“Just the FACTs” is a round-up of news stories and information regarding efforts to combat corrupt financial practices, including offshore tax haven abuses, corporate secrecy, and money laundering through the financial system.
Send feedback or items for future newsletters to Patricia Ainembabazi at painembabazi@thefactcoalition.org
Here is the State of Play
Australian Treasury Advances Public Country-By-Country Reporting Requirements for Large Multinationals
Australia is poised to deliver a global breakthrough in tax transparency. This month, the Australian government published its new budget for FY2023 including strong public country-by-country reporting (PCbCR) requirements for certain large multinational enterprises (MNEs).
If the proposal is enacted into law through legislation – as seems likely, given Australia’s parliamentary makeup – Australia will become the first country to require a wide range of MNEs, including some headquartered in the United States, to report key tax and operating information that is fully disaggregated on a country-by-country basis.
The FACT Coalition is the leading U.S. advocacy organization committed to promoting PCbCR. As FACT and other international tax transparency organizations have identified, there is evidence that PCbCR may work to counter the most aggressive tax-dodging practices employed by large MNEs across the globe. However, this information is also needed in light of the fact that, at present, investors, policymakers, and other users of financial statements are kept entirely in the dark with respect to tax and operating risks of large MNEs. For example, PCbCR can provide investors with relevant data needed to better allocate capital in the face of substantial reputational and regulatory risks presented by dodgy tax practices and growing momentum for international tax reforms that prevent MNE tax dodging in light of unprecedented challenges like climate change and Covid-19. At the same time, PCbCR can provide policy makers and other users of financial statements insights into MNE responses to tax policy in a way that will allow the creation of smarter policy.
Investors have long sought this data. Though legislation mandating PCbCR has passed the House and has stalled in the Senate, there still exist pathways to achieve greater transparency for MNEs operating within the U.S. As FACT has noted, the Securities and Exchange Commission (SEC) can use its clear, existing authority to implement PCbCR without additional material costs to MNEs that already provide the underlying data to the Internal Revenue Service.
According to FACT Policy Director Ryan Gurule, “In light of recent progress in Europe, and particularly in the aftermath of (last week’s) news out of Australia, the SEC has an obligation to act quickly to ensure that investors, policy makers, academics, civil society actors, and other stakeholders have access to the comparable and symmetrical information necessary to make sound investment and governance decisions.”
ENABLERS Act Gains Momentum with Support from Labor, Legal, Environmental, and Anti-Corruption Groups
Momentum is growing to pass the bipartisan ENABLERS Act – which would close “a loophole that foreign kleptocrats can literally sail a yacht through” by authorizing the Treasury Department to require basic anti-money laundering protocols for certain non-bank financial service providers. Last week, the FACT Coalition joined more than 80 other anti-corruption, national security, accountability, legal, environmental justice, good governance, and union groups on a letter to congressional Democratic leadership calling for the inclusion of the ENABLERS Act in the must-pass National Defense Authorization Act for Fiscal Year 2023 (NDAA).
The letter’s signatories – among their number labor giants like the American Federation of State, County and Municipal Employees (AFSCME) and the American Federation of Teachers – touted the legislation’s potential “knock-on impacts in the fight against income inequality, environmental degradation, labor exploitation, tax evasion, and even inflation.”
A number of other groups and prominent individuals from the law enforcement and national security communities have also voiced their support for the ENABLERS Act, including the National District Attorneys Association, the nation’s largest organization of state and local prosecutors, and former Secretary of State and CIA Director Mike Pompeo.
The ENABLERS Act will be heading to a conference committee following the return of Congress after the November 8th election. The Act had previously passed the House as an amendment of the NDAA in July, but fell short in the Senate. The bill’s fate for the 117th Congress will likely be decided by the end of the month.
As noted by the letter FACT joined to Democratic leadership, ENABLERS represents a rare opportunity for meaningful reform in a legal area with wide-reaching consequences for other crucial domestic and international campaigns: “If the ENABLERS Act passes, Congress will have led a sea-change in American anti-corruption law. In just a few years, the United States will have been transformed into a global leader in the fight against financial corruption.”
