Though any executive orders or passed legislation may encounter opposition later in this election year, the Obama Administration plans to take necessary legislative actions in order to combat money laundering, terrorist financing, and tax evasion through greater transparency rules, including forcing banks to verify the people behind shell companies and offshore bank accounts.
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President Barack Obama announced on Thursday that a crackdown on the worldwide offshore banking loopholes highlighted by the Panama Papers has been launched that aims to stomp out overseas tax evasion.
Treasury Secretary Jacob Lew sent a letter to Congress, requesting it pass legislation that would add more regulation to the banking industry and empower law enforcement to investigate secret owners and tax schemes. Obama said the regulatory changes would “make sure foreigners can not hide inside anonymous shell companies formed within the United States”.
A second proposed rule would close a loophole that allows a narrow class of foreign-owned companies to avoid reporting to the Internal Revenue Service (IRS).
For years, Congress and the Treasury have floated measures that would require greater disclosure of the beneficial owners of companies registered in the U.S. Those efforts escalated after the attacks of September 11, 2001, as homeland security officials warned that onshore shell companies could be used to finance terrorist groups.
Under the proposed legislation, companies would be required to name the owners of any new entities they created and would expand the justice department’s power to call for information in some corruption cases.
Paul has been blocking the passage of tax treaties in the Senate due to privacy concerns. A spokesperson for Senate Majority Leader Mitch McConnell (R-Ky.) said he would review the proposals, according to Bloomberg.
It’s unclear whether those measures could be passed by any Congress – much less one that has treated the Obama administration as a lame duck tenancy even before a new president has been elected. “We’re saying to those financial institutions, you have got to step up and get that information”, he said. The treaties, he told lawmakers, are critical “to ensure fair and full enforcement of our tax laws”. “And I’m assuming that’s not something that he’s in favor of”.
Reuters has quoted US Deputy National Security Advisor for International Economics Wally Adeyemo, telling reporters that the US financial system “should not provide the rich, the powerful, and the corrupt with the opportunity to shield their assets”.
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Paul’s office had no immediate comment.
