Currently, the rules around recording and disclosing company owners in the US are set at a state level.
The rules in states like Delaware are controversial because they have been implicated in disguising the ownership of shell companies used in terrorism financing and money laundering.
Notoriously, Trump lawyer Michael Cohen used a Delaware anonymous shell company to make payments which court documents connected to Stormy Daniels, who is suing Trump after signing a non-disclosure agreement following an affair, and an entity tied to a Russian oligarch.
Writing to the sponsors of the CTIF bill, representatives Jeb Hensarling and Maxine Waters, Delaware secretary of state Jeffrey Bullock said he accepted the need for a federal owners list.
“We support the framework contemplated in the draft, which proposes a collection of beneficial ownership information by the [Department of Treasury’s] Financial Crimes Enforcement Network (FinCEN) and is consistent with the kind of effective and sustainable national approach that we have long advocated,” said Bullock.
“We believe FinCEN possesses the expertise to effectively implement a standardised framework for the collection of beneficial ownership information, rather than a piecemeal, state-based approach, which would create loopholes vulnerable to exploitation by bad actors…
“The legislation is properly tailored to require beneficial ownership disclosure only for those entities most likely to be utilised for illicit purposes.”
The proposed arrangements in CTIF are similar to those in place in the Isle of Man, a UK crown dependency, which can be accessed by law enforcement but are not publicly accessible.
Gary Kalman, executive director of the Financial Accountancy and Corporate Transparency Coalition, said he welcomed the support which he said came at “a critical time” for the bill, which is at risk of being diluted at committee stage.
“Unfortunately, a new draft of the bill proposes to eliminate the provisions around beneficial ownership transparency — thereby breaking apart the consensus that existed around previous drafts of the proposed legislation,” he said.
“As police and prosecutors have said, several of the sections in the remaining bill would actually weaken our nation’s safeguards against rogue states and the financing of crime.
“We urge the committee to reconsider and reincorporate the beneficial ownership provisions.”