H.R.2816 - Shell Company Abuse Act (119th Congress)
Summary
H.R.2816, the Shell Company Abuse Act, aims to amend Title 18 of the United States Code to prohibit the establishment of shell corporations used to conceal election contributions and donations by foreign nationals. The bill introduces a new section, 612, to Chapter 29 of Title 18, making it unlawful for owners, officers, attorneys, or incorporation agents to establish or use corporations to conceal activities of foreign nationals prohibited under Section 319 of the Federal Election Campaign Act of 1971.
Violators would face imprisonment for up to 5 years, fines, or both. The bill seeks to enhance transparency and prevent foreign interference in U.S. elections by targeting the use of shell companies as a means to circumvent campaign finance laws.
The bill was introduced in the House of Representatives on April 10, 2025, and referred to the Committee on the Judiciary.
Expected Effects
If enacted, H.R.2816 would likely reduce the use of shell companies to funnel foreign money into U.S. elections. This could lead to increased transparency in campaign finance and reduce foreign influence on domestic political processes.
It may also deter individuals and entities from using shell corporations for illicit purposes. The new penalties could lead to more rigorous enforcement of campaign finance laws.
Potential Benefits
- Increased Transparency: Makes it harder for foreign nationals to secretly influence U.S. elections.
- Reduced Foreign Interference: Limits the ability of foreign entities to use shell companies to donate to political campaigns.
- Strengthened Campaign Finance Laws: Closes a loophole that allows foreign money to enter the U.S. political system.
- Deterrence: The threat of imprisonment and fines may deter individuals from establishing shell companies for illegal campaign contributions.
- Fair Elections: Promotes fair and transparent elections by reducing the risk of foreign influence.
Potential Disadvantages
- Potential for Overreach: The broad language could potentially capture legitimate business activities.
- Enforcement Challenges: Difficult to prove intent to conceal foreign national activities.
- Increased Compliance Burden: Corporations may face increased scrutiny and compliance costs.
- Limited Scope: Only addresses shell companies, not other methods of foreign influence.
- Potential for unintended consequences: Could lead to a chilling effect on legitimate foreign investment.
Constitutional Alignment
The bill aligns with the Constitution by safeguarding the integrity of the electoral process, although the Constitution does not explicitly address campaign finance regulations. Congress has the power to regulate elections under Article I, Section 4, which grants them the authority to make or alter regulations regarding the times, places, and manner of holding elections for Senators and Representatives.
The First Amendment protects freedom of speech, but this protection is not absolute and can be limited to prevent corruption or the appearance of corruption in elections. The bill aims to prevent foreign interference, which is a legitimate government interest.
However, concerns could arise if the law is applied in a way that unduly restricts legitimate political expression or association. The law must be narrowly tailored to address the specific problem of foreign influence without infringing on constitutional rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).