Global Financial Integrity

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GFI Urges Strengthening of Proposed Treasury Rule to Combat Dirty Money Flowing through U.S. Banks

Clark Gascoigne, +1 202 293 0740 ext. 222

FinCEN Proposal Aims to Require U.S. Banks to Collect Meaningful Ownership Information on All Accounts, but GFI Warns of Major Loopholes in Proposal

GFI Has Advocated for Such a Requirement Since Its Founding

WASHINGTON, DC – Global Financial Integrity (GFI) welcomed a proposed U.S. Treasury Department rule aimed at curtailing the flow of dirty money through the U.S. financial system, but the Washington-based research and advocacy organization called on policymakers to significantly strengthen the draft regulation in comments submitted to the government late Friday.

Issued in late July by the Financial Crimes Enforcement Network (FinCEN), the financial intelligence arm of the U.S. Treasury Department, the Notice of Proposed Rulemaking (NPRM) on “Customer Due Diligence Requirements for Financial Institutions” seeks to require banks under U.S. jurisdiction to collect information about the beneficial owners of companies for which they open accounts, a change that GFI has advocated for since its founding and one that would bring the U.S. in line with international norms and most other advanced economies.

“We are extremely glad to see the Treasury Department finally taking up this issue, and we fully support their intention to address the use of anonymous entities in international crime,” said GFI President Raymond Baker, a longtime authority on financial crime. “We would like to see the rule strengthened in a number of ways before it is finalized, but this is a change that we have been urging since the inception of our organization.”

“Anonymous entities are a favorite tool of criminals, terrorists, and tax evaders looking to launder illicit funds,” explained Heather Lowe, GFI’s legal counsel and director of government affairs.  “Requiring banks to know the true, human, beneficial owners of each and every account that they open is a straightforward way to begin curbing the trillions of dollars in illicit capital flowing through the global financial system.  To put it simply, there is no argument in favor of not knowing with whom you are doing business, and this regulation gets to the heart of that issue.  That said, as currently drafted, the proposal has a number of loopholes and short-comings that need to be addressed.  We look forward to working with FinCEN to ensure that the final rule is as strong and sensible as it can possibly be.”


The comments from GFI specifically urge changes to the proposal in order to close loopholes and strengthen the regulations. The organization particularly recommends strengthening the rule’s definition of beneficial owner to:

  • Ensure that information on the real, human owners of each account is captured,
  • Lower the ownership threshold from 25 percent of an entity to 10 percent to make it harder for criminals to subvert, and
  • Bring it in line with Financial Action Task Force (FATF) recommendations and other U.S. Government compliance standards.

GFI goes on to advise that the rulemaking should apply retroactively to existing accounts—not just to new accounts—with financial institutions being required to collect ownership information on all accounts opened on or after January 1, 2013 and on all other existing customers on a risk basis.

Other recommendations from GFI state:

  • The ownership information should be provided under the penalty of perjury that to the best of the certifier’s knowledge, after due inquiry, the information provided is complete and correct.
  • The form used to provide the ownership information should be a U.S. Government form, clearly indicating that it is a legal requirement.
  • The form should be the beginning of a bank’s due diligence with respect to status, and not dispositive proof of beneficial ownership status. Financial institutions must take reasonable measures to satisfy that they actually know who the beneficial owner of the legal entity is.
  • This regulation should supersede other regulations, guidance, and authority that are weaker than this federal regulation.

The full GFI letter to FinCEN can be found on the organization’s website.

Need for Federal Legislation to Complement Rule

While recognizing that this rulemaking is an important step, Global Financial Integrity also urges the passage of federal legislation to require that all companies disclose their beneficial ownership information publicly in a central database upon incorporation.  It notes that such a change would complement the Notice of Proposed Rulemaking by making it much easier for the banks to carry out their customer due diligence requirements. The letter states that:

“There is far too little beneficial ownership information available to [banks] or in the public domain. To close this gaping loophole in U.S. law that is regularly exploited by criminals and leaves our financial system vulnerable to dirty money, the government must require all American companies to disclose information about their beneficial owners at the time of incorporation and keep it up to date, and this information must be available to the public.”

“The U.S. is the second-easiest place in the world for someone to create an anonymous company to launder illicit proceeds,” stated GFI Policy Counsel Joshua Simmons, who—along with Ms. Lowe—co-signed the letter to FinCEN on behalf of GFI. “The White House has repeatedly endorsed the need for legislation to ensure that beneficial ownership information on all U.S. companies is available (at least) to law enforcement, but momentum behind that commitment has been slow to build.”

“Bipartisan legislation has been introduced in both the U.S. House of Representatives and the U.S. Senate that would make beneficial ownership information available to law enforcement,” continued Mr. Simmons.  “Now is the time for Congress and the Administration to fully follow through on the goals stated in this NPRM and protect the American people from criminals laundering their proceeds through the U.S. financial system by moving to enact this crucial legislation.”


Notes to Editors:

  • Click here to read an HTML version of this media advisory on our website.
  • Click here (HTML) to read the full comments from GFI submitted to FinCEN on October 3, 2014.  Click here (PDF) to download the full comments in PDF format.
  • Click here to read the full FinCEN Notice of Proposed Rulemaking on the website.
  • Click here for more information on the Senate version (S. 1465) of the bipartisan Incorporation Transparency and Law Enforcement Assistance Act. Click here for more information on the House version (H.R. 3331) of the bill.

Journalist Contacts:

Clark Gascoigne
+1 202 293 0740 x222 (Office)
+1 202 815 4029 (Mobile)


Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization, which promotes transparency in the international financial system as a means to global development.

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