BPI Applauds FinCEN’s Ongoing Effort to Crack Down on Shell Companies

Washington, D.C. — The Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking today requesting feedback on a proposal to require certain businesses to report identifying and beneficial owner information to the bureau, as required by the National Defense Authorization Act for FY 2021. A beneficial owner is defined as any individual that owns or controls 25 percent of the ownership interests of a reporting company. Angelena Bradfield, BPI senior vice president, AML/BSA, sanctions and privacy, issued the following statement in response to the announcement:

With this proposed rule the U.S. regulatory regime is one step closer to closing the anonymous shell company loophole that criminals have exploited to launder money – through the purchase of luxury New York penthouses and other creative schemes – in support of drug trafficking, human trafficking and arms smuggling. We are encouraged to see this proposal take shape and value the opportunity to continue to work with regulators to achieve a final rule that brings greater transparency and helps to crack down on malicious actors.

The proposed rule in its current form provides clarity in terms of who must file, the timeline for filing and the type of information that must be submitted to FinCEN. For example, it indicates that a reporting company must identify itself by providing information such as its name, address and state or tribal jurisdiction of formation. It must also identify each beneficial owner and company applicant and provide pertinent identifying information. Furthermore, it establishes reporting guidelines for both domestic and foreign companies.

BPI has long advocated for reforms to U.S. anti-money laundering and beneficial ownership rules, working closely with Congress, consumer groups and other stakeholders amid efforts to pass the National Defense Authorization Act for FY 2021. In 2017, BPI’s predecessor organization, The Clearing House, released a report that analyzed the current effectiveness of the AML/CFT regime, identified fundamental problems with that regime and proposed a series of reforms to remedy them. To learn more about BPI’s previous advocacy on this topic, please click here.


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