Crooks, terrorists, tax evaders: Can new shell company rule stop them?
By Elizabeth Dilts and Suzanne Barlyn
NEW YORK May 11 (Reuters) - The U.S. Treasury Department wants to go after money launderers, tax evaders and terrorists by cracking open the shell companies they use to hide cash flows, but critics say a new agency effort to identify them could be easily evaded.
Treasury last week issued a new rule, effective in 2018, requiring financial institutions to obtain the identities of "beneficial owners" of their client companies and at least one senior manager. Financial firms will have to verify their identities through documents such as passports - but will not have to confirm their ownership stakes in the companies.
That could allow criminals to provide false information with little risk of getting caught, critics say.
"If a company has criminal intent, they are probably not going to file that their beneficial owner is ISIS," said Anders Rodenberg, who oversees relationships with financial firms in North America at Bureau van Dijk, a beneficial-ownership data provider.
The Treasury Department says its rule - along with separate but related legislation it proposed to Congress - strikes the right balance between rooting out corruption and avoiding burdensome requirements on financial firms and legitimate clients.
But what if a customer lies?
"Then they are committing fraud," said Steve Hudak, spokesman for Treasury's Financial Crimes Enforcement Network.
Treasury and law enforcement officials can contact the person a company names as a senior manager if they want to investigate further, Hudak said. Continuación...