Since 2015, the European Union has been proactive at setting clear transparency requirements about beneficial ownership for companies through the formation of central national register - available to national authorities and obliged entities – under the AML 4th Directive. In 2018, the E.U. expanded this – under the 5th AML Directive - to improve transparency of beneficial ownership by requiring complete and public disclosure of beneficial owners and record-keeping at an EU level. Unlike the E.U., the U.S. has not passed comparable legislation requiring beneficial ownership to be reported and a registry maintained.
In fact, in a recent report published by Global Financial Integrity, they discovered it is easier in the United States to incorporate a company then to acquire a library card. Their report reveals that:
- No state requires any information about the person(s) who directly or indirectly own or control the company (often referred to as a beneficial owner);
- 23 states and the District of Columbia do not require a company’s address to be provided.
- Every state requires the name of the person who established the company, but that is often simply a person’s lawyer or a representative of a formation company – known as a “registered agent” – that can be hired to create a company for a beneficial owner;
- 4 states (Alaska, California, Ohio and Virginia) do not even require the incorporator’s address;
- Only 13 states require any information about a company’s directors;
- Only five states require any information about a company’s officers either upon incorporation or within the first 90 days after incorporation.
On 13 March 2019, the Corporate Transparency Act (H.R.3089/S.1717) was re-introduced to the U.S. House of Representatives after not garnering enough bipartisan support in its original introduction in 2017. This bill would require “an entity that forms a corporation or limited liability company to disclose information about its beneficial owners.” If passed, this bill would bring the U.S. closer to the EU standard, which could ultimately set an international standard.
In a 2018 study, the US was ranked second amongst tax havens while Panama was ranked 12th. Delaware, the epicenter of company formation in the U.S., has more companies than people.