News from FACT
 | Blog: Biden Administration Must Advance Anti-Corruption Progress to Tackle the Climate Crisis November 1: In a new blog, FACT Policy Fellow Christopher Boose draws a direct connection between the Biden Administration’s environmental and anti-corruption agendas, arguing that recent policy victories such as the passage and initial implementation of the Corporate Transparency Act (CTA) present real opportunities to fight back against severe environmental crimes that are enabled by international money laundering. From the blog: “Through multiple corruption and climate related strategies over the past year, the U.S. has gone far in articulating the important linkages between these issues. But with COP27 around the corner, global climate pledges under increasing scrutiny, and an anti-corruption conference in less than two months, now is the time to put strategies into action.” |
 | Letter: FACT Joins 80+ Other Organizations to Send Letter to Congressional Leaders in Support of the ENABLERS Act October 25: The FACT Coalition and more than 80 other anti-corruption, environmental, labor, and investigative groups submitted a letter addressed to congressional Democratic leadership urging them to prioritize including the ENABLERS Act in the FY2023 NDAA. Noting that “moments when true reform is possible are exceedingly rare,” the letter evoked the urgent need for wide-ranging anti-money laundering reforms to combat prominent domestic and international challenges, from income inequality to the financing of Russia’ ongoing war in Ukraine. |
 | Press Release: Australian Advancement of Public Country-by-Country Reporting Builds Pressure for U.S. Action October 25: The FACT Coalition applauded the Australian Treasury’s proposal to implement stringent PCbCR requirements for certain large MNEs, including those headquartered overseas, and urged the SEC to adopt similar PCbCR requirements in order to ensure that U.S. investors and other users of financial statements have access to symmetrical information and that MNEs face consistent, best practice reporting standards. In the words of FACT Coalition Executive Director Ian Gary, “Australia’s full PCbCR adoption signals that the tax transparency train has left the station. This investor and stakeholder led-movement now has considerable momentum, and full PCbCR in the United States is the next stop.” |
Recent and Upcoming Events
 | October 27: Report Launch – Made in China: China’s Role in Transnational Crime and Illicit Financial Flows FACT Coalition member Global Financial Integrity’s new report analyzes the outsized role of China in transnational crime and illicit financial flows, mirroring the nation’s growth as an international superpower. The report contains recommendations for both China and the U.S. towards combating illicit financial flows derived from criminal activities including the production and sale of counterfeit goods, intellectual property theft, and wildlife trafficking. |
| November 3-4: EU Tax Observatory Workshop – Transparency and Tax Avoidance: Country-by-Country Reporting by Multinational Enterprises FACT Executive Director Ian Gary participated in a policy panel on corporate transparency at the EU Tax Observatory and CORPTAX’s fall conference at Charles University, Prague, on November 3. See the link above for the conference schedule, and keep an eye on the EU Tax Observatory’s Youtube channel for a recording of the panel. |
| December 6: Public Consultation on FATF Guidance on Beneficial Ownership (Recommendation 24) and Transparency and Beneficial Ownership of Arrangements (Recommendation 25) The Financial Action Task Force (FATF) is seeking feedback from nonprofit organizations and other relevant stakeholders on recent proposed guidance for Recommendation 24 and Recommendation 25, which together establish best-practices around transparency and beneficial ownership information reporting for corporations, trusts, and other legal entities and arrangements. Feedback on both the Guidance paper to Recommendation 24 and Recommendation 25 will be accepted until December 6, 2022. |
Social Media Shoutouts
@Malinowski, The #EnablersAct, which I introduced with @RepMariaSalazar, @RepJoeWilson, & @RepCohen, is a fully bipartisan effort to stop foreign dictators, including in China and Russia, from hiding their ill-gotten wealth in America. I’m grateful to Secretary Pompeo for supporting it.
@MaElviraSalazar, Thanks @mikepompeo for supporting my bill. It’s time to stop stolen money from dictators and kleptocrats from entering the USA. #EnablersAct needs to be in the NDAA.
@SenWhitehouse, Not often Pompeo and I agree but this is my bill that will help deny shelter in USA to international criminals and kleptocrats (not a good look for City on a Hill).
@KleptoCaucus – @RepJoeWilson: “Middlemen in foreign transactions should be subject to the same anti-money laundering checks as banks” #EnablersAct
@CREWcrew, The ENABLERS Act would transform the US from a center of global financial secrecy into a leader in the movement to combat financial corruption. But don’t just take it from us. We sent a letter to Congress yesterday with 80 other organizations urging Congress to act.
About the FACT Coalition