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Ownership Transparency

The U.S. is the easiest place in the world for a criminal, terrorist, tax cheat, or kleptocrat to open an anonymous shell company to launder their money with impunity. Anonymous corporations are great ways to hide money and other assets — they can hold a bank account or buy a yacht. Criminals often layer anonymous corporations, with one owning another and so on, making it even harder for law enforcement to “trace the money” and figure out who is directing the company’s activity. It’s time to ending the use of anonymous shell companies as vehicles for illicit activity by requiring that the true owners of U.S. companies be disclosed at the time of formation and updated upon any change.

Global Task Force Slams U.S. on Anonymous Shell Companies

FATF Evaluation Notes the U.S. Anti-Money Laundering “System Has Serious Gaps that Impede Timely Access to Beneficial Ownership Information”
Last week, the Financial Action Task Force (FATF)—the international body that sets anti-money laundering and counter-terror financing (AML/CFT) standards—released its first review of the United States’ efforts to combat dirty money since 2006.  While the FATF report finds that the U.S. generally has a decent AML/CFT framework, it notes that there remains a gaping hole in the regime: the problem of anonymous shell companies.

The FATF release states:
“The United States has a well-developed and robust anti-money laundering and counter-terrorist financing (AML/CFT) regime through which it is effectively investigating and prosecuting money laundering and terrorist financing. However, the system has serious gaps that impede timely access to beneficial ownership information.”
Indeed, the U.S. remains one of the easiest places in the world for criminals, terrorists, and kleptocrats to open anonymous shell companies to launder illicit money with impunity, according to leading academics.  That is because no U.S. state requires that information on the true, human owner (known as the “beneficial owner”) of an entity be disclosed to authorities at the time of incorporation.

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Anonymous Companies

Ask the Government to Know Who It Does Business with to Protect Us All

25 Organizations Send Letter to Congress Urging Beneficial Ownership Transparency in Procurement Process
The U.S. government has long recognized that it does not have enough information on the identities of its contractors—those that help protect our national security, provide medical and educational services, and build infrastructure.
“‘[T]here is no database in the U.S. government’ that provides reliable subcontractor information.”
— Ray DiNunzio, Special Investigator General for Afghanistan Reconstruction chief investigator from August 2009 to 2011 (via the Washington Post)

This lack of information can harm us all.

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Joint Letter to Congress Urging Beneficial Ownership Transparency in Procurement

The FACT Coalition joined 24 other organizations in sending a letter to the U.S. House of Representatives Committee on Oversight and Government Reform on October 28, 2016.  The letter calls upon Congress to urge the Administration to begin exploring alternatives for how contractors are identified without delay, to adopt a contractor identifier that is a non-proprietary, open system and that includes the collection and publication of beneficial ownership information.

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Hudson Institute Highlights Links Between Criminal Secrecy and Kleptocracy

Conservative Think Tank Scholars Note “Ending Criminal Secrecy Might become that Rarest of Political Beasts: a Truly Non-Partisan Issue.”
Scholars at the Hudson Institute recently announced in an article their support for action to curtail the abuse of anonymous shell companies.  The conservative think tank’s Kleptocracy Initiative argues that the U.S. efforts around the world to stabilize governments and root out corruption are being undermined by an irrational contradiction where U.S. laws are at the same time providing a “safe haven to their dirty cash.”

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Tackling the Opioid Epidemic through Corporate Transparency

Ending Anonymous Shell Companies Will Enable Us to Follow the Money Driving the Illicit Opioid Trade
Opioids are killing more Americans than ever before.

On average, 78 people die from opioid overdose everyday. From 1999 to 2014, more than 165,000 lives were lost due to overdoses related to prescription opioids. This crisis is being described as “one of the worst public health epidemics” in U.S. history.

The prevalence of opioid abuse is pushing families apart, tearing at the fabric of our communities, and killing our loved ones. So what or who is to blame for this prevalence? What is allowing opiates to be transported into the heart of our communities? There are a number of reasons, but a recent report published by Fair Share Education Fund reveals one of the less-discussed—yet systemic—drivers of opioid abuse: anonymous shell companies.

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