> This seems like the government stumping on small money launderers while giving the big guys a tax: employ some people, and rent some real-estate

I did work on this bill (my Congresswoman is its author). Let me defend the thresholds.

The point of this bill is to require beneficial ownership disclosure for shell companies. Legal ownership of an entity is one thing. The beneficial owner is the human who ultimately owns and controls the entity [1].

Tracing the beneficial owners of economically-active entities (i.e. not shell companies [2]) is expensive. Imagine doing this for Apple. You would need to look through every ETF that holds it to its mutual fund owners to their pension fund owners to their holding companies to their pensioners. That is a multimillion dollar exercise, largely useless and reasonably opposed. This expense in its extreme stopped similar legislation in the past. As a result, someone from Russia could create a BVI company that opens a Delaware LLC and gain near-total transactional anonymity.

This bill tries to exempt economically active entities. The thresholds are easy to identify, reducing paperwork, while low with respect to most companies. (Small businesses have simple ownership structures and a small number of beneficial owners.) The bill is not a general anti-money laundering bill. If you have employees and revenues, you are engaging in sophisticated money laundering. If you have a thousand shell entities, you are doing something else (and more common).

[1] https://en.m.wikipedia.org/wiki/Beneficial_ownership

[2] https://en.m.wikipedia.org/wiki/Shell_corporation

Just wanted to say thank you for chiming in about the bill. I know some folks are jumping your shit, but it's nice to read a boots on the ground perspective. Sounds like this was a bill about managing proper red flags, minimize false positives and not creating a slippery slope. From my understanding, that's where a lot of push back from the past has been.

Piling on to the thank-you wagon. My cousin works at the GAO and often has interesting stories about policy nuance that would be really difficult to realize without that inside perspective.

I appreciate the intentions behind this bill, and I'm sure we'll find far more corruption than we ever expected through this bill.

I'm reminded of the Patriot Act, and the ways the data collected were used (beneficially), and abused (for personal reasons) by people trusted with high-level clearance. How is access being limited and audited to the data collected by this new bill?

I feel the same way about the government grant system relying on the DUNS system (run by a private company) for business registration. I also feel this way about credit agencies like Experian and Equifax being the trusted source of truth on creditworthiness for Fannie Mae loans, and collecting records on essentially all Americans (no consumer choice and limited opt-out) which inevitably gets leaked. The liability of Experian and Equifax should have been their entire businesses, not a few slaps on the wrist and the offer of credit monitoring for just a year.

With all that in mind, I want to know--when this bill is implemented, how is this not inevitably going to result in abuses or harmful massive leaks? Or do you just assume that entities below a certain threshold of activity don't deserve privacy or some level of property obscurity to help people avoid criminal attention?

The kind of info this bill is collecting could be easily be used by identity thieves. Sharing this info with foreign entities makes the problem worse.

Civil forfeiture started off with good intentions, but in many places has a serious lack of recourse and oversight. There have been some reports that it's abused as a quick way for police departments to pad their budgets. Those doing the seizing don't even need to prove guilt of a person, since civil forfeiture is a dispute between police and property, not police and a suspected person. Sure, these policies let police cripple the more clever criminals that they had trouble bringing to justice, but it also gets used all the time in ways against people (I guess against property) that would reasonably argue innocence.

> how is this not inevitably going to result in abuses or harmful massive leaks?

There probably will be abuses and leaks—-I don’t think anyone should trust the government with population-wide data that is catastrophic if compromised. But on the ladder of OPM data and IRS tax records to e.g. potato registries, beneficial ownership data isn’t that sensitive. Many countries make it a matter of public record with few ill effects. (Counterpoint: Sweden makes tax records public record. The IRS being compromised would be a big deal.)

The church, charity and non-profit exemption is the hole of the bulldozer path that had to be left to protect private civic discourse. This will be abused by the wealthy and powerful. But as a result, there will be no comprehensive database of e.g. donors to prison reform or LGBT causes.

> Counterpoint: Sweden makes tax records public record. The IRS being compromised would be a big deal.

It would be a big deal only because it would shatter current expectations. As you've mentioned, society would operate just fine if everyone's tax records were public. The aversion that people feel towards it is largely cultural - if they were brought up in a different western society, they wouldn't feel that way.

Interesting. Why targeting money specifically? If someone claims that people should not have secrets about their wallets, others may claim no one should have secrets about their bedrooms. After all, "It would be a big deal only because it would shatter current expectations. Society would operate just fine if everyone's affairs were public. The aversion that people feel towards it is largely cultural - if they were brought up in a different society, they wouldn't feel that way" right?

For most people, most of their bedroom activities are public in the US. Specifically, they are recorded in public marriage records that anyone can peruse.

Thank you for making my point.

I actually doubt it. Primatologists notice that humans in general have sex in private (and face to face) unlike all other primates.

> others may claim no one should have secrets about their bedrooms.

What does that even mean?

It would shatter current illusions, too. Definitely a move for the better.

"Potato registries"?

I don't know if the US has one, but many European countries do.

https://www.gov.uk/guidance/the-seed-potato-classification-s...

> How is access being limited and audited to the data collected by this new bill?

Why should it be? There's no sensible reason why ownership of a company should have to be kept secret, AFAICS. If your company does shit so shady you're ashamed to stand up and admit to it, that shit is probably so shady it already is — or should be — illegal anyway.

Hi, I skimmed the bill and some explanations after finding out about it last night.

I feel like this bill doesn't actually change anything. Look at your example: "Someone from Russia could create a BVI company that opens a Delaware LLC and gain near-total transactional anonymity."

