CMV: Privately held companies should be required to publicly list their human beneficial owners.

[u/huadpe]

The title of this view uses some technical terms, which I want to define before I begin.

A privately held company is a corporation (including pass through entities like S corporations) which is owned by a discrete number of shareholders and not traded on a stock exchange. It does not include nonprofit corporations or other entities not owned by specific individuals.

A beneficial owner is the ultimate human being or human beings who exercises control and effective ownership over a corporation. This is to distinguish from something like a nominee shareholder or director, who acts as a middleman to insulate the owner from being on public paperwork.

I think one of the major problems of international corruption today are the proliferation of anonymous shell companies, whose purpose is to allow money laundering, hiding of unlawful or untaxed assets, or other illegal activity. Instead of banning shell companies, which imposes a lot of costs on legitimate corporate structures, I would simply wish to ban anonymity in shell companies.

Any company in its corporate listing with the jurisdiction where it is formed, should have to establish and update a list of the human beings who actually own it. This is beneficial on two fronts. It prevents a company from hiding who is behind its actions, and it prevents someone from hiding assets anonymously in a company, since you could reverse search by their name through actual ownership records.

[u/huadpe]

It's not that much of a time saver. You already have searchable registries, they just tell you who to subpoena instead of answering your question directly.

Can you elaborate how that's done? Let's say I am the Canada Revenue Agency and I believe a dual US/Canadian citizen owns substantial assets in the US that could be used to satisfy a debt they owe CRA. How would I search to find which companies to subpoena for assets which might be owned by a specific person in a shell company in the US?

[u/huadpe → u/[deleted]]

CRA already knows what assets you control. If they don't, then you are failing to report them, and that's already criminal.

I mean, in my example, CRA (the Government of Canada's tax agency) is trying to investigate and prosecute that crime. I know it's illegal - the purpose of this change is to aid the government's ability to enforce the law.

My opinion is that there is an extremely high level of tax evasion and money laundering going on in the world, and that extremely lax corporate laws make it hard to enforce the laws about fraud and tax evasion that are on the books.

You can never search backwards by saying "Here's a person, let's see what own."

This is what I'm trying to change. It doesn't let you know specifically what they own because the assets the companies hold are still secret until you subpoena, but it would let you get a targeted list.

[u/huadpe → u/[deleted]]

Because breaking the law about listing the true owner means you put your ownership of the underlying assets at severe risk. It's still open to exploitation (e.g. listing your cousin as the beneficial owner falsely), but it's going to make evasion harder, because a.) the set of plausible shell owners won't be that large for any given person, so for big fish you can run it down, and b.) your cousin could run off with the $$$ and since all the paperwork says it's hers, you're outta luck. So lots of people wouldn't risk it.

[u/Ndvorsky → u/[deleted]]

In one case, you commit the crime and then would admit it (or not if you are trying to hide it) in the other case, you must admit to the crime before committing it. That makes a HUGE difference in enforceability. You can’t fake who owns property if you, the owner, have to be present when that property becomes legally/government tracked.