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FinCEN Aftermath

: money, December 14 2020

As expected, the biggest money-laundering scandal to date ended up with no consequences to anyone. 3 months later, my best guess is, that FinCEN are using every resource to tie-up the leak, find and punish the whistle-blowers, rather than doing their actual job of hunting bad people. Curiously, last week (11 Dec 2020), the US Senate passed the "National Defense Authorization Act (NDAA)", which actually includes some measure for fighting back. After quick check, I saw that this bill is voted annually and primarily targets the military expenditures and their handling ... which the current president, Mr.Trump, threatens to veto, because (...yeah, it gets even better...) it also shield social media companies from liability for content that users post on their platform. Apparently some sly congressmen tucked way in the back of it, the minuscule regulation against the so called "shell companies".

Definition:
Shell companies are companies without active business operations or significant assets. They can be set up by business people for both legitimate and illegitimate purposes. Illegitimate purposes for registering a shell company include hiding particulars of ownership from the law enforcement, laundering unaccounted money and avoiding tax.
What changes?
FinCEN has to report to the Treasury Department when they detect foul play.
FinCEN has to improve its tech capabilities ("why our ITs are just 3...oh wait, all the good ones make 6-digits in California").
The Justice Department would have to file yearly reports on why does it give "free pass" to the banks.
And the main one: the companies have to disclose who owns and/or profits from them. This was first proposed in 2008, but in US there is a perfectly legal form of bribing, called "lobbying", which crushed any previous attempts.
At present, anonymous shell companies can be set up with less disclosure than what is required to get a library card. These companies can be used to hide wealth or launder the proceeds of crime through legitimate assets.
Before you get too excited and wonder if the world finally starts getting changed for good, let me bring you back to the harsh reality - there is a back door. If your company has more than 20 employees and $5 million in annual sales (yes, "sales", not "profit"), it is an exempt from the law. Thus making a seemingly good bill, just the next "door in the field". $5mil is a pocket change for the big players. They will not even notice if such amount is missing from the account. Circumventing the new rule will be a child play for any accountant, who can think and breathe at the same time.