Your bill exempts every nominee or person paid to form the business. That is completely common practice, and also benefits the exact people you made this bill for?

Let me be absolutely clear, when I think about MY user experience, nothing has changed? If my registered agent formed the business with one of their employees names, or if my lawyer did that, in both circumstances there would never be a report to the Treasury for them, and there would never be a report for me.

I don't actually want a burdensome regulation, but I also don't feel Congress actually cares about this since this was just a rider into an actually politically charged bill, so I don't mind talking to you about it:

How does this bill accomplish anything if it exempts everything that real people actually do, let alone anyone trying to mask ownership and control.

> Your bill exempts every nominee or person paid to form the business

Yes, we already know who the legal owners of entities are.

Under this bill, if you pay a registered agent to form an LLC you control, your name is recorded. That is not presently done. It’s been pushed back on, particularly by the real estate industry, for decades.

> Under this bill, if you pay a registered agent to form an LLC you control, your name is recorded.

Okay I misread that in the law review documents. So anyone acting on behalf of the beneficial owner is not reported, but the beneficial owner still is.

This is in line with some other countries that are vying for respect by reforming.

I don't mind it being on-file privately with the government, and this bill doesn't change anything with publicly perusable databases, nor create a new one.

> this bill doesn't change anything with publicly perusable databases, nor create a new one

Correct. I have seen arguments for such databases, and might support it in limited cases (e.g. for public officials). But I think, personally, beneficial ownership information should be afforded privacy similar to tax returns.

In what part of the formation process do you feel this report is to be made?

Let's say if I walked to the secretary of state in Wyoming and paid them cash to form a new entity, where is the Treasury report supposed to be done? Is there a notification somewhere?

Does the Federal Government even have a way of knowing when a new entity is created in all of the incorporated states and other semi-autonomous regions? Not all the states have free public databases.

Is this bill going to sanction the states until they give information automatically about newly formed and existing entities?

Does this apply to indigenous protectorates? Navajo nation has incorporation statutes, and literally any of other the 560+ tribes could as well.

> But I think, personally, beneficial ownership information should be afforded privacy similar to tax returns.

Out of curiosity, could you explain why? What would be the risks if this information were publicly available?

That your friends/neighbours/family members could snoop at your finances. This can fracture relationships.

It's the same reason why i would want my medical data to be private, but available to relevant gov't agencies for public health reasons.

> But I think, personally, beneficial ownership information should be afforded privacy similar to tax returns.

I agree. Not only similar, but exactly the same.

Only I'm Swedish.

What if a lawyer hired by a company is the person initiating the registration?

Company -> hires lawyer to register Company2 -> Company2 -> hires lawyer to register Company3 -> etc.

> What if a lawyer hired by a company is the person initiating the registration?

Beneficial ownership is an old legal concept. It traces through entities to natural persons. Until one gets to the controlling humans, the search keeps running. It is a powerful and costly tool.

So short answer: no, daisy chaining lawyers and entities wouldn’t hide you.

Do you know if the beneficial ownership information is (likely to be) subject to the Freedom of Information Act? I ask because this kind of information can be in the public interest.

Edit: the Washington Post article on this says “ The general public won’t have access to the ownership data, a disappointment to anti-corruption campaigners, who say public scrutiny would help combat criminal activity.”

https://www.washingtonpost.com/us-policy/2020/12/11/anonymou...

Doesn’t FOIA only apply to government agencies, not companies and corporations?

This law requires ownership to be reported to FinCEN, a government agency. So it's natural to ask if a FOIA to FinCEN could get this information. It probably won't work though.

probably not, it'd be like asking the IRS for information on taxpayers. You won't be able to get your neighbor's AGI over the past four years, but you probably could get some summary or overall statistics on the income of people in your city or state.

It's a felony for tax return information to be disclosed without authorization (e.g. 26 US Code § 6103), though it still happens sometimes.

I don't see anything in the bill language that restricts the disclosure, much less makes an unauthorized disclosure a crime.

It is a good thing for privacy though, people use business entities like this for legitimate purposes to protect their privacy so the world does not know where they live, the car they drive, etc etc etc

The is the problem with "anti-corruption" efforts, is that always hurts people that have legitimate reasons or simply desire to live anonymous lives

I wish more people considered this. Lots of people keep pushing to get rid of cash, for example, because it will "reduce terrorism" or "reduce money laundering" or whatever. But I like using cash, because I don't want my bank, or an anti-money-laundering authority, or anyone else to know what I buy, when, why, how much, or from whom. It has nothing to do with illegal activity, or buying drugs, or whatever.

My parents and grandparents told me about the days before centralized documentation. A birth certificate was sufficient documentation, and of course those could be changed. One could lie about his birthday and not get caught. These days, no one is a person at all unless the government says he is, and even then, he is only the person the government says he is: I knew someone who was a transgender; she couldn't call herself a woman in many contexts until the government said so. This idea of constantly proving that you are who you claim to be, backed by government verification, strikes me as a bad direction to go.

I agree, but I feel that measures that are only available to the wealthy (like putting your finances behind an anonymous corporation) are making things worse. The powerful, who are in the best position to bring about change, are shielded from the consequences of the pervasive loss of privacy and so have little reason to do anything about it.

You don't need to be especially wealthy to own your home via a corporation. It's essentially a one time cost of a few hundred dollars plus a small annual registration fee.

