FOR IMMEDIATE RELEASE
November 6, 2013
+1 (202) 841-1466
Contact: Nick Jacobs
Despite the damage that shadow banking and financial secrecy has caused to global markets and local budgets today’s release by the Tax Justice Network (TJN) of their 2013 Financial Secrecy Index ranking the world’s nations by their financial concealment shows a global financial network still remains hidden in the shadows. The FACT (Financial Accountability and Corporate Transparency) Coalition sees many opportunities for the U.S. to not only take action on this issue, but also in the process bring in new revenue to alleviate some of the constraints imposed under sequestration.
The United States is ranked sixth in TJN’s 2013 Financial Secrecy Index, a slight improvement from 2011, when they were ranked fifth. In TJN’s FSI rankings, the higher the number a country is ranked, the more secretive it is. And while giving credit for taking some important steps, such as the Foreign Account Tax Compliance Act (FACTA), the US is nonetheless described as a country that, “…has played a pioneering role in devising ways to defend itself against foreign tax havens, but has failed to address its own role in attracting illicit financial flows and supporting tax evasion.” Members of the FACT coalition have been vigorously supporting efforts to build on the progress of FATCA, and make sure that corporations that benefit from doing businesses in the US are paying their taxes as well, and calling for tax cooperation and reporting by countries on economic activities of multinational corporations. “The global race to the bottom on corporate regulations as well as tax rates has led to massive revenue loss in both developed and developing countries,” stated FACT Director Nicole Tichon. “Closing loopholes that enable our most profitable companies to legally game the system should be the top priority during upcoming budget debates.” TJN also cited the lax company formation regulations and requirements in the United States, which are left up to the individual states. A report accompanying the release about the US notes that almost two million corporations and limited liability companies (LLCs) are formed in U.S. states each year, without the states asking for the identity of the owners. Many of these companies are then used as conduits for money laundering, fraud, tax evasion, and other nefarious deeds. The US could address corporate secrecy by taking immediate action on legislation currently before Congress that would put an end to the secrecy of phantom firms. This year legislation has been introduced in the Senate, S.1465, and a companion bill newly introduced in the House, H.R. 3331. While these pieces of legislation do not call for public registries, FACT members see these efforts as a critical first step for the U.S. to finally begin collecting information about people who ultimately own or control companies and making it available to law enforcement. Read letters of support for corporate transparency and for U.S. legislation from law enforcement, small businesses, investors and civil society here. “Each year close to two million corporations and limited liability companies (LLCs) are formed in the United States, making this country accountable for over 22 percent of the global market for offshore financial activity. The fact that such an influential, powerhouse of a country should rank so poorly on this year’s FSI is shameful. The United States owes to its own citizens who are feeling the crunch of severe budget cuts, as well as to the rest of the world, a basic level of transparency and accountability in our financial system,” said Porter McConnell, manager of the Financial Transparency Coalition. “The U.S. should be showing leadership on the issues of financial and corporate secrecy. We cannot expect cooperation from other countries while letting the shadows to remain here,” Tichon further observed.
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. We seek an honest and fair corporate 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 legitimate financial system.