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House Republicans are gutting a bill to fight money-laundering

Iran used shell companies to hide its ownership of 650 5th avenue in manhattan
AP Photo/Seth Wenig
The Iranian government used this Manhattan skyscraper as a slush fund for years without the US government knowing about it.
  • Max de Haldevang
By Max de Haldevang

Geopolitics reporter

Published This article is more than 2 years old.

House Republicans this week axed a key passage in a bill that is deemed crucial in the fight to stop kleptocrats, drug traffickers and terrorists from laundering money through the US.

The original legislation would have forced anyone setting up a company in the US to tell authorities who the actual owner was. Law enforcement, anti-corruption groups and national security experts say this is essential in fighting crimes that range from child trafficking to Russian election hacking; America’s opaque incorporation laws can otherwise make it impossible to find out who is behind a company benefiting from such crimes.

However, that crucial clause was taken out of a new draft (pdf) of the bill, authored by representatives Steve Pearce and Blaine Luetkemeyer, and submitted on June 11, ahead of a planned vote in the House Financial Services Committee on June 14.

Both sides painted a very different picture of the consequences of nixing the passage. A House Republican aide said this was just one part of a broad piece of legislation on “modernizing” terrorism and initial finance regulations and that it was dropped because they couldn’t find consensus on which part of government should collect the ownership information. Rep. Pearce said in a statement that he is “committed to working on a solution” to ownership transparency without “overburdening” businesses.

Anti-corruption activists argue that, without ownership transparency, the bill could actually make things worse. “The remaining package may actually make money laundering and terror finance easier by weakening the current money laundering laws,” writes John Cassarra, a former Treasury special agent for terrorist financing.

Clark Gascoigne, deputy director of the pro-transparency FACT coalition, said he was “blindsided” by the cutting of language in a bill that he believed previously had broad bipartisan support, but, he says, is now in jeopardy. A spokesperson for the committee didn’t respond to a request for comment on whether the move has killed bipartisan support for the bill.

Carolyn Maloney, a Democrat on the committee who has spent years trying to pass legislation on corporate ownership transparency, called the move “foolish and an abdication of duty.” Maloney’s legislation was modest compared to transparency moves currently underway in Europe. The UK has a public register of the owners of all companies (albeit a flawed one), and the EU is working to put in place a similar register across the continent.

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