Bad ideas are never ins short supply in Washington, D.C. In support of this premise, we offer the following:
H.R. 4450: "Incorporation Transparency and Law Enforcement Assistance Act." was introduced to Congress on February 2, 2016 by Rep. Carolyn Maloney (D-NY) and is going through the process of possibly becoming a law.
H.R. 4450
This bill would amend title 31, United States Code:
"To ensure that persons who form corporations or limited liability companies in the United States disclose the beneficial owners of those corporations or limited liability companies, in order to prevent wrongdoers from exploiting United States corporations and limited liability companies for criminal gain, to assist law enforcement in detecting, preventing, and punishing terrorism, money laundering, and other misconduct involving United States corporations and limited liability companies, and for other purposes."
Why was this law introduced? Congress launched an investigation and state they found the following:
- Very few States obtain meaningful information about the beneficial owners of the corporations and limited liability companies formed under their laws.
- A person forming a corporation or limited liability company within the United States typically provides less information to the State of incorporation than is needed to obtain a bank account or driver's license and typically does not name a single beneficial owner.
- Criminals have exploited the weaknesses in State formation procedures to conceal their identities when forming corporations or limited liability companies in the United States, and have then used the newly created entities to commit crimes affecting interstate and international commerce such as terrorism, drug trafficking, money laundering, tax evasion, securities fraud, financial fraud, and acts of foreign corruption.
- Many States have established automated procedures that allow a person to form a new corporation or limited liability company within the State within 24 hours of filing an online application, without any prior review of the application by a State official. In exchange for a substantial fee, 2 States will form a corporation within 1 hour of a request.
It doesn't take a mastermind to find loopholes in this proposed amendment.
The Panama Papers
About two months after this law was proposed, there was a data leak of an unprecedented size referred to as "The Panama Papers". If you haven't heard of it, it is a massive leak of documents from an anonymous source. The 11.5 million records include financial and legal information dating back four decades. Allegedly these records are all connected to a Panama law firm, Mossack Fonseca. They have found current or former world leaders, other politicians and public officials, and celebrities and sports stars to be involved.
The spin put on the story was that this uncovered a system that “enables crime, corruption, and wrong doing, hidden by secretive offshore companies.” Were there some people trying to hide their money? Probably. Were all of these people (whose data is now public information on a website) criminals? Absolutely not (And BTW most of the corruption alleged in the Panama Papers comes from government bureaucrats hiding money — governments are the problem, not liberty).
What this leak did do is give the US government and the IRS even more reason to stomp their feet and say "See! We need to know where ALL the money is! We need more laws!"
FATCA is aimed at catching those that are hiding their money in offshore accounts (in reality it's just created pain the ass reporting requirements for the average taxpayer). But the above findings from Congress show that they believe we have issues right here in our own country. With all of the press that the Panama Papers leak has gotten, I believe the proposed law will pass with flying colors.
Side note
Carolyn Maloney, who introduced the law, voted yes for the HIRE Act which is where FATCA was born. She also voted yes for the DRIVE act, which gives the government the right to take away someone's passport if they owe the IRS taxes. But? She then wrote a letter to Secretary of State John Kerry expressing her concern "with provisions that call for the denial of issuance or revocation of passport for any individual whose tax debt exceeds $50,000." Did she actually read the law she voted on?
If you want to track the progress of H.R.4450, click here (you can also sign up to get email alerts): https://www.congress.gov/bill/114th-congress/house-bill/4450/text
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