The United States banned anonymous shell companies through the defense bill vetoed by President Trump last month but passed in Congress on Friday.
The new legislation will require companies to report their real owners or “beneficial ownership” to the treasury department’s Financial Crimes Enforcement Unit.
Included in the $740 billion defense bill, the Corporate Transparency Act will help prevent companies from hiding funds acquired by criminals or corrupt officials, or hiding behind corporate organizations capable of concealing that information. The U.S. led the world in anonymous shell companies as of 2011, according to Reuters.
Those who fail to provide complete or updated information, or provide fraudulent information, can face up to three years in prison.
Additionally, anyone forming a company in the U.S. will be required to submit their name, date of birth and unique identification number.
Trump vetoed the defense bill for several reasons but mainly because it excludes a provision that would strip lawsuit liability protections from Big Tech. By voting to override the president’s veto, the Senate provided his first and likely only veto defeat.
Treasury Secretary Steve Mnuchin and Democratic Sen. Mark Warner pushed for the anonymous shell legislation, according to the New York Post.
Transparency International, a non-profit against global corruption, worked with lawmakers on the legislation, according to the Independent. They called it’s passing “historic.”
“It’s a huge step forward in fighting illicit finance at home and around the globe,” said Gary Kalman, the group’s U.S. director. “Simply put, corporate transparency means it will be harder for corrupt leaders and other criminals to hide and move stolen money through secretly-owned corporations.”