We Need to Crack Down on Anonymous Shell Companies

| 12 Nov 2020 | 10:44

For nearly 30 years, a 36-story office building in the heart of midtown Manhattan — around the corner from Radio City Music Hall and Rockefeller Center — was secretly owned by the Government of Iran. How was a government that was under economic sanctions able to own a highly coveted piece of real estate in the middle of the largest city in the United States? The answer is surprisingly simple: It used anonymous shell companies. What’s worse, those shell companies were not created in some shady foreign jurisdiction — they were formed right here in the U.S.

In 2016, bombshell reports by 60 Minutes and The New York Times showed how easy it is for terrorists, drug dealers, and other criminals to launder money in the U.S. through anonymous shell companies. These reports, along with a multi-year undercover investigation by Global Witness, documented numerous examples where loopholes in U.S. state and federal laws are used to hide the identities of the true owners of these shell companies, allowing criminals to launder their money by purchasing real estate and other assets with illegal funds.

Because of these loopholes, the U.S. is the world capital of anonymous shell companies — and is a haven for money laundering.

To combat these abuses and end the illicit use of anonymous shell companies, I having been working on legislation, the Corporate Transparency Act, for over a decade. It finally passed the House last October, and was included in the House-passed National Defense Authorization Act (NDAA) for Fiscal Year 2021. That legislation is currently being negotiated by House and Senate conferees and I am working to make sure that Congress finally passes this bipartisan bill to strengthen our national security and crack down on money laundering and organized crime.

Beyond the impacts for law enforcement, this bill will directly affect us here at home by lowering housing costs in New York City. Kleptocrats and criminals routinely park their illicit money in luxury real estate in New York City, which limits the availability of housing and drives up housing costs for ordinary New Yorkers. It seems that more than ever before, there are too many dark windows in apartments in NYC at night — but with this bill, this practice will be put to an end once-and-for-all. Put simply, my bill would lower housing costs for ordinary New Yorkers.

This is one of the most pressing national security problems we face in this country, because anonymous shell companies are the vehicle of choice for money launderers, criminals, and terrorists. Because of its bipartisan, common sense approach, the Corporate Transparency Act has the support of more 130 good-government organizations, the entire law enforcement community, the financial industry, and the real estate industry.

We’re the only advanced country in the world that doesn’t already require disclosure of this information — and frankly, it’s an embarrassment. We must must fix this in the final NDAA.