US Treasury Secretary Janet Yellen confirmed the United States’ dedication to promoting corporate transparency in the partnership with over 20 countries attending the Summit for Democracy this week.
The Biden administration is already working on creating a small business ownership database, and Yellen promised on Tuesday to maintain and oversee the beneficial ownership registry. This will ensure law enforcement access and protection of individuals’ personal information.
Yellen stated in a speech preceding the summit that the beneficial ownership database would “deter dirty money from entering the U.S.” The registry is expected to include the personal details of at least 32 million US business owners to fight corruption.
Countries such as Colombia, Malta, and Japan are part of this commitment. Yellen emphasized the importance of revealing shell corporations as the most crucial step toward creating an inhospitable environment for corrupt actors within the financial system. She also acknowledged the vulnerabilities in tracking business ownership, as shown by recent efforts to monitor sanctioned Russian assets.
The US is pushing to counter illicit finance partially in response to Russia’s invasion of Ukraine. This effort aims to more effectively identify wealthy Russians suspected of hiding stolen funds and assets in the US and worldwide.
The two-day summit, co-hosted by the governments of Costa Rica, the Netherlands, South Korea, and Zambia, begins on Wednesday. In September, the Treasury initiated the rulemaking process to establish the small business ownership database. Most American businesses under 20 employees must register with the government starting January 1, 2024.
Yellen highlighted instances of corrupt foreign officials hiding stolen funds in US-based shell companies, kickbacks laundered through anonymous foreign real estate purchases, and corrupt proceeds moved through complicit or unwitting financial intermediaries like attorneys or wealth managers.
In November, the National Small Business Association filed a lawsuit to halt the creation of the US database, claiming it places undue burdens on small businesses and infringes on states’ rights to regulate them.
Nate Sibley, a research fellow with Hudson Institute’s Kleptocracy Initiative, argued that a properly implemented beneficial ownership registry is a long-overdue and essential tool for combating money laundering and sanctions evasion. Ian Gary, executive director of the Financial Accountability and Corporate Transparency Coalition, urged the Biden administration to introduce new regulations addressing money laundering in the $50 trillion US real estate sector.
As US Treasury Secretary Janet Yellen reaffirms the country’s commitment to corporate transparency in collaboration with more than 20 nations at the Summit for Democracy, efforts to establish a small business ownership database are underway. The beneficial ownership registry aims to combat corruption and illicit finance, which has become a pressing issue in light of Russia’s invasion of Ukraine.
However, the National Small Business Association has filed a lawsuit opposing the creation of the database, citing the undue burden on small businesses and infringement on states’ rights to regulate them. Advocates for the beneficial ownership registry argue that it is a crucial tool for tackling money laundering, sanctions evasion, and corruption.
