On Tuesday, the U.S. Treasury Department’s anti-corruption watchdog stated that it would enact new rules to crack down on those who use shell companies and businesses to conceal illegal funds behind opaque corporate structures.

Financial Crimes Enforcement Network is a Treasury Department-based bureau known as FinCEN. The rule will require that more companies provide information about investors.

Every year millions of entities, including limited liability companies and corporations are created in the United States. These entities are essential and legal in U.S. and international economies but they could also facilitate illegal activity,” the Treasury Department stated in a factsheet.

Treasury Department hopes the increased transparency rules will deter bad actors and prevent them from setting up shell companies that launder illegal money. This should also make it more easy for law enforcement to follow criminal fund movements.

According to the Department, “The proposal rule will significantly improve the U.S. ability to protect its financial system from illicit uses, and provide crucial information that law enforcement can help prevent corrupt actors and terrorists from hiding money, or other property, in the United States.”

Treasury officials think the rule will require limited liability partnerships and companies to disclose information about individuals or entities that own or control more than 25% or who have “substantial control” over the company.

FinCEN would require companies to give their owners’ names and addresses. The rule would give companies that had been established prior to its enactment one year to file their first reports. Those formed after it was passed would have 14 calendar days.

Himamauli Das, Acting Director of FinCEN, stated in a statement that FinCEN was taking aggressive action against those who exploit shell companies and front companies to launder proceeds from crimes such as corruption or drug trafficking and/or terrorist financing.

As part of the wider effort by the Biden administration to support democracy, the rule proposal is included in their larger efforts to advance democracy up to the elections. inaugural Summit for DemocracyLater in the week. This virtual conference will bring together officials from across the globe for two days to renew democracy commitments and promote representative government.

New sanctions were already announced by the Obama administration against officials from foreign governments and individuals it claims are involved in corruption and other human-rights violations. The White House ought to use these tools, according to activists and lawmakers, in order punish Russian oligarchs as well Chinese officials.

On Tuesday, Treasury officials spoke with reporters and said that their department was uniquely qualified to assist in these efforts because it supervises the implementation of sanctions policies. Monday, the Treasury department announced that it is also looking at ways to fight corruption. This includes increasing reporting requirements for transactions in all-cash real property.