Iran uses shell companies in Manhattan to finance terrorism

For nearly 30 years, a 36-story office building in the heart of Manhattan was secretly owned by the Iranian government, and many questions arose about how a government that was subject to economic sanctions managed to own a very important piece of real estate in the middle of the largest city in the United States. The answer is surprisingly simple: It used anonymous, fake companies. Worse still, these shell companies weren't created in some shady foreign jurisdictions…they were formed in the United States.

The beginning was in 2016, when classified reports from 60 Minutes and the New York Times showed how easy it was for terrorists, drug dealers and other criminals to launder money in the United States through anonymous shell companies. These reports, along with a classified investigation worked on for several years by Global Witness, documented numerous examples where loopholes in US state and federal laws are used to conceal the identities of the true owners of these fictitious companies, allowing criminals to launder their money by buying real wealth, like real estate and other assets, with illegal money.

Limited liability companies (LLCs) are formed statewide in the United States, and no US state currently requires corporations to disclose their true beneficial owners. This means that the United States is the global capital of anonymous shell companies – a center not only for money laundering but also for terrorist financing. Yes, that's right, the same terrorist groups that attack the United States also use the US financial system to move their funds and fund their operations.

Representative Caroline B. Maloney said, “To combat these violations and end the illegal use of anonymous shell companies, I have been working on legislation, the Corporate Transparency Act, for more than a decade. It was finally approved in the House of Representatives last October and is included in the National Defense Authorization Act (NDAA) that the House of Representatives passed for fiscal year 2021. This legislation is currently under negotiation by the House and Senate, and I am working to make sure that Congress finally passes this law, which was introduced by the two parties to enhance our national security and suppress money laundering and organized crime.”

“Besides the implications for law enforcement, this law will directly affect us here at home by reducing housing costs in New York City,” she added. “The corrupt and criminals routinely block their illicit money in luxury New York City real estate, which limits housing availability and increases housing costs for ordinary New Yorkers. You see this clearly when you drive through parts of New York City at night – the entire buildings are not lit, because no one lives in these apartments. It was bought only to hide funds and to function as a bank account. This removes valuable homes from the market that would otherwise go to hard-working New Yorkers, which increases housing costs for all. But my bill will finally put a stop to this practice. Put simply, my bill will cut housing costs for ordinary New Yorkers.”

“This is one of the most pressing national security problems we face in this country, because anonymous shell corporations are the preferred vehicle for money launderers, criminals and terrorists. Due to its partisan approach and common sense, the Corporate Transparency Act is supported by more than 130 NGOs advocating for financial transparency, as well as the entire law enforcement community, the financial and real estate industry,” she continued.

“We're the only developed country in the world that doesn't really require this information to be disclosed – and honestly, that's embarrassing. We should fix this in the final NDAA,” she noted.

Congresswoman Maloney represents the 12th congressional district in New York. She chairs the House Oversight and Reform Committee and is a prominent member of the House Financial Services Committee.