Presumably this law still will be easily avoided by the sufficiently wealthy-- some kind of finance structure involving loans and whatever where a nominee is the legal beneficial owner. ... and outright criminals will just break it, because its not like violations of it will be detected quickly and if they are detected the criminals will already have worse problems.

Or just purchase a 'real' business that engages in some unrelated activity to own the property... Which is something just about every money launderer already does! It just has to be over the size threshold in this bill, essentially leaving this avenue open only to the wealthy.

The limits here speak to the exact opposite, it did not take a whole lot of money (a few hundred dollars) to create a fictitious entity to hold your home or other property so that is does not appear on public property tax records.

This was not a tool "only for the wealthy" and since the limits of the law are fairly low before the law no longer applies it is clear this law IS NOT targeting "the wealthy"

>>I wish more people considered this.

Modern US Society is losing alot of things that used to be a foundation. Privacy is one of them.

In general people today agree with the "if you have nothing to hide you have nothing to fear" rhetoric, generally accepting that "only bad people" want or desire privacy, and the government is only their to "protect good people from bad people"

It is all a lie ofcourse but that is where we are as a society, and I am not seeing anything on the horizon to change this

Largely we (the US) are moving to a more Authoritarian, collectivist society, leaving behind our Individualist libertarian roots

"if you have nothing to hide you have nothing to fear" only works if it applies all around. Declassify all the things, then we can have this talk...

It is not valid to claim that people have a right to privacy if only those well enough off to afford it are able to take advantage of it.

If the above is true:

>If you have employees and revenues, you are engaging in sophisticated money laundering. If you have a thousand shell entities, you are doing something else (and more common).

Isn't it easier (and more effective to the goal) to query the attorney of record, Articles of Organization filer, registered agent (etc from the Secretary of State), and have a more stringent eye on what they do, rather than taking personal identities to the Treasury?

The fault is not the individual, it's the supporting system that allows for thousands of anonymous LLCs to be coordinated - that only can happen through a support structure - that should be easy to identify through the current data.

Edit: also, yes, as another comment mentioned, thank you for chiming in. Very rarely do people get to speak to decision makers and advisors in these positions - this is real democracy at work.

> Isn't it easier (and more effective to the goal) to query the attorney of record, Articles of Organization filer, registered agent (etc from the Secretary of State), and have a more stringent eye on what they do

Formation documents and registered agents track legal ownership. An attorney may have a line to the beneficial owner. Or it may be to another attorney. Either way, that is protected by attorney-client privilege.

There is nobody logging beneficial ownership. The closest are banks, which started requiring beneficial ownership information only last year. Unbanked entities are dark.

Put another way, this bill is putting that “more stringent eye” on the system.

I'll add a second bit of context - a well respected member of Congress once told me, paraphrased "we do not regulate out in front. We are America. We are usually behind when it comes to regulations. We are free."

So, this legislation feels like a break from that consciousness.

Instead of playing cat and mouse with these entities - which the above quote illustrates as the American legislative way - we are going for the jugular of this issue.

Anonymous shell companies have been a problem for decades, to the point that they are a standard trope in movies and TV. How is this ‘regulating out front’?

Because the methods these shell companies employ to coordinate give off a greater signal in the 21st century datasets — going the personal identifier route, you’re able to target people based on personal affiliations. The goal is admirable — however, this act as a solution is hasty (opportunistic) and disguised itself as “protecting against (insert threat).”

I’m not sure how this answers the question. How is it hasty when the problem is decades old?

Hasty (maybe I should say opportunistic) because it’s ideological reasoning to pass is capitalizing on the current zeitgeist (which I believe to be leaning more antithetical to the quote above). Again, the reason this bill is intriguing is because the problem can be solved through other methods - albeit more effortful. You don’t really need beneficial identifiers on these types of companies to get who’s doing bad things.

What ideological reasoning are you referring to?

So this bill is the beneficial ownership paper for the US? Am I the only one who think this requirement is as stupid as it gets. If you are a money launderer are you going to make an accurate disclosure? How does the US/Authorities check the validity of these disclosures?

As someone who went through the BO pain, I think it only added more paperwork load to small business/guys like me.

These laws have precedence, and the precedence shows benefits [1][2]. It would have also mitigated historical harms [3].

Note that American compliance is de-centralised. A $5+ million entity attracts a different level of scrutiny from banks, corporate registers and brokers than a no-revenue entity with an overseas signatory.

[1] https://knowledgehub.transparency.org/assets/uploads/helpdes...

[2] https://open.cmi.no/cmi-xmlui/bitstream/handle/11250/2475354...

[3] https://www.jstor.org/stable/90012622

My question might be stupid since you seem to be more versed in this subject. But if I incorporate in the US, how does the government/relevant bodies know that I am who I say I am in the BO?

I believe it is a criminal act under this law to lie about it (there are other laws that make it illeagal to lie on government forms), so you would be committing a paperwork process crime which USG loves to enforce. Signing the false form would literally be mailing evidence of a crime to FinCen.

But if you are already a criminal... Would that matter?

Al Capone committed a lot of crimes besides tax evasion, but he went to prison for the crime he could be convicted of.

The more offenses someone commits, the more likely they'll make a mistake committing one of them and get caught. Yeah most money launderers will have no moral qualms about lying on a form, but someone already on the fence might be dissuaded if the risk of getting convicted increases.

True, lots of kingpins go down for off center charges.

My guess is that many people don't consider themselves all out criminals, just 'regular' folks skirting the edges of legality. So doing something undeniably illegal and on the record may discourage taking an action.

