Instead, the government has for many years outsourced the work of identifying who owns U.S.-based corporations to banks, through a complicated patchwork of invasive and expensive “know your customer” regulations. This ramshackle arrangement results in a process that is both invasive and ineffective at the same time. It also creates a financial incentive to severely restrict access to capital, decreasing economic mobility.

The primary beneficiaries of the defective status quo are those who rely on its design to cloak their activities from the government. That includes, in the most serious cases, terrorists and drug lords. But it also facilitates money laundering, fraud, tax evasion, and other financial crimes.

“The FBI has countless investigations, spanning criminal and national security threats, in which illicit actors, operating both domestically and internationally, use shell and front companies to conceal their nefarious activities and true identities,” Steven D’Antuono, a senior FBI official, recently testified at a congressional hearing. “The strategic use of these entities makes investigations exponentially more difficult and laborious.”

Any time Congress is considering increasing reporting or other compliance burdens on private institutions to aid the efficacy of law enforcement, it’s natural that such proposals should be subject to scrutiny. Is it necessary to collect this information? Are there less onerous alternatives that would serve the same purpose?

But in this evaluation, proposals to close these loopholes must be put in context and compared to the existing status quo.

Although you may be able to register a business pseudo-anonymously via shell corporations, fronts, registered agents, and the like, most businesses will at some point need to interact with money. That generally means access to a bank.

It’s at this point that the existing process suddenly becomes invasive and onerous. The enormous financial liability banks and other financial institutions face has, over time, encouraged them to be extremely cautious and deliberate in extending services — an understandable response.

And yet, most of this considerable (and considerably expensive) effort is wasted. Adding a layer of indirection (the know-your-customer process) between law enforcement and the information they need to connect the financial dots results in vast mountains of data reported, with barely any of it acted upon.

Meanwhile, the federal government does not collect, in any organized way, the most basic and essential information about businesses registered in its jurisdiction: the identity of the owners.

The Corporate Transparency Act and other proposals like it would simply require disclosing the identity of the “beneficial owners” of any new business at the time of its creation. That’s it.

The House committee process also included several reforms designed to safeguard privacy even further. For instance, one amendment to the bill prohibits law enforcement from utilizing the business ownership database that would result without having a concrete reason to search it.

In the past several years, banking and finance have undergone dramatic innovation, with quickly spreading convenient payment networks, decentralized currencies, peer-to-peer lending, and more. That rapid innovation has also worked to highlight the calcified status quo and point the way to reform.

Closing these legal loopholes will go a long way to help the government combat financial crimes. But it also offers an opportunity to reform the existing system to increase privacy, increase access to credit, grow our economy, and reduce prices.

That’s bad news for terrorists, drug cartels, human traffickers, and other criminal networks, who will find it harder to hide in plain sight. But it’s excellent news for the rest of us. Congress should move quickly to fully enact this important reform.

Eric O’Neill is a former FBI counterintelligence operative and the author of Gray Day: My Undercover Mission to Expose America’s First Cyber Spy.