US House approves Corporate Transparency Act to prevent the misuse of anonymous companies by financial criminals

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The US House passed a landmark, bipartisan anti-corruption measure in July 2020 that will upgrade the country’s AML laws after over 20 years and make the US financial system more transparent. The legislation, which is called the Corporate Transparency Act (CTA), is pending approval of the US Senate.

Financial criminals have often used anonymous companies to transfer money through the US financial system. One example is the case of a Venezuelan strongman and a Russian arms dealer who used US-based anonymous companies to challenge security. The lack of transparency in the financial system further facilitates this misuse.

The CTA would require companies to share the details of their beneficial owners on a secure federal database. This database would be accessible to relevant law enforcement and financial authorities. The CTA would also set up a ‘whistleblower fund’ for those who report financial crime. These measures will help improve national security and check corruption, fraud, tax evasion, human trafficking, and other such crimes.