Or even if consciously criminal then one would want to minimize risk of getting discovered.

My point was related to those already practicing money laundering. They already know it's illegal, what's one more criminal act? Once you are invested, it's not a problem.

Something I think you are missing is that at the moment if the government is investigating potential money laundering and the trail leads to a shell company then the trail ends there. With the new law, if the company is registered to someone that doesn't exist then a felony has been committed and they can probably seize all the assets of the company.

If the criminals risk forfeiting their money they may look to other avenues instead of using American shell companies.

I very much doubt anyone is under the illusion that this will stop criminals trying to launder money through American companies, it just makes it easier to seize assets of potential laundering operations and to investigate sources.

Your lie has to pass scrutiny. Your lawyer also had to be willing to lie on paper. The companies who set up these fake corporations (with bogus boards) now have to supply a real person. If they don’t make an attempt to verify this information, then they become criminally liable too.

Ummm, you don't anyone to fill business fillings for you in the US. So no, you don't need anyone else to lie, no need to add conspiracy to the charges.

Also, finding an attorney that is willing to lie, is very easy. How do you think all this stuff is already happening illegally now? ;)

Right, so if government agents can’t string you up for your actual crime (which they probably suspect but cannot prove) then they can get you for lying on a government form.

It still seems to raise their risk profile as the shells are more likely to get discovered unless they meet these new thresholds.

"Never break two laws at once"

This had to be said by sometime who wasn't a career criminal. Lol!

The same way any company performs anti-fraud checks.

And how this is done - check the provided information against a known-good database (there are plenty of services that you can pay for here). Perform random spot checks. Make sure that the UBO is filing taxes for this entity’s earnings. Etc.

I’m not claiming it’s perfect; fraud detection is a hard problem, and it’s also pretty obscure if you haven’t had to deal with it at your own company.

Exactly, just find another Patsy too put down as the beneficial owner and use them as a proxy. Cartels and people with money/power, don't ask you to do this for them, they tell you. This bill lacks teeth in so many ways. Requesting honesty from criminals is silly. Expecting the banking industry that has lobbied for this secrecy to play along, is also silly.

This is already happening and had been for years.

Source; I know people who laundered money for years in the Caribbean. One of the Patsy's is paying a lot of tax debt for the shell that was in his name.

This law isn't just for money launderers, it's for people hiding assets. For example, there are many criminals and despots that steal huge sums of money and then form shell companies in the US and buy real estate or other assets.

If the beneficial owner is falsified, then if that property comes under investigation, they stand to lose it. There are currently multiple $50m+ homes in places like BelAir or Beverly Hills that are owned by anonymous shell companies and they sit vacant year round. Some, after much investigation were found to be owned by foreign politicians. I suspect a large percentage of these properties are also from ill gotten gains.

> they stand to lose it.

If the source of the funds was unlawful, they'd lose it anyways.

And as a guess, under the new law, if they have a fake owner, then the government can take the property because a documented crime has been committed, as opposed to hitting a brick wall when it encounters the shell company.

But making that 'patsy' the legal owner also increases the actual owner's risk profile. The Patsy has greater control and can redirect the money and is the legal 'owner' of the assets. That forces the non-legal owner to use someone they trust implicitly and someone closer to them generally, making them easier to tie back in a legal case.

> If you are a money launderer are you going to make an accurate disclosure? How does the US/Authorities check the validity of these disclosures?

Someone has to file the paperwork. If you willingly misfile it, then you are an accomplice. The various offices that manage these papers also try to do minimal checks. Also if the filer is a professional agent/attorney they have strict requirements to keep various details about their clients. (Which are protected by attorney-client privilege, but if there's sufficient evidence then a judge can issue a warrant, so the investigation can try to follow the trail. So either the attorney was duped or it was complicit.)

Government wants the information for tax purposes. If I sell a multi million dollar condo in Chicago, taxes have to be paid. If I sell an LLC that owns the same condo, no taxes are paid.

There are a lot of types of businesses that don't need physical presence, software development should be the most obvious.

How is this bill going to affect US entrepreneurs operating legitimate businesses incorporated in Delaware (or similar jurisdictions) who are just trying to protect their privacy?

That's my worry. I seem to be in the minority here, who thinks that if I am not being suspected of a crime, I should not have to provide any information to the government about a company that I own. To me, this is another example of freedom lost in the name of crime/terrorism/protect-the-children/whatever justifications.

It sounds like this information will be available to people at banks and law enforcement without a subpoena. Is this the case? If so, this represents an enormous threat to privacy. It should not be possible for people at a bank or law enforcement to do a db query without judicial consent, find out everything someone owns, and illegally leak that data to their friend / reporter / relative / lawyer / PI who asked. I don't care if that makes their work harder or more expensive; unless someone has reasonable suspicion that a person is engaging in illegal activity, there are good reasons for that data to be private.

Why wouldn't beneficial ownership of a company be entirely public data?

TL;DR I agree with the intent of this law but I disagree with the exact implementation.

There are groups of people who have legitimate safety concerns (victims of domestic violence and stalking, members of law enforcement, victims of abuse from law enforcement, public figures potentially subject to political violence such as the people certifying voting in this recent election, high net worth individuals, corporate officers of companies some people have beef with, activists, LGBT in very religious areas, reporters, whistle blowers, etc) who are using these tools as part of a DIY witness protection program to safeguard themselves against violence and intimidation. This is undermined if people can trivially unmask the beneficiaries of companies used to obfuscate purchases of assets such as a house or car. I agree that this data should be available to law enforcement during an investigation (ie with a subpoena), but allowing bank employees or any member of law enforcement to trivially access it whenever they want opens up the door to abuses and leaks (selling access or granting access to friends, contacts, or others intent on doing the owners harm). It also assumes blanket trust in those with privileged access and there have been many instances in the past of this trust being abused. It should require more than knowing or being a cop or a bank employee with access to be able to DOX or come after someone who is not breaking the law but wants to remain private.

