In 2000, what was then known as the General Accounting Office (now, the Government Accounting Office) warned of possible money laundering by Russian entities using U.S. corporations. The report was addressed to Senator Carl Levin who was then the ranking minority member of the Senate’s Permanent Subcommittee on Investigations, Committee on Governmental Affairs. Senator Levin, who has chaired the Subcommittee from June 2001 to January 2003 and from 2007 to the present, continues to be interested in the subject. In the last several years, he and other members of Congress have introduced legislation directing states to collect beneficial ownership information and the U.S. Treasury to regulate “company formation agents.”
In 2005, the Money Laundering Threat Assessment Group issued a report taking direct aim at three states – Delaware, Nevada and Wyoming:
Legal jurisdictions, whether states within the United States or entities elsewhere, that offer strict secrecy laws, lax regulatory and supervisory regimes, and corporate registries that safeguard anonymity are obvious targets for money launderers. A handful of U.S. states offer company registrations with cloaking features – such as minimal information requirements and limited oversight – that rival those offered by offshore financial centers. Delaware, Nevada, and Wyoming are often cited as the most accommodating jurisdictions in the United States for the organization of these legal entities.
These three states have now issued a white paper, Encouraging Business While Fighting Fraud, that responds to the issue from a state perspective. The states point out that
The task of identifying a company’s beneficial owners is a complex undertaking, and policymakers have yet to agree on the details for gathering such data.
They also list the many changes at federal and state levels to eliminate fraud.
