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The Morning Risk Report: U.S. Aims to Peel Back Shell Companies by Requiring New Ownership Rules
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Good morning. The Treasury Department proposed new corporate-reporting rules meant to help unmask criminals, terrorists and others who use opaque ownership structures to hide money laundering and other illicit activities, Ian Talley reports for The Wall Street Journal.
Under the proposed rules, announced Tuesday, companies will be required to provide personal identification information on the primary owners and the people who register the companies, Treasury officials said.
[Continued below...]
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National security and law-enforcement officials say the rules will be a useful tool in unmasking shell companies—firms that exist on paper only—and helping prevent and disrupt illicit activities.
For small businesses such as local grocery stores and construction companies, the new disclosure rules could pose an additional regulatory burden, costing both time and money they can’t afford, according to business and industry associations in Washington.
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From Risk & Compliance Journal
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What’s in the Treasury’s Proposed Corporate-Ownership Rules?
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Rules proposed by the U.S. Treasury Department on a forthcoming corporate ownership database offer new details regarding which companies will be required to submit information, and about whom.
Congress in January passed legislation that requires the Treasury’s Financial Crimes Enforcement Network to create a centralized database containing information about the owners of limited liability companies and other corporate entities.
FinCEN on Tuesday issued its first set of draft regulations for the new database, which lawmakers hope will help prevent the illicit use of shell companies by criminals, terrorists and other bad actors.
Risk & Compliance Journal's Dylan Tokar presents some of the key takeaways from the 180-page notice of proposed rulemaking.
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Tackling Profits From Environmental Crimes Could Help the Climate, FATF President Says
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Governments need to recognize and take action against money laundering linked to environmental crimes, which can have the added benefit of helping to mitigate climate change, the head of an international anti-money-laundering watchdog said.
Marcus Pleyer, the president of the Financial Action Task Force, a Paris-based organization that sets standards for anti-money-laundering laws, said at a conference Tuesday that tracking down illicit profits stemming from environmental crimes should be seen in the context of climate change, but the issue is often overlooked as nations give priority to other crimes.
Environmental crimes such as illegal logging and wildlife trafficking generate up to $281 billion in criminal gains each year, according to FATF.
Mr. Pleyer also called for a global push to develop public-private partnerships that enable more aggressive action to stop the flow of money from environmental crimes.
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Saule Omarova, seen at a recent Senate hearing, is a Cornell University law professor. PHOTO: STEFANI REYNOLDS/BLOOMBERG NEWS
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Saule Omarova, President Biden’s nominee to oversee large national banks, withdrew from consideration on Tuesday, amid opposition from Republicans and moderate Democrats who had sought to block her nomination, the White House said.
“I have accepted Saule Omarova’s request to withdraw her name from nomination,” President Biden said Tuesday, saying he would look for a new nominee.
Mr. Biden last month nominated Ms. Omarova, a Cornell University law professor, to be Comptroller of the Currency, which supervises many of the biggest U.S. lenders including JPMorgan Chase & Co. and Wells Fargo & Co.
Ms. Omarova’s earlier calls for shrinking big banks and creating a much bigger role for the Federal Reserve in consumer banking has drawn opposition from industry advocates and Republicans. They have said she envisions an overly large role for the government that they say would crimp business, even at community lenders, a powerful constituency that lobbied against her nomination.
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The flood of everyday Americans into options trading has drawn a skeptical eye from U.S. regulators, who are considering possible rule changes for the era of smartphone brokerage apps.
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Around 39 million options contracts have changed hands on an average day this year, up 35% from last year and the highest level ever, according to Options Clearing Corp. data as of the end of November. Retail traders recently made up around one-quarter of all options activity.
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Sen. Elizabeth Warren (D., Mass.) is continuing to press the Federal Reserve for information detailing the extent of financial trading by its leadership ranks, and wants a formal briefing on new ethics rules adopted by the central bank.
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The Environmental Protection Agency on Tuesday proposed reducing the amount of ethanol and other biofuels that must be blended into gasoline this year and retroactively lowered last year’s mandate, in a win for refiners who warned that raising the requirement would lift prices at the pump.