I may be off base here, but what if I'm a super-rich dude who starts a company that exists solely to send the SPCA, St.Judes and Shriner's Hospital a million a month because of those gut-wrenching commercials, but I want to remain completely anonymous about it?

Isn't that dealt with by running a non-profit? "Churches, charities and other non-profits are also exempt."

If you need a a commercial company to make money before handing it over, here in the UK it is common to set that up as a subsidiary of the non-profit. Charities do it all the time, a subsidiary company runs the charity shops, and gives the profit to the parent charity. This allows the shops to be run more like a commercial operation, with fewer constraints than a charity is required to follow, then when the money is handed up to the charity those constraints apply to how it is spent or distributed to other charities.

Most of the value gains of companies in the current economy occur before a company IPO's and shares are available to the general public. If regular people are to be able to invest successfully then they will need access to invest in those companies. The JOBS act tried to help facilitate this, but by making it easier for companies to wait to IPO, it seems to have just made it easier for accredited investors to reap the benefits of their special status for even longer periods of time. While this law may help with shutting down some corrupt entities, I fear it will prevent many new possible ways for normal people to invest in the last remaining sector of the economy producing any decent returns. Would an ETF of a large number of start-ups be allowed under this law?

Also, attaching a bunch of non related stuff to huge bills like defense appropriation is really an annoying to me, but I guess that is how the sausage gets made.

> non related stuff to huge bills like defense appropriation

An inspiration for this bill was mitigating circumvention of the Magnitsky Act. Americans using shell companies may evade taxes. Foreign entities using shell companies may evade our counterintelligence.

> Americans using shell companies may evade taxes. Foreign entities using shell companies may evade our counterintelligence.

Americans use incorporated entities to buy assets to limit their personal or corporate liability in operating businesses. This requires all of those to be queried for beneficial ownership - for what reason?

Anonymous Shell corporations is being used synonymously with legitimate holding companies because it markets the cause well - greater tracking on who owns what.

> greater tracking on who owns what

This is transparently the intent of the bill.

God forbid the government charged with enforcing property law know who owns what!

Public Courts are so good we chose to use private arbitration!

You're ultimately still relying on the public men-with-guns to enforce anything binding, so suck it up and get back in the public courts.

That’s quite a large assumption on who would win those battles - and further how they really have to be enforced - pen mightier than the sword, or some such.

Btw - fun ‘spar.’ I respect your thinking, just disagree slightly

> Americans using shell companies may evade taxes.

This is a general problem with the tax code. Fix what Apple does, which needs to be done anyway, and you don't have this problem.

> Foreign entities using shell companies may evade our counterintelligence.

Isn't a foreign counterintelligence service just going to list a straw man as the beneficial owner?

This is great (and thanks!), but if congress really cared about this stuff, they would have big teams at the IRS working on tracing sophisticated money laundering. As it is, those teams are underfunded, headed by revolving doors of people, and threatened whenever they do something bigcos don't like.

Cool. Ive always wanted to ask this to someone in the us. I am from India and here the government department that manages companies has rules put in where all companies necessarily put all directorships as public info. Same for an interesting idea. You cannot have more than two layers of companies. A bunch of people cannot form a company and then buy/setup a subsidiary below it beyond 2 levels. Same for each human director lists all directorships in all companies.

What benefit does anonymity provide ? Its not like your phone/address has to be made public. Just a name/id. This transparent system is working here without any issues, why cant it work with you guys?

Short answer: hiding questionable (not necessarily illegal) activities.

good. if you say that argument, whats the point of kyc/aml legislations? if corporates are allowed to operate in secrecy, do whatever, why expect kyc norms on the rest of the world?

Digression-- why is it 2021 and I'm reading a 1990s-style forum that has no automated way to authenticate the "JumpCrisscross" identity?

There might be something to having an option for an authenticated identity, to a reasonable degree of certainty. Maybe charge a fee for a special badge to cover the extra administrative hassle?

What kind of authentication of a user do you have in mind ?

Further, in what manner is 'jancsika' authenticated, to anyone, and why do you consider that negative ?

Anonymity is for people who influence our laws, not for people subject to them.

I am not a US citizien but I'd still like to thank you for taking time out of your day to explain. I wish politics would generally be more transparent about their intentions but I guess it wouldn't be politics then. It's always hard to find out the intentions of thresholds and numbers as the models behind them are never communicated through the media.

Do you know, will the beneficial ownership disclosure information be available to the public, including available to litigious lawyers?

What is the estimated cost for the regulatory compliance? Considered that the burden will fall on small business, have you considered the impact on global competitiveness? Is that impact worth the benefits of this legislation?

If you are wrong and later discover unexpected side-effects, what is the mechanism and cost of fixing or removing this regulation?

This sounds a lot like the "people with significant control" rules in the UK:

https://www.gov.uk/guidance/people-with-significant-control-...

I am a director of a small and mostly inactive company. We had to fill in a form when these rules came in. We have to fill in a form when we change directors or shareholders, which happens every few years. We have to fill in an annual confirmation that the information is up to date. All of this takes a matter of minutes. The cost is negligible.

