[Congressional Record (Bound Edition), Volume 156 (2010), Part 11]
[Extensions of Remarks]
[Page 15491]
[From the U.S. Government Publishing Office, www.gpo.gov]




  INTRODUCTION OF THE INCORPORATION TRANSPARENCY AND LAW ENFORCEMENT 
                             ASSISTANCE ACT

                                 ______
                                 

                        HON. CAROLYN B. MALONEY

                              of new york

                    in the house of representatives

                        Tuesday, August 10, 2010

  Mrs. MALONEY. Madam Speaker, I rise today to introduce the 
Incorporation Transparency and Law Enforcement Assistance Act. The bill 
would require the States to obtain information about the true ownership 
of the corporation, when they allow someone to create a corporate 
entity. As some have put it, this bill is a ``no-brainer.'' And it is 
fairly straightforward: it would require that the person creating the 
corporation to state the ``beneficial owner'' of the corporation and 
provide some form of identification.
  Although this is as straightforward as it sounds, the implications 
for law enforcement are broad reaching. Criminal organizations are 
infamous for using shell corporations, both foreign and domestic to 
open bank accounts, launder money, perpetrate fraud, and finance 
terrorism. And it isn't difficult for them to do. Virtually no States 
require people applying to create corporations to provide the identity 
of the corporate owner. In fact, 48 of 50 States, except for Alabama 
and Alaska, allow for the unfettered creation of an anonymous corporate 
entity. As a result, just about anyone can easily manipulate the system 
to fund criminal activity.
  Here is an example from a recent investigation in NY by the Manhattan 
District Attorney. The office announced investigations involving the 
movement of funds through banks in NY by entities controlled by the 
Iranian Military. In at least two cases, domestic shell companies were 
opened in two different States to further secret Iranian interests. 
Through a NY shell company, individuals working on behalf of the 
government of Iran were able to move funds to secret accounts held in 
offshore jurisdictions. Shockingly, the offshore government was able to 
give the Manhattan DA more information about the ownership of the NY 
entity than the State of NY could.
  Although the DA does not contend that requiring a declaration of 
beneficial ownership would have stopped this activity, it would have at 
least been a piece of evidence to go on. And if the declaration of 
beneficial ownership had been required but falsified, it would have 
been an extra tool for law enforcement to shut down the entity and 
prosecute the perpetrators.
  The bill I am introducing today will provide the kind of transparency 
that law enforcement needs to investigate financial crimes. However, it 
is narrowly drafted so that it is not overly burdensome on either 
States or incorporating entities. In fact, most corporations would be 
exempt from the bill's requirements including companies that are 
already regulated by federal banking regulators and companies that are 
over 20 employees. This bill is meant to capture beneficial ownership 
information from companies that are able to escape regulation and 
oversight through other federal entities.
  Senator Levin has already introduced a similar bill in the Senate, 
and President Obama was the lead sponsor when he was a U.S. Senator. It 
is supported by numerous law enforcement associations, including the 
Federal Law Enforcement Officers Association, the Fraternal Order of 
Police, the National Association of Assistant United States Attorneys, 
the National Narcotic Officers' Associations Coalition, the United 
States Marshals Service Association, and the Association of Former ATF 
Agents.
  I urge my colleagues to support this important legislation.

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