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House passes AML reforms in defense spending bill

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WASHINGTON — The House voted to approve a defense spending bill that includes a banking industry-supported measure to reform anti-money-laundering regulations.

The National Defense Authorization Act was approved in a 295-125 vote late Tuesday. It included an amendment to require companies to disclose their true owners at the point of incorporation to the Financial Crimes Enforcement Network. The provision would remove the burden from banks to report their customers’ beneficial owners.

“Anonymous shell companies are the vehicles of choice for money launderers, criminals, and terrorists,” said Rep. Carolyn Maloney, D-N.Y., who introduced the amendment but voted against the overall defense spending package for other reasons. “Unfortunately, the United States is the world’s capital of anonymous shell companies. My bill would correct this by requiring companies to disclose their true beneficial owners to the Financial Crimes Enforcement Network.”

A separate anti-money-laundering reform measure was also included in the NDAA aimed at improving information sharing between financial institutions, law enforcement and the Treasury Department.

“Anonymous shell companies are the vehicles of choice for money launderers, criminals, and terrorists,” said Rep. Carolyn Maloney, D-N.Y.
“Anonymous shell companies are the vehicles of choice for money launderers, criminals, and terrorists,” said Rep. Carolyn Maloney, D-N.Y.

The Senate is also considering a defense spending bill and could vote to pass its version as early as this week. Senate Banking Committee Chairman Mike Crapo, R-Idaho, and Sen. Sherrod Brown of Ohio, the top Democrat on the committee, have introduced a similar beneficial ownership amendment. It is unclear whether that amendment will be approved in the Senate’s NDAA legislation.

The amendment, which is aimed at cracking down on anonymous shell companies, was initially passed by the House as a standalone bill last year, with the support of roughly two dozen Republicans. Separate legislation was also introduced in the Senate last year by four Democrats and four Republicans, but has not received a committee vote or Senate floor consideration, partially because of opposition from small businesses.

While Maloney's amendment passed, she did not support the full defense spending bill, saying it "continues to explode the Pentagon’s budget while too many Americans are suffering."

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