The U.S. Capitol building is seen reflected in a puddle at sunrise on the day of the U.S. midterm election as voters go to the polls across the country to elect 33 U.S. senators and all 435 members of the U.S. House of Representatives in Washington, U.S., November 6, 2018.

The United States has become one of the go-to destinations for the creation of anonymous shell companies, allowing human traffickers, terrorists, money launderers, sanctions evaders, kleptocrats, and other criminals to promote criminal activities here in the United States undetected.

To make matters worse, banking laws designed to detect and combat money laundering and illicit financial activities haven't been updated comprehensively in decades.

As a result, our financial institutions are spending more money than ever before to adhere to outdated compliance rules, while regulators and law enforcement personnel are stuck fighting 21st century threats with 20th century tools.

As senators committed to protecting U.S. national security, upholding the rule of law, and promoting efficient government, we believe the time is right to reform our laws for combating illicit finance.

We've worked together to draft bipartisan legislation that would require U.S. shell companies to report their true owners so that law enforcement can better track and penalize illicit criminal activities.

The Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings Act (ILLICIT CASH Act) would modernize our antiquated money-laundering laws and ensure that public and private sector resources are used where they matter most.

Additionally, our legislation would facilitate information sharing between financial regulators and law enforcement, and upgrade the technology they use to fight terrorism and prevent criminals from exploiting our financial system.

Financial institutions, law enforcement professionals, national-security experts, regulators, businesses, transparency advocates, and human-rights activists agree that our current methods are falling short.

The United States is ranked second-worst in the world for its high levels of secrecy and offshore activities, according to the Tax Justice Network's Financial Secrecy Index. Illicit finance has become such a problem that the Financial Action Task Force (FATF)—the premier international organization for combating money laundering—recently identified the United States as an outlier among developed nations for failing to disclose and track shell company ownership.

As we work to improve our policies for fighting illicit finance, we also want to protect legitimate privacy interests. That's why in addition to requiring greater transparency for shell companies and updating money laundering laws, our bill also includes strict protocols for protecting personal information and stiff penalties for unauthorized disclosures of ownership information or personal data.

Legitimate U.S. businesses have much to gain from a crackdown on anonymous shell companies. Businesses will avoid lost revenue from counterfeit goods and risks to reputational damage from unknowingly dealing with criminal organizations.

At the same time, reporting this information shouldn't mean hours of new paperwork or other costly reporting obligations. Our bill mandates that new corporate-reporting obligations be well-tailored and integrated within existing reporting requirements so they don't place needless burdens on small businesses.

We're encouraged by progress the House of Representatives has made on similar reforms and believe our legislation will provide tools to fight back against illicit financial and criminal activities in America.

We look forward to working with our House and Senate colleagues to move this important debate forward, bring the anti-money laundering system into the 21st century, and close our nation's doors to shady shell companies and illicit financial activity.

Commentary by U.S. Sens. Mark R. Warner (D-VA), Tom Cotton (R-AR), Doug Jones (D-AL), and Mike Rounds (R-SD)

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