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Haute Finance
U.S. Tries to Outlaw Shell Companies

The United States is going to try to outlaw shell companies once more, the Financial Times reports:

Charles Grassley, Senate judiciary committee chairman, and Sheldon Whitehouse, a Democratic colleague, are early next week set to introduce legislation that would require all US states to track the true owners of corporations. Though similar proposals failed last year, growing evidence of Moscow’s use of corporate vehicles that obscure their owners’ identity has revived prospects for action.

This is smart—and necessary. In the old days, the danger of Russian and Chinese oligarchs using shell companies to conceal their ill-gotten wealth in the West was more a nuisance for the U.S. than a real threat. But that is changing as both Putin and Xi tighten their control over their countries and show every sign of weaponizing investment.
The U.S. government needs to know who owns foreign corporations making strategic investments in the United States—and the sooner the better.
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  • Jim__L

    This will step on a lot of toes. I hope they make it happen. =)

  • Unelected Leader

    And there are plenty of Americans hiding vast wealth of questionable origin in shells. This would be a lot more hard-hitting if it’s immediately followed up with new rules on foreign MNC investment. Maybe some smarter rules that disallow foreign MNCs to buy existing US companies simply to lay off the workers and shift labor to china or Japan, etc.

    • Fat_Man

      Nonsense. see above.

      • Unelected Leader

        Unfortunately “above” does not address that problem. I can address it for you, however. In fact, foreign MNCs buying existing US companies is not investment at all, and it has been weaponized for literally decades. Great example. Look at the Chinese Lenovo purchase of IBM PC manufacturing in 2005. Can you guess how many of those jobs were destroyed in America and shifted over to China, Taiwan and elsewhere in Asia by 2007?

        • Fat_Man

          That question has nothing to do with shell corporations. Purchase of publicly held corporations is regulated by the SEC and their disclosure rules are exacting. No one is fooled by who is acting. The question you raise is a good one, but it has nothing to do with this legislation.

          • Unelected Leader

            Never said they were connected. In fact, the whole point of my post is in saying that they ought to be.

  • Fat_Man

    You cannot hide wealth in a shell anything in the US. The real controls are the know your customer rules of the financial regulators. I can personally testify that they are meaningful, even intrusive. And nobody with a half a brain cell would try to cheat the IRS in that way.

    On the other hand I once had a client who accumulated land for a large development. The land was in the form of several dozen small to medium sized parcels. We used shell corporations to make the acquisitions to defuse speculation that he was doing what he was doing. If we had not been able to do that, it might have made what was eventually a very sucessful and popular project uneconomic.

    Further, this type of measure only makes it easier for tyrannical foreign regimes like China and Turkey to reach out and harm their opponents at a distance.

    The revelation of how far NSA and the FBI go in eavesdropping on American citizens should disturb everyone. There is no need to hand them a freebee.

    Finally, we need to remember that the totalitarian intentions of leftists like Sheldon Whitehouse, who has spoke out in favor of penalizing opponents of the Global Warming scam, do not stop here. He and his kind will have no compunction about chasing down and destroying anyone who dares to oppose any of their sacred causes like transgenderism, homosexual marriage, and illegal immigration. We should not empower them.

    This is a solution to a non-problem that could cause a lot of harm.

    • Private agents can work as well as shell corporations I would think. Lawyers working on behalf of undisclosed clients.

  • Likely the resistance will be from US taxpayers hoping to conceal their incomes in unregistered accounts in overseas tax havens. Both practices need to be eliminated. Large cash transactions are another area of abuse. Technologically at least we are not far from a cashless society.

    • Fat_Man

      “US taxpayers hoping to conceal their incomes in unregistered accounts in overseas tax havens”

      Good luck with that one. There are numerous IRS rules on that issue, and they have been able to crack Swiss bank secrecy on that issue.

  • FriendlyGoat

    The likelihood of a Republican Congress and this particular Republican President 1) Imposing itself on the peculiarities of state incorporation laws and 2) Forcing transparency of ownership of incorporated entities????? This is all a joke, right? “Smart and necessary” have nothing to do with why this is going nowhere fast.

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