The U.S. government is close to issuing a rule that will for the first time require banks and other financial institutions to find out the identities of people hidden behind shell companies, the New York Times reported today. The rule is meant to close a major loophole in the American banking system that enables the sorts of secretive financial maneuvers that were thrust into the spotlight this week with the leak of millions of documents from a law firm in Panama. That firm, Mossack Fonseca, is one of the largest incorporators of shell companies in the world. The trove of leaked documents — analyzed by more than 100 news organizations worldwide — revealed offshore companies tied to 143 politicians, their families and close associates. The documents also showed scores of shell companies doing business with major international banks, including UBS, Credit Suisse and HSBC, that rely on access to the American banking system. 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, Said Jennifer Shasky Calvery, director of the Treasury Department’s Financial Crimes Enforcement Network.
