Experts are baffled by the Obama administration’s new rules to fight money laundering, which appear to create a glaring new loophole for the bad actors the rules are intended to target.
Last week, the White House announced new measures to help bring shell companies, which allow their owners to hide assets, into the light. The leak of documents from a Panamanian law firm, Mossack Fonseca, highlighted the widespread abuse of these companies by criminals and tax-dodgers.
In the US, corporate rules are set largely at the state level, and no state requires companies to disclose beneficial owners; some go even further to keep ownership opaque. Absent federal legislation changing those rules, the Obama administration could only use existing bank regulations to go after shell companies.
To do so, it used the attention on the Panama Papers to enact a “customer due diligence” rule requiring US