> The cost is negligible.

It is not. It adds stress. When this was added (where I operate), I had to call in an accountant to do the paperwork because the penalty is prison time, and not a fine. This additional stress and paperwork just keeps compounding (there is a new paperwork every one or two years now). Then you have the small fee for that particular paperwork (should have been free?) and the accountant fee. It just keeps adding up, and for a single or very small business it's becoming unsustainable.

“the penalty is prison time“

Penalty for what? There is usually a pretty large distinction between misfiling as part of a crime, and misfiling as mere clerical error.

I don’t know where you operate.

Perhaps it’s so corrupt that officials will use any excuse to jail people who don’t pay them, but if this is the kind of locale in which you operate, a regulation like this would seem to be the least of your worries.

You're thinking about this as though the system is free of uncertainty and prosecutors didn't use overcharging to extract plea bargains.

If doing something could allow the prosecutor to plausibly charge you with this, even if you wouldn't be convicted, you now have to be counseled in doing it to avoid that possibility, otherwise you could be coerced into pleading guilty to something you didn't do because the alternative is prohibitively expensive legal defense from a questionable charge with a low risk of a high penalty.

Businesses are risk averse with things like this, so now, because of the possible implications, they'll hire a lawyer/accountant to deal with it, increasing compliance costs on many innocent people.

Not really. I totally agree that if you have committed some kind of crime, then this could be part of overcharging you.

My point is that if this is all they have then they don’t have a case, so legitimate businesses don’t need to stress about about clerical errors landing them in jail.

> I totally agree that if you have committed some kind of crime, then this could be part of overcharging you.

There is no if. Everybody is committing a crime all the time. There are laws that prohibit doing things that other laws mandate. There are more pages of laws on the books than anyone could read in a lifetime, so there is no feasible way to know that a given action isn't illegal.

Businesses are engaged in risk management. They try to avoid knowingly breaking the law. Making that process consume more resources, increases compliance costs.

If what you say is true, this law makes no difference, so why bother critiquing it?

The law likely will make little difference for its intended effect, but will create compliance costs.

It will also needlessly lead to the disclosure of personal information from people doing nothing wrong, simply because using tax disregarded LLCs has become a widespread practice to patch around just about everything else constantly demanding your personal info and leaking it everywhere.

By demanding the submission of this information, having harsh penalties for avoiding it, and providing apparently zero protection or consequences for disclosing it... that outcome is essentially guaranteed.

“become a widespread practice to patch around just about everything else constantly demanding your personal info and leaking it everywhere“

Is it? Can you give some examples of how this is used?

I have never seen any reporting on this practice. What makes you think it is widespread?

> You're thinking about this as though the system is free of uncertainty and prosecutors didn't use overcharging to extract plea bargains.

In the UK, they don't, because we don't have plea bargains.

> In the UK, they don't, because we don't have plea bargains.

Various UK sources seem to think you do, and cite specific government guidelines for the practice, e.g.:

https://www.inbrief.co.uk/court-proceedings/plea-bargaining/

In my experience of doing this, the cost was negligible. If you freaked out and spent a lot of money on it, that's your business.

> the penalty is prison time, and not a fine

You aren't going to prison for an honest mistake. mens rea, innit.

As some solicitors say [1]:

> It is a criminal offence not to:

> * Take reasonable steps to find out if there is anyone who is a PSC and identify them to Companies House

> * Give notice to the registrar of companies of an entry alteration or note in a company’s PSC register within 14 days of any change being made

> The sanctions for such offences are a fine or possible imprisonment.

> In the event that you do not comply with your PSC requirements Companies House will contact your business and give you an opportunity to rectify the position, before proceeding to enforcement action.

https://www.gl.law/insight/news/criminal-effects-psc-regulat...

You seem like someone who isn't risk-averse. Personally, I like to know that what I'm doing doesn't put me at the mercy of an annoyed / overworked bureaucrat. I don't think it's only police officers who sometimes enforce where they shouldn't.

What additional burden do you think the bill puts on small businesses?

> The act also makes “deliberate false statements or willful evasion of its requirements” a federal crime, punishable by up to three years in jail.

The relevant words being ‘deliberate’ and ‘willful’, meaning the prosecution will have to prove your intent beyond reasonable doubt.

If there is no crime to point to beyond misfiling, there will be no case for willful intent.

As someone else pointed out, those words seem ripe for exploitation by prosecutors looking for a plea-bargain.

As I have replied elsewhere, that’s only a problem if they have something else on you.

Legitimate businesses don’t have to stress about a clerical error landing them in jail.

Better to have a well written law on the side of the civilian than a badly written one that can be enforced on the whim of a bureaucrat. At least, that's the way I see it.

That doesn’t seem to be related to this topic in any obvious way.

That seems pretty similar to every government form that I've ever filled out.

> The bill is not a general anti-money laundering bill. If you have employees and revenues, you are engaging in sophisticated money laundering.

So, sophisticated money laundering is explicitly legally allowed?

Not really, you just need different tools to deal with it. Why expect a single law to fix everything?

> This bill tries to exempt economically active entities.

A company with 5 emplyees is not active?

A company with 5 employees is very unlikely to have a complicated ownership structure and so wouldn't be hamstrung by the act.

You are penalized if you are small, complicated, and anonymous. You aren't penalized _just_ for being small, or complicated, or anonymous.

Thank you for your efforts.

Thank you for explaining!

Well written, thanks for making your case here.

Found Sam Seaborn

We've banned this account for breaking the site guidelines badly and repeatedly. This site is not for that kind of thing.

