October 15, 2026 | The National Interest
How the Treasury Is Hindering Efforts to Combat Illicit Finance
Foreign and malign actors constantly exploit weak ownership reporting requirements to launder money throughout the United States.
October 15, 2026 | The National Interest
How the Treasury Is Hindering Efforts to Combat Illicit Finance
Foreign and malign actors constantly exploit weak ownership reporting requirements to launder money throughout the United States.
Excerpt
When the Departments of Defense and Homeland Security conducted forensic analyses of phones and computers over the past few years, the Russians likely got a look, too. According to a new federal indictment, the forensic software used by the Pentagon, Homeland Security Investigations, and the Secret Service was purchased from a company that hid its Russian ownership through layers of shell companies. It is just the latest example in a national security emergency of our own making, as American shell companies have become the favorite tool of drug cartels, terror groups, and adversaries, like China, Iran, and, of course, Russia.
Illicit cash has permeated the United States because anyone, from criminals to foreign countries, can use America’s opaque corporate structures to set up anonymous US entities for front companies and money-laundering operations, with no identification required.
In 2020, Congress closed loopholes by requiring businesses to report at least one person linked to these shell companies. Still, the Treasury Department killed the requirement in 2025, setting back efforts to bring the United States more in line with international money-laundering standards.
As part of the National Defense Authorization Act for FY2021, Congress explicitly mandated a beneficial ownership registry to identify the individuals responsible for creating companies in the United States. The bill’s unambiguous intent was to prevent bad actors from exploiting laws that allow companies, even anonymous ones, to hold bank accounts.
Tyler Stapleton serves as senior director of government relations at FDD Action. Tyler spent eight years working in Congress, where he served as a senior advisor on national security, foreign policy, defense, and intelligence for two members of the House Foreign Affairs Committee. Josh Birenbaum is deputy director of the Center on Economic and Financial Power at the Foundation for Defense of Democracies, focusing on economic security, illicit finance, corruption, and financial secrecy.