The Department of the Treasury is expected to move on a rule proposed in 2014 requiring banks to look into the identities of those who hold shell company accounts in the wake of the release of the Panama Papers.
The leak of more than 11.5 million confidential documents from Panamanian law firm Mossack Fonseca exposes a number of the world leaders involved in legally dubious offshore financial deals. In the outpour of information, which was reviewed by around 100 news agencies over the course of a year, it was discovered just over 14o politicians and members of their inner circles were linked with offshore shell companies and banks to dodge taxes.
The New York Times reports the regulation is designed to close a loophole allowing “secretive financial maneuvers” in the U.S. banking system.
Under current policy, the names of company heads can be obscured as identities are not required when limited liability corporations are registered with certain states. The change would force institutions to identify each individual who owns 25 percent or more of the equity interests.
“The proposed rules would contain explicit customer due diligence requirements and would include a new regulatory requirement to identify beneficial owners of legal entity customers, subject to certain exemptions,” the rule reads. “Such changes will enhance financial transparency and safeguard the financial system against illicit use. Requiring financial institutions to perform effective CDD so that they know their customers—both who they are and what transactions they conduct—is a critical aspect of combating all forms of illicit financial activity, from terrorist financing and sanctions evasion to more traditional financial crimes, including money laundering, fraud, and tax evasion.”
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