If you read https://news.ycombinator.com/newsguidelines.html and decide you're willing to follow the rules and use HN as intended, you're welcome to email [email protected] and let us know. We're happy to unban anyone who gives us reason to believe that they'll follow the rules in the future, and any kind of squid is welcome in principle.

How’s that?

I think what you’re saying is the wealthy have made it too complicated to tax them effectively or even find out what they are doing with their assets.

> the wealthy have made it too complicated to tax them effectively or even find out what they are doing with their assets

Complexity comes into play on the cost calculation. Wealthy people with complicated structures doing little revenue with few or no employees may find this law onerous. Most people, including the wealthy, will be done listing themselves, their spouse and a few outside investors.

I think you're mistaken. This is about anti-money-laundering, not tax.

They're one and the same. The purpose of money laundering is to pay the taxes on illegally acquired money so you can spend it legitimately. If the IRS wasn't going to come after you for tax fraud, I don't see the point in laundering. Just deposit that crap in the bank.

No, you are wrong.

The purpose of money laundering is to prevent government from getting too curious about where that money is coming from.

That’s what the parent is saying. In a nutshell by taxing money it becomes legitimate. The trick lies in not drawing any scrutiny on the business itself, I believe it is basically attempting to make the said business appear as ordinary as possible.

BVI has already passed the legislation to set up a beneficial ownership database. The battle for this ended about four years ago (there will be hold outs like Mauritius, and Nauru but they are now very small in number...beneficial ownership disclosure is now accepted).

And btw, this will make no difference for most foreigners doing evil things (the ever-present "Russian"). Russia doesn't participate in information-sharing, money laundering today is largely a problem of govts choosing not to participate in information-sharing (and I think the implication is that this is anti-corruption, this globalist approach to corruption does nothing, it will help no-one).

This law appears to be a boon to anyone trying to find out where specific wealthy people live in order to kidnap them and/or their families for ransom.

It doesn't matter if the information isn't supposed to be made public, if you hand it over it's easily social engineered out, and if you hand it over it gets sold to data brokers. The only way to be secure is to not actually share the data, and this law-- a rider which bypassed democratic review by being tacked onto a budget bill-- makes doing so a crime.

:(

I think that no law should be passed that requires the collection of personal information without including penalties for abuse of the information at least as severe as the penalties for not providing the information.

People shouldn't be doing business in the shadows. If you are engaged in economic activity you should be a knowable entity. It isn't hard to find where wealthy people live anyway.

The "economic activity" being discussed in my sub thread here is simply owning your own home and not having your address easily available for kidnappers and nut bags. It is, in fact, pretty hard (as in the cost can be easily raised to a couple grand with a bit of opsec).

Renters have no such disclosure of where they live.

This law could have at least made unauthorized disclosure of the information collected a felony as is the case for tax returns, but it does not.

Thanks for outlining the thoughts that went into this. To me this once again exemplifies why a blockchain for assets is the way to go. And by that I don't mean an ethereum or bitcoin (or insert popular coin here) type of blockchain. I mean a public ledger run by regulators that keeps track of all assets. If enough regulators adopt such a model and allow tax collectors to access its data then that lookup for the ultimate beneficial owners becomes much more feasible.

How do I downvote on here?

When you get (iirc) 501 “karma “ a downvote button appears next to the upvote one.

I think the threshold is still 500 karma for that.

You need at least 501 karma to use that feature.

> This seems like the government stumping on small money launderers while giving the big guys a tax...

It is a little different. Using your numbers, previously $5 million got a big player ~1,000 shell companies, now it gets them 1. The law would make a legal manoeuvrer several orders of magnitude more costly. That is more powerful than a $5 million per business tax.

The way I see it, before, he had two choices: Run a single money laundering operation where he recruit people, have an office, etc... and have a sizable amount going through it. Or create 1.000 shell company. Having a single shell company with no presence and employees move dozens of millions of dollars will raise eyebrows from the bank. But a 1.000 shell that move dozens don't.

After this, he has only one choice: Run the fake business.

its simply the cost of enforcement. The tax will help make sure the public is getting a cut, you cant just have a shell company on the backs of the american system without paying some locals. The tax will help fund enforcement efforts for better security, some of these "big" companies will be corrupt and there will be more money to help catch these bad actors. Also there probably has been some data done on how these shell companies run and with this one law you take out 90% of corruption.

There might be some good actors that get caught in this too and have to go out of business. If there is such thing as a good shell company???

You cant catch every drug dealer so you either focus on the big offenders and make them pay or you make drugs legal. I think its better for society if we do the former. Drugs are unhealthy.

Wouldn’t that force every small business to hire legal experts to prove they aren’t shell companies?

No, it will force small businesses in a handful of states to provide their beneficial owners, as they already do in most states and when opening bank accounts nationwide.

Probably a dumb question, but are the disclosures only available to the government (federal?), or will the disclosures be available to the general public (and litigious lawyers) too?

Government only.

I can find nothing in the bill that guarantees this, nor provides for any penalty for unauthorized disclosure. Am I missing something you can direct me to?

I can state that in practice, in attempting to social engineer my own legally protected information from banks and local government I have had nearly 100% success rate in obtaining it. The only solution is to not give them access to the data in the first place.

If this information is available 'only to law enforcement' as some have suggested here, that often means that essentially any law enforcement anywhere in the country for any reason. If you don't know someone who can look up tags for you, or addresses off drivers licenses ... you need to get out more. That level of protection is better than nothing, but it isn't particularly protected.

