Senior Counsel to the Deputy Attorney General Jennifer Shasky testified Thursday morning at a Senate Homeland Security Committee hearing on a bill to increase corporate transparency.
The bill, sponsored by Sen. Carl Levin (D-Mich.), would require businesses to fully report who controls a company. The aim is to give law enforcement additional tools to combat money laundering and track terrorist financing.
“It is important to recognize that the worst actors seek to exploit our lack of corporate transparency,” Shasky told the committee, detailing instances of criminals using lax reporting requirements to run arms and drug trafficking networks through shell companies.
The Justice Department has warned that international criminal networks are gaining strength. Last month in Singapore, Deputy Attorney General David Ogden told representatives of Interpol, the international crime-tracking agency, that partner countries needed to enact stronger asset forfeiture and money-laundering laws.
In the Senate hearing, Shasky told Sen. Claire McCaskill (D-Mo.) that “there’s no question” the use of shell companies to evade law enforcement has grown.
In a recent training session with 75 investigators, Shasky said, she asked how many had hit dead ends because the trail led to a U.S. shell company. “It was darn near every hand” that went up, she said.
Shasky argued for several changes to the bill, including requiring filers to provide photo identification, easing restrictions to track transfers of ownership, and provide civil and criminal liabilities for those who don’t comply with the new regulations.
She responded to questions from at-times skeptical senators worried about the burden the bill might place on small businesses, the costs states might incur, and how a “beneficial owner”, or those who benefit from and control a company, might be defined.
Shasky proposed that states not be required to verify the information, and that information only be available to law enforcement after a subpoena had been issued.
The Treasury Department’s Assistant Secretary for Terrorist Financing David Cohen also testified that existing laws had stymied investigations. We ”have seen some exploitation of that vulnerability,” he said.
Levin, in his opening statement, said: “We require people to provide more information to obtain a drivers license or a bank account than to acquire a U.S. corporation.”
The hearing was briefly interrupted by “Code Pink” activists who held handmade signs about healthcare reform in the back of the room.