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A woman testified at Ghislaine Maxwell’s sex-trafficking trial Tuesday that the British socialite set up many of the over 100 sexual massages she gave to disgraced financier Jeffrey Epstein, despite knowing she was underage.
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Elizabeth Holmes’s surprise turn on the witness stand in her criminal-fraud trial has given jurors a close look at the control she held over her blood-testing startup Theranos Inc., and at the alleged torment she endured in her personal life at the same time.
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President Biden and Russian President Vladimir Putin met virtually Tuesday amid rising tensions over what U.S. officials have called a buildup of Russian troops along Ukraine’s border. PHOTO: MANDEL NGAN, MIKHAIL METZEL/SPUTNIK/AFP VIA GETTY IMAGES
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President Biden warned Russian President Vladimir Putin that the U.S. and its allies would meet a military invasion of Ukraine with strong economic penalties, moves to bolster Ukrainian defenses and fortify support for Eastern European nations.
For two hours Tuesday, the two leaders held a secure video call to address what the U.S. has described as large and unusual troop movements near Russia’s border with Ukraine in recent weeks.
Mr. Biden reaffirmed U.S. support for Ukraine’s sovereignty and urged Mr. Putin to return to diplomatic talks to resolve the conflict in Ukraine’s Donbas region, where Kyiv is fighting Russian-backed separatists, White House national security adviser Jake Sullivan said following the call. The two presidents, he said, also discussed strategic stability, ransomware and Iran, and assigned staff to follow up on the call.
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Inflation has emerged as a pressing concern for American voters, with majorities saying it is causing them at least some financial strain and is bound to get worse, a new Wall Street Journal poll finds.
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Businesses that have been ordering goods earlier and in larger volumes to guard against shortages are on a knife’s edge, balancing between the possibility of lost sales and the risk of getting stuck with excess or outdated inventory.
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The supply-chain problems rippling across the U.S. economy are improving for some companies, but long-term fixes might take much longer, the heads of Intel Corp., Wayfair Inc. and Accenture PLC said at The Wall Street Journal CEO Council Summit on Tuesday.
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The U.S. trade deficit narrowed sharply in October as an increase in exports of U.S. energy and agricultural commodities outpaced growth in imports, which were restrained by a backlog at U.S. ports that month.
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Companies are planning for steeper wage increases next year than at any point since the 2007-2009 recession, according to a new report, amid a tight labor market and the highest inflation in three decades.
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In some cases, modern network infrastructure can use machine learning and AI to spot suspicious email attachments or malware and isolate them. ILLUSTRATION: GIACOMO BAGNARA
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As hacker attacks rise, companies are spending more than ever on efforts to thwart them. But there’s something that many companies aren’t doing, and could do, that can have a big impact on cybersecurity: upgrading their networks so they aren’t as vulnerable.
This type of IT spending goes well beyond narrowly defined cybersecurity tools such as firewalls and encryption. It involves replacing servers and other crucial hardware, operating systems, browsers and outdated applications.
Much of this may require spending beyond traditional cybersecurity budgets. And yet it pays big dividends for cybersecurity and beyond, say companies that have invested in such efforts.
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Wall Street Journal news editor Sara Castellanos spoke with Kathy Hughes, chief information security officer at Northwell Health, and Joey Johnson, chief information security officer at Premise Health, at the WSJ Pro Cybersecurity Executive Forum, about the cybersecurity threat and how the industry can protect itself.
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Doug Parker will continue as chairman at American Airlines after he steps down as CEO. PHOTO: SAUL LOEB/AGENCE FRANCE-PRESSE/GETTY IMAGES
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American Airlines Group Inc. Chief Executive Doug Parker will retire from that job next year after two decades running airlines, handing the reins to a longtime lieutenant as the company begins to emerge from the pandemic.
Robert Isom, who has served as American’s president since 2016, will take over as CEO on March 31, 2022, the company said Tuesday. Mr. Parker will continue to serve as chairman of American’s board.
Mr. Parker’s career has been bookended by crises: He took the helm at America West Airlines in 2001, just 10 days before the Sept. 11 terrorist attacks. Now he is departing as airlines try to move past the Covid-19 pandemic. He has been a champion of consolidation, engineering mergers that transformed the industry and built American into an industry giant.
