actors behind a shell corp was sufficient to hide the crime. e.g. a foreign government could donate to a super pac by way of a shell corp. In order to prosecute such behavior one would need. 1. The list of all donations 2. The ownership information of all donations I can't exactly send out a mass lawsuit against all donors asking them to prove that they are in fact American.

bogomipz 6y ago

I am curious if this will actually have an affect on real estate then in urban areas such as NYC, SF, Miami etc? So much of the "luxury condo" stock in these places is owned by anonymous shell companies[1]. In fact it seems that much of the luxury condo building boom of the last 20 years is almost predicated on the existence of the anonymity of such shell companies. [1] https://www.washingtonpost.com/news/wonk/wp/2016/04/12/how-secretive-shell-companies-shape-the-u-s-real-estate-market/ https://www.washingtonpost.com/news/wonk/wp/2016/04/12/how-s...

samirillian 6y ago

Transparency International strikes me as one of those branding strategies where actually the opposite of the name is the case (cf. OpenAI). All these issues are too complicated for >99% of the population to actually understand well enough to say if it's "good" or "bad" _in the final analysis_. Read the Wikipedia on the organization and tell me if these seem like transparent people. https://en.wikipedia.org/wiki/Transparency_International https://en.wikipedia.org/wiki/Transparency_International

pfdietz 6y ago

Is this why Trump vetoed it?

SV_BubbleTime 6y ago
Not even on the radar for why he vetoed it, but you knew that and just wanted to make a dig for echo chamber points. Just like Independent did when they wrote “Donald Trump had originally vetoed the $740bn defence bill containing the anti-corruption measures”... but asking for integrity when there is a chance to dig at Trump is just apparently asking too much. Don’t you find it all so tiring? Don’t you want to be better than what you accuse “the other side” of?
- rsynnott 6y ago
  I mean, Trump has personally benefited from anonymous shell companies (Essential Consultants LLC; it was unmasked because Cohen is Not a Very Good Lawyer; there's also one associated with his re-election campaign), so it doesn't seem _that_ outlandish a question... His stated reasons for vetoing weren't particularly credible.
  - SV_BubbleTime 6y ago
    Can you provide any source at all that Trump was even aware of this provision? Any comments he made on disliking it? I’d accept anything at all that even gave the slightest credence to your assertion. Because otherwise... it’s just projecting a fault where there is no evidence of one as revenge for some hurt feelings you have, after all, any think bad directed at a bad man is a good thing right? So what if you are making it up, it’s “always ok to punch a Nazi”, right?
    - rsynnott 6y ago
      To be clear, no-one knows why Trump vetoed in the first place (his first two excuses were clearly not particularly credible; one could believe them if one liked, of course, but it’s not unreasonable to be sceptical of them). So one is left with speculation. This seems plausible, though obviously no-one can say for sure. It’s perfectly reasonable to speculate on reasons when someone does something weird, and risky (ultimately, he was overridden) for no obvious reason.

bsimpson 6y ago

Am I the only person bothered that they snuck it in as a rider on another bill? We need more succinct, germane legislation. It's no surprise that the Read The Bills act never passed. These multi-hundred/thousand page laws are bullshit, and usually filled with pork that has nothing to do with the title of the bill. Congress shouldn't vote on bills they haven't read, period. If a bill wants to pass, it should stand on its own merits, not sneak in with one that can't fail.

generalizations 6y ago

Looks like this is going to require existing companies to submit information about the beneficial owner as well. That's going to be interesting.

Chirael 6y ago

I’m curious what actual form/filing, if any, this will manifest as. The reason I say this is that for several years now, whenever you’ve applied for an EIN on the IRS website, they’ve basically asked for the beneficial owner(s) information anyway.

throwaway41597 6y ago

How will this affect patent trolling? I feel it's a small, good step even though the issue is much larger. I mean, there has been shell companies filing for patent infringement in the past, hasn't it?

1vuio0pswjnm7 6y ago
Intellectual Ventures for example makes extensive use of shell companies.1 However, the database proposed to created under this bill will be "nonpublic at FinCEN". 1 http://www.plainsite.org/tags/index.html?id=640 http://www.plainsite.org/tags/index.html?id=640

tftp7 6y ago

Under this new law, how would I go about purchasing a house anonymously? I should have no obligation to tell the government where I live.

sjtindell 6y ago

In technology we are coming to accept that no matter how solid your security is, there are just too many attackers and someone will get in. We need to tackle our tax code and similar systems the same way. We need to design the systems to be robust to this kind of trickery from the start, not chase and plug loopholes after the fact. Particularly when the incentives are so off - the private industry accountants and lawyers getting around the rules are paid more, have more fun, and enjoy more prestige than those on defense.

neodypsis 6y ago

My team and I created a C-corp using Stripe Atlas with the aim of being able to use the Stripe payments platform. In our country, processing mobile payments is expensive and the service fails every now and then. So far we haven't been able to open a bank account, though. All the "new" information mentioned in this article we have already provided when registering the C-corp with Atlas, so I'm not sure if we need to do something else. Has anyone experienced something similar?

RaymondDurk 6y ago

Does anyone have resources on what can be done now that this has passed? While I understand the intent of this bill it was a good privacy measure for spinning up new business units. I know there is a 20 person exception but if you are under that, it sounds like you'll need to do a ton of leg work then spin up the company.

CryptoPunk 6y ago

This is a shameful violation of contract rights.