Yellen: 100,000 Companies Join a Corporate Database Aimed at Unmasking Shell Company Owners
VIENNA, Va. — Treasury Secretary Janet Yellen announced that 100,000 companies have joined a new database that collects “beneficial ownership” information about companies as part of a new government effort to unmask shell company owners.
Yellen said in a statement Monday that the Treasury Department's new database, which collects beneficial ownership information, sends the message that “the United States is not a haven for dirty money.”
Yellen visited the Treasury Department's Financial Crimes Enforcement Network – known as FinCEN – in Vienna, Virginia, to discuss the new year's launch of the database. She also spoke about the upcoming real estate rules that are intended to increase transparency about the people and companies buying real estate in the U.S.
The visit to Virginia is intended to demonstrate the Biden administration's intent to increase business transparency and prevent abuse of shell companies.
“Around the world, a lack of transparency, especially due to opaque corporate structures, makes it easier to conceal illegal activities,” Yellen said during her visit to FinCEN headquarters. offenders, and the confiscation of ill-gotten property.”
In 2021, the bipartisan Corporate Transparency Act was signed into law, giving the Treasury Department the authority to write new rules on beneficial ownership. And starting January 1, most U.S. companies must report identifying information about who directly or indirectly owns or controls them.
The rule requires most U.S. companies with fewer than 20 employees – roughly 32.6 million businesses – to register with the government.
In November 2022, the National Small Business Association sued the Treasury Department over the database, arguing that the new reporting rule violates the U.S. Constitution because it says it unnecessarily burdens small businesses, violates consumer protections privacy and freedom of expression and infringes on the powers of states to govern companies. .
It is expected that a judge will rule on the case soon.
In addition to the corporate database, Yellen says the Treasury Department is considering additional steps to address risks associated with commercial real estate.
Real estate is a common vehicle for money laundering. Yellen said in March 2023 that illicit actors laundered at least $2.3 billion through US real estate between 2015 and 2020.
A 2022 Congressional Research Service report suggested that Congress could consider how to balance money laundering risks in the real estate industry with differing views on oversight.
“The benefits of increasing corporate transparency by collecting beneficial ownership information – simply put, knowing who owns what – start with protecting our national security,” Yellen said. “Corporate transparency can also provide economic benefits: protecting our financial system, reducing due diligence costs, enabling fair competition among companies and increasing tax revenues.”
FinCEN's mission is to protect the financial system from criminal abuse, money laundering and other illegal activities, according to its website.