(Refiles to correct spelling error in paragraph five)
By Sarah N. Lynch
WASHINGTON, April 15 (Reuters) - The U.S. TreasuryDepartment inched closer on Friday toward finalizing a rulerequiring banks to identify the legal owners of shell companies,a move it hopes will help prevent illegal financial activitiessuch as money laundering.
The White House's Office of Management and Budget announcedit has commenced its review of the final rule, which theTreasury Department's Financial Crimes Enforcement Network(FinCEN) submitted earlier this week.
The OMB review, which could take about 90 days, marks thelast step in the process before the rule can become final.
The last stages of the rulemaking process, which commencedin 2012, come after a massive data breach at Mossack Fonseca, aPanamanian law firm that specializes in setting up off-shoreshell companies.
The leak triggered investigations around the globe intowhether politicians and public officials used these off-shoreshells for illicit activities, including dodging taxes,laundering money or hiding business activities with drug cartelsand terrorist organizations.
The International Consortium of Investigative Journalists(ICIJ), which pored over the records during a year-longinvestigation, found that major banks such as Credit Suisse, HSBC, UBS and Societe Generale, are among a group of 10 financial institutions thatrequested the most off-shore companies for clients.
The ICIJ plans to release a full list of people andcompanies tied to the off-shore shell companies in early May.
Federal anti-money laundering rules already generallyrequire banks and brokerages to take steps to make sure they"know their customers" who open accounts.
However, current rules do not require them to identify thetrue owners behind shell companies, a loophole law enforcementagencies say can hinder their investigations into activitiessuch as money laundering and tax evasion because it givescriminals a degree of anonymity.
FinCEN does not have legal authority to regulate thesecorporate entities, but it does have the power to oversee manyfinancial institutions that do business with them such as banksand stock brokers.
The rule would impose additional requirements on banks toverify the identity of the actual individuals who own andcontrol the shell companies.
The final version of the rule will not be known until afterthe OMB completes its review.
(Reporting by Sarah N. Lynch; Editing by Meredith Mazzilli)