FACT Welcomes Bipartisan Bill to Curb Terror Financing, Money Laundering Through Anonymous Shell Companies

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Incorporation Transparency and Law Enforcement Assistance Act” Will Increase Corporate Transparency; Give Law Enforcement Important Tool for Investigating Terrorism, Other Crimes

Rampant Abuse of Anonymous Companies Featured Prominently on Sunday’s 60 Minutes

WASHINGTON, DC – The Financial Accountability and Corporate Transparency (FACT) Coalition welcomed the introduction today of bipartisan legislation to give law enforcement an important tool for investigating terrorism and other crime enabled through anonymous American shell companies.

Sponsored by Rep. Carolyn Maloney (D-NY), Rep. Peter King (R-NY), Rep. Dan Donovan (R-NY), Rep. Stephen Lynch (D-MA), Sen. Sheldon Whitehouse (D-RI), and Sen. Dianne Feinstein (D-CA), the Incorporation Transparency and Law Enforcement Assistance Act (H.R.4450 | S. 2489) will help fight the abuse of anonymous companies—one of the primary tools for laundering criminal, corrupt, tax evading, and terrorist money.  The legislation requires the disclosure of the real people who, directly or through another corporation, own a substantial portion of the company or have some control over it at the time of incorporation and that the information is kept up to date.

“Whether you’re a terrorist or drug lord, anonymous companies are one of the primary tools for laundering dirty money to escape the eyes of law enforcement, yet the U.S. is the second easiest place on Earth for a criminal to set up an anonymous shell company that can be used to launder money,” said Clark Gascoigne, interim director of the FACT Coalition.  FACT unites over 100 leading small business, faith-based, human rights, investor, anti-corruption, public-interest, government-watchdog, labor, and global development organizations from across the ideological spectrum on the issue of anonymous companies. “This commonsense legislation, with broad-based bipartisan support, will go a long way toward closing this absurd loophole—helping to keep the American people safe from terrorists and other criminals.”

60 Minutes Broadcasts Anonymous, Inc.

The ease with which criminals can establish anonymous companies to move suspect funds into the U.S. gained prominent media attention Sunday on CBS’s 60 Minutes program. In a segment titled Anonymous, Inc., 60 Minutes analyzed undercover footage from FACT Coalition member Global Witness.  Wearing a hidden camera, a Global Witness investigator met with 13 New York law firms while posing as an advisor to a foreign government minister and asked the lawyers how to anonymously move large sums of money that should have raised suspicions of corruption. Lawyers from 12 firms suggested using anonymously-owned companies—11 of the firms suggested using American companies. The meetings were preliminary, none of the law firms took the investigator on as a client and no money was moved.

Anonymous Companies Facilitate Nearly Every Crime Imaginable

Global Witness recently released another report highlighting dozens of cases of anonymous U.S. companies being used to defraud Medicare, embezzle from public schools, hide the owners of expensive real estate and scam the elderly. Creating a registry of beneficial ownership information—or the true, human owners—as the legislation does, provides a useful and effective tool to combat these criminal activities.

Stefanie Ostfeld, acting head of Global Witness’ U.S. office, observed that: “In basically every case of corruption that we’ve investigated, we have found that anonymously owned companies have been used to move and hide money. What’s more, anonymously-owned companies are what unite all crimes that generate money, and America is at the heart of this problem. This bill will stop criminals from being able to set up anonymous American companies to rip off innocent people and businesses across the country.”

“U.S. states have known about this problem for over a decade and have failed to take any action to learn and keep track of who owns or controls the companies that they incorporate,” said Heather Lowe, Director of Government Affairs at development research and advocacy organization Global Financial Integrity. “Our failure to act in this area facilitates the flow of devastating amounts of illicit money out of developing countries every year.  Congress must pass this bill and fix the problem once and for all.”

“Financial secrecy fuels poverty and instability around the world. Whether we’re talking about corruption in the FIFA soccer world or how dictators hide money, the U.S. banking system should lead the fight for transparency. We applaud Representatives Maloney, Donovan, Lynch, and King as well as Senators Whitehouse and Feinstein for their leadership on this issue,” said Eric LeCompte, executive director of the religious anti-poverty coalition Jubilee USA.

“Anonymous incorporation allows fraudsters, mobsters, terrorists, money-launderers, tax-evaders and corrupt politicians to cover their tracks and evade the authorities while they rip off the public and engage in all manner of crime. It is a scandal that the United States is a major haven for corrupt money and illicit activity, including from poor countries. This bill is essential to end corporate secrecy and fight tax evasion, money laundering and other crimes.” said Tatu Ilunga, Senior Policy Advisor for Tax and Extractives Industries at Oxfam America.

“Most real American business owners are proud to have their names on their front doors and incorporation papers,” said Bryan McGannon, policy director for the American Sustainable Business Council (ASBC). “Hiding a business’ true ownership identity with a shell corporation creates unnecessary risks and added costs for legitimate businesses and for the economy.”

A Threat to Democracy

“A handful of wealthy donors and special interests are dominating election spending like never before, drowning out the voices of everyday Americans,” said Dan Smith, Democracy Campaign Director for U.S. PIRG. “What’s more, millions of dollars are being spent in secret. Wealthy donors and special interests shouldn’t be able to hide their identity from voters by funneling money through shady shell companies. Americans have the right to know what interests are backing their elected leaders, so they can make an informed decision at the ballot box. This important legislation would take away a tool used for hiding the source of campaign cash and shine some light on secret spending.”

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Journalist Contacts:

Clark Gascoigne
FACT Coalition
cgascoigne@nullthefactcoalition.org
+1 202.813.0290

Mark Hays
Global Witness
mhays@nullglobalwitness.org
+1 508.414.1722

Notes to Editors:

  • Click here to read an HTML copy of this press release on our website.
  • Click here to read the press release from Rep. Maloney introducing the legislation.  Click here to read the press release from Sen. Whitehouse about the bill.
  • Learn more about the legislation and download the full text of the bills here: H.R.4450 | S. 2489
  • Click here to read a statement of support for ending anonymous shell companies signed by more than 23 different organizations.
  • Click here to watch Sunday’s 60 Minutes exposé—Anonymous, Inc., which featured undercover footage from FACT member Global Witness.
  • Click here to learn more from Global Witness about their investigation into money laundering in the U.S.
  • Click here to read a letter, published January 19, 2016, in The New York Times by FACT Interim Director Clark Gascoigne explaining the connections between anonymous companies, money laundering, and the real estate sector.

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Founded in 2011, the Financial Accountability and Corporate Transparency (FACT) Coalition unites civil society representatives from small business, labor, government watchdog, faith-based, human rights, anti-corruption, public-interest, and international development organizations from across the ideological spectrum. FACT seeks an honest and fair international tax code, greater transparency in corporate ownership and operations, and commonsense policies to combat the facilitation of money laundering and other criminal activity by the financial system.  For more information, visit www.thefactcoalition.org