U.S. preparing new bank rules after Panama Papers

Apr 07, 2016, 11:42 AM EDT
(Source: 401(K) 2012/flickr)
(Source: 401(K) 2012/flickr)

The U.S. Treasury is preparing new bank rules after the leaked Panama Papers exposed massie offshore tax evasion.

Reuters reports:

The U.S. Treasury Department intends to soon issue a long-delayed rule forcing banks to seek the identities of people behind shell-company account holders, after the "Panama Papers" leak provoked a global uproar over the hiding of wealth via offshore banking devices. A department spokesman said on Wednesday the rule would "soon" be turned over to the White House for review and issuance, but did not confirm any timetable for the initiative, which has taken years. Governments around the globe have launched probes into possible financial wrongdoing after 11.5 million documents from the Panamanian law firm Mossack Fonseca, nicknamed the "Panama Papers," were leaked to the media and reports emerged Sunday. Mossak Fonseca has said it was the victim of a computer hack, and that it has consistently acted appropriately. The papers offer "validation for those who have been screaming for a decade" about the need for financial institutions in the United States and elsewhere to address risks of money laundering, terror finance and other crime by identifying people who clandestinely control legal entities, former Treasury official Chip Poncy told Reuters.

The New York Times writes:

Under federal regulations, banks with American branches in the United States are required to “know their customers” who open accounts in the United States. But those rules have been significantly weakened because banks have not been required to know the identities of customers who set up accounts in names of shell companies. The government’s proposed customer due diligence rule, or C.D.D., is an attempt to close that loophole, a senior Treasury official said in an interview. “I don’t think everyone recognizes the connection between the C.D.D. and the Panama Papers,” said the official, Jennifer Shasky Calvery, director of the department’s Financial Crimes Enforcement Network. The new rule, she said, “would clarify and make absolutely clear to our financial institutions that they must know and understand the beneficial ownership of their customers,” she said. “We already know that they need to know their customer, but where that customer is a legal entity, we are clarifying that they need to know and understand the beneficial owner of that customer. Who is actually calling the shots? Who stands to gain?”

The Detroit News notes:

The reaction in the United States, meanwhile, has been relatively muted. But voters and experts say the documents validate the frustration felt by supporters of Democrat Bernie Sanders on the left, who feel hard work is no longer enough to get ahead in America, and the anger of Republican Donald Trump partisans on the right who say it will take someone who knows the insider system to dismantle it. “We’ve recently heard the startling revelations about the tax dodge that is taking place in Panama,” Sanders told supporters in Wyoming on Tuesday night after his win in the Wisconsin Democratic primary. “In a time of massive income and wealth inequality, how does it happen that you have large, profitable multinational corporations who in a given year pay zero, not a penny, in federal income taxes?”

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