Yes, it keeps randoms out. Be careful asking friends in law enforcement to look something up for you. Requests are logged. And if another law enforcement group has an alert set, you will get a visit asking why you were asking.

Small businesses are usually LLC. This will most likely target C-Corps than anything else. But yes, this will make life hard for anyone running a remote C-Corp and does not have enough revenue to be "legitimate". This also will inflate costs for small businesses running legitimate operations: Rent will go up, Harder to recruit people and Less profit or no profit. I lived near a place like this. It was impossible to run a profitable coffee-shop or restaurant because there was lots of competition, little customers and sky-high rent costs. It seemed like 90% of the activity right there was simply fake or driven by the money laundering economy.

None of what you said seems to follow from what is explained in the comments above or the article. From my reading, literally all the small business has to do to be “legitimate” is to accurately disclose the beneficial owners’ names, addresses and a Government issued ID (which I assume can be foreign for foreign owners as long as it can be verified).

There’s nothing about not being allowed to have an anonymous shell company that inflates the costs of legitimate business...

> literally all the small business has to do to be

These are the most dangerous words ever. Especially that this requirement is probably ineffective. It is a small paperwork, yes, but it is there. A couple years later, it is reviewed and judged to be ineffective and new requirements are added to this paperwork.

Then we end up with hundreds of paperwork to fill and submit just to be able to run a business.

> This also will inflate costs for small businesses running legitimate operations

It's inherently obvious you didn't read the article at all. None of what you state is true. Just do yourself a favor and read the article.

That's my worry, too. For my 3 person consulting business we already have to spend about 8 hours a week on "compliance".

Also, look at the second sentence: churches, charities and other non-profits are isent. Creating a church was already a great business, now it will be even better.

Considering how many churches are money laundering for say televangelists, they could probably use some competition

This sounds like the same reason we have a death tax. Those that can’t afford to setup the right paperwork are essentially screwed and have to pay their fair share. Meanwhile those with teams of lawyers have the ability to skirt paying their fair share. Great.

In general, if you can't afford a lawyer to set up paperwork, you won't have enough to trigger the tax, though. The outrage about the inheritance tax is generally misplaced.

And to be fair, that last bit is simply the US tax system: If you can lawyers and accountants, you might not pay much tax. Unfortunately, change requires congressional action and folks working together.

> In general, if you can't afford a lawyer to set up paperwork, you won't have enough to trigger the tax, though. The outrage about the inheritance tax is generally misplaced.

The outrage is that it's a trap for the unwary. Billionaires don't pay it but family businesses who didn't realize they had assets in excess of the threshold do, or people who die young before doing the preparation.

If you can avoid it just by hiring an accountant then it shouldn't exist.

Inheritance taxes don't kick in until $11.5 million.

My state taxes inherited out of state real property at an absurd rate (I wanna say 20%, might be 15, in any case, that's a big chunk of change).

In practice it's just a big f you to anyone who's parents live out of state and die owning their home and didn't have the foresight to put it in trust or sign it over to the kid(s) prior to dying.

There is no justifiable purpose for this tax other than revenue. Property out of state has zero cost to the people of the state. It's a pure money grab and it's only affecting the middle class (because anyone who can justify the cost of estate planning will not be subject to this tax).

Edit: I'd be curious to see why people find this comment so disagreeable? Or is it just ideologically inconvenient to point this stuff out?

> There is no justifiable purpose for this tax other than revenue.

Isn’t this the alleged purpose for all taxes?

Where did you get that number? As the executor of my father's estate, I can attest to paying taxes based on a much lower threshold.

It doubled a couple years ago, which was temporary, so will halve in a few years time. That will catch people unaware.

2020/2021 are good years to die, tax wise. Covid19 is doing the taxpayers a solid.

:-/

Gp is talking about at the federal level, where that is indeed the number. You probably had to pay state taxes, those have much lower limits in some states.

Isn't the lower limit on an estate that is subect to estate taxes pretty high? (State rules may differ, but if you're talking about "the death tax", you're probably speaking nationally)

Dying is actually subsidized for people with less than that who have unrealized capital gains, unless I understand the system wrong.

Exactly! This kind of legislature is pointless. Either fix everything at once, or don't. There's zero point in making small incremental changes that do not benefit everyone, and still allow a proportion of thugs to get away with it. It is obviously a political stunt by a government desperate to score some 'wins' on its way out.

> Either fix everything at once, or don't. There's zero point in making small incremental changes that do not benefit everyone

?! That’s an interesting perspective, especially on a software development forum :)

Most (new) laws have loopholes. The solution is to close the loopholes, not abandon laws.

> Either fix everything at once, or don't. There's zero point in making small incremental changes that do not benefit everyone

Have you ever had any look at how laws actually get passed in the US and pretty much any country with some sort of democratically legitimized government?

Your demand in any of these systems would simply lead to no laws getting passed at all, most of the time, total legislative gridlock. Legislature is an incremental process by nature, and especially so in systems of government where the interests of more than one side are represented, so compromises have to be made at every step of the way.

For what it's worth, this was supposed to be an "agreement onto absurdity" satirical response, to point out the flaw of following parent's reasoning to its natural conclusion.

Though, given people didn't pick up on the sarcasm, at the very least I'm glad it's at least being downvoted instead of upvoted!

Huh, never would have guessed, I suppose sarcasm really doesn't translate well in text form. There are just too many actual crazy viewpoints around to be sure which ones are actually just satirical/sarcastic.