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Lee Jae-yong, the de facto leader of Samsung Electronics. PHOTO: YONHAP NEWS/ZUMA PRESS
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Visiting a semiconductor facility in early January, Samsung’s de facto leader Lee Jae-yong gave a pep talk for the year—and made a plea for the South Korean tech giant that he worried had grown stagnant.
“We should emerge as a new Samsung,” said Mr. Lee, the 53-year-old grandson of Samsung’s founder. “Together, we can open a new future.”
On Tuesday, Samsung Electronics Co., heeding Mr. Lee’s advice, began a new chapter: All three of its co-CEOs were replaced, and its mobile and consumer-electronics units were merged into a single unit. The consolidation may position Samsung better to create a cohesive ecosystem, much like rival Apple Inc., given how smartphones can serve as a digital fulcrum that links together with the company’s many gadgets and appliances.
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Instagram unveiled a raft of new features on Tuesday that it said will make its site safer for teenagers. The rollout comes the day before Instagram head Adam Mosseri is slated to testify before Congress for the first time.
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China Evergrande Group didn’t make payments due on some U.S. dollar bonds before a final deadline expired on Monday, people familiar with the matter said, potentially setting the stage for a massive default and one of the country’s largest-ever debt restructurings.
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An hourslong outage on Amazon.com Inc.’s cloud-computing unit Tuesday left Roomba vacuum cleaners dormant, streaming services blank and delayed buyers from snapping up Adele presale concert tickets.
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Starbucks Corp. was dealt a setback Tuesday after a federal labor authority ruled that the tallying of ballots can move ahead in a worker vote on unionizing three of the company’s cafes.
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Voters were divided on whether the Covid-19 vaccine should be mandatory for school-aged children. PHOTO: HANNAH BEIER/REUTERS
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Half of Americans support President Biden’s Covid-19 vaccine requirements for private-sector employers, and a slim majority backs other state and local mandates, a new Wall Street Journal poll finds.
Fifty percent of voters said they support Mr. Biden’s vaccine requirements for the private sector, which direct companies with 100 or more employees to require workers to either get vaccinated or tested weekly, while 47% oppose them. A slightly larger share of voters support state and local vaccine mandates for public safety workers, such as police officers, firefighters and first responders, with 55% in favor and 44% opposed.
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Work holiday parties—much like return-to-office plans—are all over the place this year. Some companies are keeping gatherings virtual or small due to continuing concerns about Covid-19, while others, eager to send a return-to-normal message, are resuming big in-person bashes.
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A U.S. judge on Tuesday blocked the Biden administration’s Covid-19 vaccine mandate for employees of federal contractors, the latest of several recent early rulings against federal vaccine requirements in the workplace.
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Bookings for flights across the Atlantic and between destinations in Europe fell sharply in the days following the identification of the new coronavirus variant, ending for now a nascent recovery that was starting to take hold in international flying.
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The Omicron variant of coronavirus can partially evade the protection afforded by vaccines, according to laboratory tests conducted in South Africa that give one of the first indications of vaccine effectiveness against the variant, but scientists say the shots should still defend those inoculated from severe disease.
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Citigroup CEO Jane Fraser says that ramping up financing to companies that can help the clean-energy transition is important for the bank. PHOTO: THE WALL STREET JOURNAL
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Citigroup Inc. Chief Executive Jane Fraser, speaking at The Wall Street Journal’s CEO Council Summit Tuesday, said the bank will have to cut off some clients to meet its climate goals.
Ms. Fraser said the bank is going industry by industry to determine how to fulfill a pledge she made on her first day as CEO in March to have its entire financing portfolio achieve net-zero carbon emissions by 2050. The bank has said it would release the plans and goal posts in the next year.
Citigroup will first outline its plans for how to respond to clients in the energy industry. The bank will consider the project the client is launching, the commitments the client has made to greening itself and how important the client is to Citigroup.
“At the end of the day that will mean there are some choices as to which clients we will be serving and which ones we won’t be,” Ms. Fraser said. “One-size-fits-all won’t work for that.”
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