As part of the Treasury Department’s battle against money laundering, stricter disclosure requirements are at hand for beneficiaries of bank and financial accounts. Regulators have pulled back from the most onerous proposals, which would compel banks themselves to verify who operates and benefits from the accounts. But even the scaled-back rules — requiring self-disclosure by customers — raise questions about the legitimate use of privacy for business or personal reasons.
While the specifics of the final policy, which could be enacted as early as this year, are still under discussion, regulators are insistent that banks reveal the names of the beneficial owners of any company account. One iteration of the rule would require anyone with at least a 10% stake in the company and managers who oversee regular operations of the company to be identified.
The need for information in the fight against terrorism and criminal activity is understandable, but these rules open a wider debate about the legitimate use of privacy in business transactions. Isn’t privacy a legitimate business or personal financial strategy? Given the prevalence of frivolous litigation and “Deep Pocket” targeted lawsuits and dubious marketing practices to customers by financial institutions themselves, what level of disclosure should be required from individuals and companies seeking to protect themselves from overreaching by the government, potential legal adversaries and aggressive marketing tactics?