July 2, 2020
LANSING – Michigan Attorney General Dana Nessel recently joined a bipartisan coalition with 41 other attorneys general urging the U.S. Senate to pass S. 2563, the Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act.
The letter was sent Tuesday to Sens. Mike Crapo and Sherrod Brown, chairman and ranking member, respectively, of the Senate Committee on Banking, Housing and Urban Affairs. The ILLICIT CASH Act updates the federal framework for fighting money laundering and terrorism financing, which has not been comprehensively reassessed since its inception in the 1970s. The act creates new tools for information sharing between financial institutions and law enforcement. In addition, it requires a covered entity to report its “beneficial owners,” the actual people who benefit from or control the entity.
“There is no place in Michigan for criminals – especially those who engage in money laundering and terrorism financing,” said Nessel. “The ILLICIT Cash Act is commonsense reform and will be a useful tool for law enforcement in our state to further hold those who hide their criminal acts behind shell companies accountable.”
Currently, most states do not collect information that identifies who owns or benefits from corporations and other legal entities. Without this information, states are handicapped in efforts to detect shell companies that are concealing illegal activities. Shell companies often have no physical presence and generate little to no activity, which allows criminals – such as drug traffickers, human traffickers, terrorist financiers, tax evaders and corrupt government officials – to anonymously shelter and transfer the proceeds of their crimes.
Under the ILLICIT CASH Act, certain business entities will have to disclose a “beneficial owner” to the federal government. A beneficial owner is a “natural person” who controls an entity, owns at least 25% of it or receives economic benefits from it. The Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury will then keep all the disclosed beneficial ownership information in a federal registry. The act requires FinCEN to release beneficial ownership information to law enforcement agencies, including at the local and state levels.
In sending this letter, Attorney General Nessel joins the attorneys general of Alabama, Alaska, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, N. Mariana Islands, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, West Virginia and Wisconsin.