Delaware, Treasury sign MOU to improve transparency re: AML Compliance

US Treasury, Delaware work to strengthen information sharing

So much of AML Compliance and the fighting of financial crime rely on transparency. But various countries and U.S. states have offered secrecy as a lure to draw business. Delaware has long been one of those states, but a new agreement with the Treasury’s Office of Foreign Asset Control may increase transparency there.

Corporate-formation requirements in Delaware have long permitted anonymity regarding ultimate beneficial ownership. That anonymity makes Delaware a beneficial location for entities seeking to hide their UBOs. Delaware has made changes in recent years, however, to increase transparency.

On Sept. 2, 2020,  the U.S. Department of the Treasury and the State of Delaware announced a Memorandum of Understanding (MOU) setting forth information sharing procedures between the Office of Foreign Assets Control (OFAC) and the State of Delaware Department of Justice.

This MOU is intended to:

  • Promote the sharing of certain U.S. economic sanctions-related information between OFAC and the Delaware Department of Justice, and facilitate coordinated investigations;
  • Foster cooperative efforts between OFAC and the State of Delaware to heighten awareness of U.S. economic sanctions within both the Delaware business community and the general public;
  • Protect national security by promoting compliance with U.S. trade and economic sanctions laws;
  • Support litigation against entities placed on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List);
  • Improve transparency into corporate structures used to disguise illicit business dealings; and
  • Prevent abuse of U.S. companies by criminal and terrorist organizations, corrupt individuals, and other blocked persons through cancellation of entities or imposition of OFAC penalties.

“The MOU will allow OFAC and the State of Delaware to work together to shut down or otherwise disrupt the illicit activities of entities that should not be operating in the United States,” said OFAC Director Andrea Gacki in a Treasury press release. “Enhanced collaboration with the Delaware Department of Justice will help OFAC to enforce its sanctions programs by more quickly identifying parties with an interest in blocked property.”

“Delaware is recognized nationally and globally as a critical venue in the business community,” said Delaware Attorney General Kathy Jennings. “We take that role, and the responsibility that accompanies it, seriously. Delaware and OFAC’s partnership is a new chapter in a longstanding collaboration against abuse, and for the rule of law. We will not enable criminal enterprise in this State, and we are grateful for OFAC’s assistance in ensuring that the advantages of doing business in Delaware are not abused to break the law.”

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