Blog | Page 24 | The FACT Coalition

TRACEpublic: A Step Towards Beneficial Ownership Transparency

August 29, 2016

Anonymous shell companies are impressively flexible tools. They can be used to launder money, evade taxation, covertly channel the payment of bribes, stash away a nation’s stolen wealth, and facilitate trafficking in drugs, weapons, and human beings. It’s a challenge to grasp the scale of the harm they help bring about.

It’s also challenging to find an appropriately scaled response. One place to start is for governments to require all companies within their jurisdiction to disclose their beneficial ownership for inclusion in a central registry—a step already taken by the United Kingdom, Denmark, and Norway. Going further, data from such registries can be aggregated and combined with other public registration materials to produce a gigantic database of company information, such as the one maintained by the UK for-profit OpenCorporates’ project.

Banks Join the Call to End Anonymous Companies

August 10, 2016

This week, The Clearing House Association, a major trade association for U.S. commercial banks, endorsed legislation requiring the collection of information about the real owners of U.S. companies (S. 2489/H.R. 4450). The Clearing House Association is the oldest banking association in the U.S., and it advocates on behalf of the largest U.S. commercial banks, such as Bank of America, Wells Fargo and SunTrust, just to name a few.

Their letter states, “We believe the bill would assist public sector efforts to identify money laundering and terrorist financing through the disclosure of the beneficial owners of corporations. In addition, the legislation would bring the United States further in line with international AML/CFT expectations, such as the recommendations developed by the Financial Action Task Force (FATF). We can see no justification for allowing corporations to shield their ownership.”

Why the SEC Needs to Require More Disclosure from Companies

July 22, 2016

In 2015, Citigroup reported to the Security and Exchange Commission that it has 21 offshore subsidiary companies, but it reported to the Federal Reserve that it has 140. Similarly, Bank of America reported to the SEC that it has 21 subsidiaries while reporting to the Federal Reserve that it has 109. All told, 27 financial firms report wildly different numbers to the SEC v. Federal Reserve.

So what gives and which reporting is accurate? It turns out that SEC has less stringent reporting rules, requiring companies only to disclose “significant” subsidiaries. It defines significant as comprising 10 percent or more of the company’s assets. The Federal Reserve requires broader disclosure, but only for financial companies. A CTJ comparison of the disclosures revealed big banks and other financial firms collectively are under reporting to the SEC the number of subsidiary companies by a factor of more than seven.

An Urgent Call for Action: Stop Anonymous Shell Companies from Fleecing American Taxpayers

May 11, 2016

For three and a half years, a former Pentagon supplier used two shell companies in Wyoming and pretended they were largely owned by ethnic minorities to win preferential treatment for government contracts so that he could profit from supplying substandard parts to the military. These schemes happen all too often. In another, conspirators used sham companies from North Carolina, Nevada and Tennessee to steal more than $2 million from subcontractors that they tricked into fulfilling contracts.

The US Administration is coming upon a key moment tomorrow at the international Anti-Corruption Summit hosted by the UK where it can keep the criminal and corrupt from ripping off our public budget while hiding behind the veil of an anonymous shell company.

How Treasury Could Take Action to Prevent Inversions

March 25, 2016

Even as more large companies announce plans to take advantage of the inversion loophole to avoid taxes, Congress has refused to move on commonsense legislation that would put an end to inversions. Fortunately, as outlined in a new letter signed by Citizens for Tax Justice and 54 other groups, there are a number of additional actions that the Treasury Department could take without Congressional approval to stem the tide of inversions.

Although Treasury issued new regulations in response to the surge in inversions in 2014 and 2015, Pfizer’s planned inversion with Allergan demonstrates that the regulations so far have been inadequate to prevent this and similar planned inversions by Johnson Controls and IHS. Perhaps the biggest motivation for Pfizer’s planned inversion is that it could allow the company to avoid an estimated $40 billion in taxes that it owes on the $194 billion in untaxed earnings the company has offshore. Expatriating to Ireland through an inversion will allow Pfizer to avoid paying any tax on its offshore hoard through an accounting gimmick called a hopscotch loan, which effectively allows the new foreign parent company to reinvest its untaxed offshore earnings without triggering the US taxes it would normally owe.

Want to Know Who Owns the Largest Newspaper in Nevada? Good Luck.

December 15, 2015

But an Iowa Republican Has a Bill to Do Something about It…
Reporters at the Las Vegas Review-Journal, Nevada’s largest media outlet, are up in arms after an anonymous company—News + Media Capital Group LLC—spent $140 million to purchase the paper while refusing to disclose who owns the company. These dumbfounded journalists have run into the obscure yet increasingly prominent issue of “anonymous incorporation”, which has plagued anti-corruption warriors in developing countries for years.

At the heart of the issue are extreme secrecy rules on the books in states like Nevada, Delaware and Wyoming, which allow individuals forming companies to shield their true identities. Presidential candidate Jeb Bush has entered the fray, joking on Twitter about the paper’s anonymous owners:

Just finished hour+ @reviewjournal ed board. Only q left unanswered – who owns the newspaper?
— Jeb Bush (@JebBush) December 14, 2015

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 and illicit activity. According to the US Departments of Justice and Treasury, anonymous companies have been used to fund al Qaeda and evade sanctions in Iran.