WSJ: U.S. Treasury’s Beneficial Ownership Rules Stirs Debate

This week, the WSJ reported that the U.S. Treasury is “facing a wide range of views on the details of a corporate ownership database, more than a year after the agency was tasked with implementing a law that Congress hopes will help curtail the use of anonymous shell companies.” In its review of public comments received by the department relating to the proposed rules, the publication noted that, while groups advocating on behalf of financial institutions and small businesses expressed concerns over the challenges and costs of complying, anticorruption groups have largely lauded.

According to the Open Government Partnership, the Global Financial Institute estimates that “anonymous shell companies were facilitating the illegal outflow of roughly $1 trillion from developing countries every year, while World Bank research found that 70 percent of corruption cases analyzed involved anonymous shell companies.” Yet, according to a study by the Tax Justice Network, out of 133 jurisdictions, only 37 have, what they consider, “proper legal ownership registration,” with just 11 jurisdictions making the corporate registry information publicly available online. The United Kingdom, one of the 11 jurisdictions and the only jurisdiction to provide the information in an open data format, is the perfect case study in the importance of verification, a critical challenge to its effectiveness.  

In a study of 10 million corporate records, Global Witness discovered that approximately 10% of all UK companies, relying on legal loopholes, would not identify its beneficial owner. Among those that do, though, four thousand beneficial owners are listed under the age of two, including an owner who has yet to be born. Furthermore, due to the open data nature of the registry, Global Witness was able to identify 5 owners that appear to control more than 6,000 companies and nearly 10,000 companies controlled by “beneficial owners” who control over 100 other companies! More shockingly though, the analysis revealed that “7,848 companies share a beneficial owner, officer or registered postcode with a company suspected of having been involved in money laundering.” By leveraging technology like Sigma, insights into risk, like those identified by Global Witness, can be derived not just from corporate registries but from a variety of data sets, both structured and unstructured in order to both mitigate and fight financial crime more effectively.

About Sigma360 | The Standard in KYC & Financial Crime Compliance

Sigma360 is a full-stack financial crime compliance and risk intelligence platform that unifies high-quality global risk data, proprietary intelligence, advanced screening technology, and trusted AI to help organizations identify and act on risk with greater speed, precision, and context. Built for an emerging era of AI and Super Intelligence, Sigma360 applies advanced entity resolution, intelligent matching, and automation across point-in-time screening and perpetual monitoring to reduce false positives, surface meaningful direct and network-based risk, and support faster, more defensible decisions. Founded by former U.S. Treasury Department and National Counterterrorism Center official Stuart Jones, Jr., Sigma360 is trusted by banks, fintechs, payments providers, and other regulated institutions worldwide, protecting trillions of dollars in assets and billions of dollars in monthly transaction value.

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