Ending Anonymously-Owned Companies Would Be Widely Seen as an Effective Strategy in Crippling Those Who Pose a Real Danger to the U.S.
The President’s executive order banning refugees and legal immigrants from seven Muslim-majority nations has led to large protests in the U.S. In a conversation yesterday with anti-corruption advocates based in Canada and Belgium, I listened as they discussed the outrage this order has generated around the globe. The action, it appears, only reinforces the worst fears they held about the new administration.
The order is unconscionable, likely unlawful and—according to a growing list of security experts— unhelpful in protecting the nation against acts of terror. Just a few days in and the stories of harm and disruption are piling up.
Fox News reports that the order is:
…drawing outrage among some Iraqis who have taken the lead in the fight against ISIS, a defeat which the new president has said is also his top foreign policy goal.
“Iraqis are the largest victims of terrorism and now we are paying double the price,” one high-ranking general in the Iraqi Army, who requested anonymity as he is not authorized to speak to the media, told Fox News. “This has caused massive disappointment in the hearts of every Iraqi who is fighting radicalism.”
There are also stories of “universities scrambling” to account for international students and faculty, and “tech firms grappling” with employees based overseas and more.
While disrupting (and, in a number of cases, endangering) the lives of innocent people and their families, the order does little to disrupt terror networks according to the experts.
We would like to suggest an alternative approach. Let’s lift the ban and, instead, aggressively attack the flow of money used to finance rogue nations and terror operations. Consider that when the Iranian government was evading our sanctions, they simply established a series of anonymously-owned companies in the U.S., which enabled the Iranians to purchase real estate in New York City without detection. While establishing agreements and protocols around the globe to enforce the sanctions, the U.S. left the door open for Iran to secretly hide the money right here in the U.S. in the form of a gigantic 5th Avenue skyscraper.
Additional examples of our lax laws facilitating criminal financing include an illegal weapons dealer, drug cartels, and human trafficking operations. It’s time we stopped this.
Current rules do not require companies to name their ultimate owners. This secrecy has allowed bad actors to take advantage of the relative stability of our economy while avoiding prosecution. In the latest Financial Secrecy Index published by the Tax Justice Network, the U.S. ranks third in terms of secrecy and our facilitation of illicit financial flows. Switzerland, Hong Kong, Singapore, and the infamous Cayman Islands round out the top five.
Ending anonymously-owned companies would disrupt the financial engines that fuel dangerous nations and networks around the globe. That’s why the Federal Law Enforcement Officers Association wrote in a 2016 letter to Congress:
Suspected terrorists… continue to exploit the anonymity afforded to them through the current corporate filing process … Hiding behind a registered agent, these criminals are able to incorporate without disclosing who the beneficial owners are for their company(s). This enables them to establish corporate flow‐ through entities, otherwise known as “shell companies,” to facilitate money laundering and narco-terrorist financing.
Unlike the travel ban, ending anonymously-owned companies has support from across the political spectrum. The reform does not endanger innocent lives or compromise our values. It would be widely seen as an effective first step in crippling those who pose a real danger to the U.S.
Gary Kalman is the executive director of the FACT Coalition.