New law will make it easier to detect drugs and terrorism – Latest News, Breaking News, Top News Headlines

For years as a federal prosecutor in New York, Daniel R. Alonso led teams that had to search a maze of anonymously owned corporate entities to expose criminal activity.

“All kinds of basic research was required to identify who was really behind these shell companies,” Alonso recalled. “We had to request bank records and subpoena lawyers, as well as human sources, and even then we were often at a dead end.”

Now, thanks to a decisive reform of America’s money laundering laws, locating the proceeds from foreign bribery, drug trafficking and terrorist financing could be as easy as pressing a few keys.

The new legislation quietly passed by Congress last month after a decade-long struggle is the most radical banking reform of its kind since the passage of the Patriot Act, following the terrorist attacks of September 11, 2001.

For the first time, shell companies will have to provide the names of their owners or they will face stiff penalties and jail sentences. The information will be stored in a confidential database accessible to federal law enforcement and shared with banks that are often unwitting accomplices in international corruption.

“It is not an exaggeration that this law changes the rules of the game in some serious ways,” said Alonso, who now practices privately advising clients on foreign corruption and anti-money laundering issues.

The Corporate Transparency Act was included in a defense spending bill that was approved by Congress on New Year’s Day after President Donald Trump tried to veto it.

The bill was introduced by Congresswoman Carolyn Maloney, a Democrat from New York, in 2010 and initially faced opposition from banks and business groups worried about bureaucracy, as well as states like Delaware and Wyoming, which derive significant income from the almost 2 million corporations and limited liability companies that are registered each year in the country.

But a series of international financial scandals involving FIFA and Malaysia’s 1MDB development bank, as well as the leak of the so-called Panama Papers on money laundering, ultimately won out over criticism by revealing the prominent role they play. shell companies to hide profits from illicit activity.

America’s financial system, the world’s largest and most stable, has long been a magnet for dirty money. But the tools to prevent abuse by bad actors have not kept pace with technology and the proliferation of instant online transactions that cross borders.

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