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FinCEN, Bank Secrecy Act and planned developments.

FCRO Subsection: 
Contributor

Kenneth A. Blanco, Director, FinCEN (The Financial Crimes Enforcement Network, the USA's FIU and a division of the Department of the Treasury) sets out how Bank Secrecy Act data, including "convertible virtual currencies."

Beneficial Ownership

I hope I have made it clear today that your reports, which are made available to approximately 12,000 authorised law enforcement and regulatory users all over the country, are vital. But for you to provide us with accurate reporting, you must know your customers.

This brings me to a very important national security issue—beneficial ownership information. Its importance to our national security cannot be understated. The lack of a requirement to collect information about who really owns and controls a business and its assets at company formation is a dangerous and widening gap in our national security apparatus.

That is because criminals thrive when they have somewhere to hide. And the secrecy behind shell companies—businesses that exist only on paper—is a clear and present danger.

While FinCEN has worked to address this gap through the CDD Rule, which strengthened customer due diligence obligations for certain financial institutions to know the people who own, control and profit from companies and to verify their identities at account opening, there is more work to be done. The next critical step to closing this national security gap is collecting beneficial ownership information at the corporate formation stage.

If beneficial ownership information were required at company formation, it would be harder and more costly for criminals, kleptocrats, and terrorists to hide their bad acts and for foreign states to avoid detection and scrutiny. This would help deter bad actors accessing our financial system in the first place, denying them the ability to profit and benefit from power while threatening our national security and putting people at risk.

We are committed to working with key stakeholders, including Congress, to find effective, sensible solutions to address this serious and growing gap in our national security.

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