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business Monday 11 January 2021

New law cracks down on shell companies to combat corruption

By JOSHUA GOODMAN enforcement and shared illicit activity.
Associated Press with banks who are often The U.S. financial system
MIAMI (AP) — For years as a unwitting accomplices to -- the world’s largest and
federal prosecutor in New international corruption. most stable -- has long
York, Daniel R. Alonso led “It’s not an overstatement been a magnet for dirty
teams that had to search that this law is a game money. But the tools to pre-
through a maze of anony- changer in some serious vent abuse by bad actors
mously owned corporate ways,” said Alonso, who haven’t kept pace with
entities to expose criminal is now in private practice technology and a prolifera-
activity. advising clients on foreign tion of instant, online trans-
“It required all kinds of corruption and anti-money actions across borders.
shoe-leather investigating laundering issues. The new law seeks to
to identify who was really The Corporate Transpar- strengthen controls by cre-
behind these shell com- ency Act was tucked into ating a registry managed
panies,” recalled Alonso. a defense spending bill first by the Treasury Depart-
“You’d have to subpoena vetoed by President Don- ment that will contain the This Thursday, June 6, 2019 file photo shows the U.S. Treasury
bank records and lawyers, ald Trump and then over- names of the true owners Department building at dusk in Washington.
as well as human sources, ridden by Congress on New of both domestically-creat- Associated Press
and even then you fre- Year’s Day. ed shell companies as well torney, Michael Cohen, to dramatically expands
quently hit a dead end.” It was introduced by Rep. as foreign ones conducting conceal hush money pay- awards for whistleblow-
Now, thanks to a watershed Carolyn Maloney, a New business in the U.S. ments to porn star Stormy ers. Specifically, individuals
overhaul of U.S. money York Democrat, in 2010 Creating a shell company Daniels. Others registered who come forward with
laundering laws, locating and early on faced oppo- in states like Delaware re- in the state have been tied evidence of financial mal-
the proceeds from foreign sition from banks and busi- quires little more than a to corrupt military officers in feasance are entitled to re-
bribery, drug trafficking ness groups worried about payment of a $90 fee and Venezuela, drug trafficking ceive up to 30% of money
and financing for terrorists red tape as well as states a one-page letter listing guerrillas from Colombia seized by the Treasury or
could be as easy as a few such as Delaware and the entity’s the name, P.O. and former Zimbabwean Justice Departments when
keystrokes. Wyoming, which reap im- Box and a registered agent dictator Robert Mugabe. their information leads to
The new legislation quietly portant revenues from the who is frequently a law “Congress was late to ac- successful law enforce-
passed by Congress last registration every year in firm dedicated to churn- knowledge that secrecy is ment actions. Previously,
month after a decade-long the U.S. of nearly 2 million ing out companies in bulk. alive and well in the United awards were capped at
fight is the most sweeping corporations and limited li- The true owners are rarely States,” said David P. We- $150,000.
banking reform of its kind ability companies. listed, their identities hid- ber, a former U.S. Treasury “This could end up being
since passage of the Patri- But a string of international den under a web of sub- investigator who was one the secret sauce,” said Mi-
ot Act, in the aftermath of financial scandals involving sidiaries. But once created, of two experts to review chael Nadler, a recently
the Sept. 11, 2001, terrorist soccer’s governing body the entities can be used to the Panama Papers be- retired federal prosecutor
attacks. FIFA and the 1MDB devel- purchase legitimate assets, fore publication. He now is in Miami who has brought
For the first time, shell com- opment bank from Malay- such as real estate, using ill- a forensic accounting pro- charges against dozens
panies will be required to sia, as well as the leaking of gotten funds furtively trans- fessor at Salisbury University of corrupt Venezuelan of-
provide the names of their the so-called Panama Pa- ferred into a U.S. bank ac- in Maryland. “Kleptocrats ficials. “It has the potential
owners or face stiff penal- pers, eventually softened count. and corrupt foreign officials to weaponize low-ranking
ties and jail sentences. The criticism by revealing the One such Delaware-based did not need secret bank company officers who
information will be stored prominent role played by company, Essential Con- accounts in Switzerland. have access to sensitive
in a confidential database secretive shell companies sultants LLC, was used by They were right here.” client information and see
accessible to federal law in hiding the proceeds from Trump’s former personal at- Less touted, the law also criminal behavior.”q

Roku buys library of the short-lived streaming service Quibi

The Associated Press streaming services, but has Channel because there
Roku is buying the content recently begun piling up are “natural commercial
library of Quibi, the short- content for its free Roku breaks built into the pro-
lived streaming service, to Channel. gramming.”
bulk up its own free ad-sup- With the acquisition, Roku The Quibi content, created
ported channel. will acquire 75 staccato- for mobile viewing, can still
Quibi, short for quick bites, style programming with be viewed on phones via
raised $1.75 billion from in- some very big names at- Roku’s mobile app.
vestors including major Hol- tached. Idris Elba, Kevin Roku says its channel
lywood players like Disney, Hart, Liam Hemsworth, reached 61.8 million peo-
NBCUniversal and Viacom. Anna Kendrick, Nicole ple in the fourth quarter,
It produced shows that Richie, Chrissy Teigen and double that from the prior
were released in 10- to Lena Waithe have all been year. More people are
12-minute increments or in Quibi shows. That in- streaming entertainment
less, believing that there cludes more than 12 shows as people stay at home
was strong demand from This Aug. 13, 2020 file photo shows a logo for Roku on a remote that never aired on Quibi during the pandemic, but
people stuck doing any- control in Portland, Ore. before it was shuttered. The there’s growing competi-
thing from waiting in lines to Associated Press shows target the 18-35 de- tion, too. New streaming
commuting. mographic, an attractive services including Discov-
But it stepped into a mar- tially generated free of tines of millions, including segment for advertisers. ery+, NBCUniversal’s Pea-
ket already saturated with cost. commutes to work. It shut Roku spokesperson Dallas cock, HBOMax, and others
short videos from YouTube, Quibi also launched in April down last month. Lawrence said the short have been launched to ri-
TikTok and other platforms, 2020, when a global pan- Roku created its business format will work well for val older services like Netflix
and that content is essen- demic scrambled the rou- solely as a hub for other the ad-supported Roku and Hulu.q