Treasury’s latest Hill headache – POLITICO

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It was a decade before Congress got around to it pass a law to crack down on anonymous shell companies – a tool used by criminals and other scoffers to evade the IRS and the police.

Now, the biggest supporters of the 2021 law are warning that the Biden administration is poised to screw up the execution if it doesn’t change course. Lawmakers are preparing to voice their opposition.

The source of the growing fear is the Treasury Department’s Financial Crimes Enforcement Network.

The agency responsible for enforcing anti-money laundering safeguards is in the process of proposing regulations to implement the bipartisan shell company law.

The legislation has been a political grind, as it requires millions of companies to share their ownership information with the government. Legislation requires the data to be made available to law enforcement agencies and banks tasked with rooting out criminal activity among their customers.

The problem: Transparency advocates and lenders say FinCEN’s proposed design for the government database is deeply flawed and inconsistent with Congress’ intent, with too many roadblocks for state and local officials and lenders.

• The Coalition for Financial Accountability and Corporate Transparencya driving force behind the law, is calling on FinCEN to drop an “unfounded requirement” requiring state, local and tribal agencies to obtain a court order to access the register of beneficial owners.
• FACT Coalition Policy Director Ryan Gurule MM said the rule “creates substantive and procedural hurdles that did not exist in the law and which threaten to undermine the very purpose of the directory.”
• The American Bankers Association calls on FinCEN to withdraw the proposal.
• Bankers are furious that the plan would limit their use to simply fulfilling existing requirements that they collect customer data — and shielding the information from other banking efforts to identify suspicious activity or investigate sanctions evasion.
• “The way they’ve interpreted it is so limiting that it’s unclear if banks will even use it.” Cara Camacho, senior vice president of government affairs at the Bank Policy Institute said MM.
• Transparency watchdogs also want FinCEN to scrap a separate proposal that would allow companies to avoid disclosure by saying they are unable to identify all of their owners.

Congress is watching and preparing to intervene.

A spokesman for the Senate Budget Chair Sheldon Whitehousea key driver behind the law, said the Rhode Island Democrat “shares concerns that have been raised about the proposal and plans to file comment with the Treasury Department soon.”

Why is this happening?

FinCEN may err on the side of privacy concerns Republicans like to see as the House Financial Services Chair Patrick McHenry have raised. But McHenry and Rep. Blaine LutkemeyerFinCEN said on Thursday that it believes the database rule still falls short on this front.

“The comment letter from Chair McHenry and Subcommittee Chair Luetkemeyer makes it clear that this rulemaking — like previous rulemaking — is not in accordance with the intent of Congress,” said McHenry spokeswoman Laura Peavey.

But Elise Beanwhose work on the subject stems from investigations she worked on for the former senator. Carl Levintold the agency that it doesn’t strike the right balance and goes beyond what the law requires on data protection.

“The proposed rule sometimes seems to elevate the creation of a secure database over the [the law’s] other equally important goals,” she said.

FinCEN informed MM that at the same time it is committed to more transparency “This makes this historical beneficial ownership database an extremely useful tool for everyone involved, including financial institutions and others.”

“We take feedback from public comments on FinCEN’s proposed rule very seriously and are carefully reviewing all comments as we complete our work.”

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Richmond Fed President Tom Barkin speaks at 8:30 a.m. on the jobs market…Fed Governor Michelle Bowman speaks at a 9:45 a.m. Tennessee Bankers Association conference…CBO Director Phillip Swagel speaks at the Bipartisan Policy Center event on the US fiscal health at 10am…

World Bank job posting update – The FT reports that the Treasury Department is scrambling to compile a list of World Bank nominees with “strong credentials in climate finance” following the early resignation of David Malpass.

Possible picks are the head of USAID Samantha PowerPresident of the Rockefeller Foundation Raj Shah and WTO Director-General Ngozi Okonjo-Iweala.

The Democrats want labor representatives in the Fed — In the wake of the Fed’s vice chairman Lael BrainardDeparture of Senate Democrats led by Sen. JackReed introduced a bill that would require the Fed to have a governor with experience in assisting or protecting workers’ rights. There’s a similar mandate on the books that requires the Fed board to have someone with community banking experience.

Reed’s co-sponsors include the Senate Banking Chair Sherrod Brown and Sen. Elizabeth Waren.

Sen. Bob Menendez on Thursday, President Joe Biden called for nominating someone of Hispanic descent for the Fed. The New Jersey Democrat, who has a committee vote on the Fed nominees, said he’s sending names to the White House.

It’s official: Marty Walsh is out – The NHL Players’ Association announced Thursday that Secretary of Labor Marty Walsh will become its next chief executive, reports POLITICO’s Nick Niedzwiadek.

A new Epstein bomb lands on Wall Street – Former Barclays CEO Jes Staley exchanged more than a thousand emails with convicted sex offender Jeffrey Epstein, including photos of young women, according to the WSJ.

The SEC accuses Do Kwon of fraud – The SEC accused Terraform Labs, the firm that ran the failed stablecoin TerraUSD, and its founder Do Kwon of orchestrating a “multi-billion dollar crypto asset securities scam.”

Binance sent funds from the US subsidiary to the CEO’s trading firm – Reuters reports that crypto exchange Binance secretly accessed a bank account owned by its supposedly independent US arm, Binance.US, and sent money to a trading firm run by Binance CEO Changpeng Zhao.

“Binance.US executives were concerned about the outflows as the transfers took place without their knowledge, according to news verified by Reuters.”

Now it’s a Canadian crackdown — Coindesk reports that Canada’s market regulator will tighten requirements for cryptocurrency exchanges.

Judge threatens SBF with jail for encrypted apps, VPNs – The judge overseeing Sam Bankman-Fried’s fraud trial threatened to revoke his bail over concerns about his use of encrypted messaging apps and virtual private networks.

Options clearing giant settles SEC and CFTC cases – Options Clearing Corporation will pay $22 million to clear SEC and CFTC fees for failing to comply with operational risk stress tests and regulations. Regulators said the outages at certain times between October 2019 and May 2021 left the clearing fund underfunded by nearly $600 million.

Credit card debt is nearly $1 trillion – Bloomberg: “Stubbornly high prices and resilient consumer spending collided in the fourth quarter of 2022, pushing credit card balances to a record $986 billion.”

Goldman is halting bids for new credit card programs – WSJ: “The Wall Street company recently ended advanced discussions to launch a co-branded credit card for T-Mobile US Inc.”

Pentagon official visits Taiwan – FT: “The top Chinese Pentagon official is set to visit Taiwan in the coming days, a rare trip by a senior US defense official to the island, which comes as Washington-Beijing relations tumble over a suspected downed Chinese spy balloon.” two weeks ago.”