U.S. Treasury Secretary Jack Lew (R) delivers his remarks next to Federal Reserve Board Chair Janet Yellen (L) at the Oversight Committee hearing at the Treasury Department in Washington November 2, 2015. REUTERS/Gary Cameron
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The U.S. Treasury Department wants to go after money launderers, tax evaders and terrorists by cracking open the shell companies they use to hide cash flows, but critics say a new agency effort to identify them could be easily evaded. Treasury last week issued a new rule, effective in 2018, requiring financial institutions to obtain the identities of "beneficial owners" of their client companies and at least one senior manager. Financial firms will have to verify their identities through documents such as passports – but will not have to confirm their ownership stakes in the companies.The Treasury Department says its rule – along with separate but related legislation it proposed to Congress – strikes the right balance between rooting out corruption and avoiding burdensome requirements on financial firms and legitimate clients.Critics contend that the plan does not go far enough to unmask shell companies' true owners.As it stands, corporations are formed across 50 states, whose governments have resisted collecting beneficial-ownership data.
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