Joint Letter from 44 Organizations Supporting the TITLE Act (S.1454)

The Financial Accountability and Corporate Transparency Coalition (FACT Coalition)  joined 43 other organizations to send a letter to Sens. Whitehouse, Grassley, and Feinstein supporting the True Incorporation Transparency for Law Enforcement (TITLE) Act [S. 1454], which would require companies to disclose information about the real people who own or control them (often called the “beneficial owners”) at the time they are created. The full letter can be read below or downloaded here.

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Download Letter as PDF

June 28, 2017

The Honorable Sheldon Whitehouse
United States Senate
530 Hart Senate Office Bldg
Washington, D.C. 20510

The Honorable Charles Grassley
United States Senate
135 Hart Senate Office Building
Washington, D.C. 20510

The Honorable Dianne Feinstein
United States Senate
331 Hart Senate Office Building
Washington, D.C. 20510

RE: True Incorporation Transparency for Law Enforcement (TITLE) Act (S.1454)

Dear Senators Feinstein, Whitehouse, and Grassley,

We, the undersigned organizations, write to express our strong support for your bipartisan True Incorporation Transparency for Law Enforcement (TITLE) Act (S.1454), which would require companies to disclose information about the real people who own or control them (often called the “beneficial owners”) at the time they are created.

We support increased corporate transparency because it would (1) safeguard our national security and expose terrorist financing; (2) curb corruption and fraud, which robs taxpayers of resources designated for infrastructure, and other critical needs; (3) provide critical tools to law enforcement and others to combat money laundering; (4) promote sound corporate governance and financial stability; (5) combat human trafficking; (6) curtail the financing of drug cartels; and (7) help ensure a fair and level playing field for small- and medium-sized businesses.

Many U.S. states rank among the easiest places in the world to set up a company whose owners cannot be traced.[1] In many states, you need less identification to set up a company than you do to get a library card.[2] The lack of transparency allows corrupt foreign official to divert resources from public treasuries and destabilize the economies of developing nations.  As shown last year by the Pulitzer-Prize-winning revelations of the Panama Papers and by CBS’ 60 Minutes, it’s all too easy to move suspect money in the U.S. through anonymous companies created in this country.[3]

Investigations continue to reveal that terrorists, drug cartels, human traffickers, arms dealers, corrupt foreign officials, tax evaders, sanctioned individuals, and other criminals easily and regularly set up U.S. shell companies without providing any information about who owns or controls such companies.[4] Criminals often layer anonymous corporations, with one owning another and so on, to make it even harder for law enforcement to “follow the money” to figure out who is directing the company’s activity — i.e. the identity of the real criminal. These tactics enable criminals to disguise their identities behind the anonymity provided to U.S. companies and to launder dirty money through the U.S. financial system. The lack of transparency also allows corrupt foreign official to divert resources from public treasuries and destabilize the economies of developing nations

Anonymous companies have been set up in states across the U.S. to commit crimes and hurt Americans throughout the country. Some examples include:

  • A gang used anonymous companies from Kansas, Missouri, and Ohio to trick victims from overseas in a $6 million human trafficking scheme.[5]
  • A crime syndicate opened fake health clinics across the country in the names of anonymous companies from states including Alabama, California, Colorado, Kentucky, Maryland, Nevada, New Mexico, and Texas to steal at least $35 million from Medicare.[6]
  • The Iranian government used an anonymous company from New York to conceal its ownership of a skyscraper on 5th Avenue, in direct breach of sanctions.[7]
  • Con artists tricked churchgoers and military personnel into investing millions in a South Carolina company that turned out to be a Ponzi scheme.[8]
  • Texas lawyers used sham companies from Delaware and Nevada to trick elderly people into investing their life savings in worthless enterprises.[9]

Currently, no state collects ownership information.[10]  A uniform, federal requirement that no company can be registered anonymously is the most effective way to ensure a level playing field for states. A change in the law would save money from states’ budgets by reducing the time and money currently spent trying to track down the anonymous company owners behind so many crimes in the United States. The Departments of Justice and Treasury have offered $40 million to offset the cost of states updating their systems to include beneficial ownership information, drawing from funds they have recovered from prosecuting precisely the types of criminals that this law would help stop in their tracks.[11] By increasing the collection of fines and penalties that result from the improved ability of law enforcement to pursue and prosecute these criminals, the law would also generate new revenue for states.

As momentum builds globally to solve the problem of anonymous companies, the U.S. needs a policy solution that will address our role in it. Congress should pass legislation that requires all companies to disclose their ultimate owners to the government when they incorporate and to keep that information up to date. The government entity collecting the information should then make it available to law enforcement.

We thank you for your leadership and look forward to working with you on this important and commonsense step to make our corporate formation process more transparent. Your bill will make it harder for criminals to misuse American companies to facilitate illegal activities and stop the U.S. from being a dumping ground for dirty money. Please feel free to reach out to Clark Gascoigne (cgascoigne@nullthefactcoalition.org), Eryn Schornick (eschornick@nullglobalwitness.org), or Liz Confalone (lconfalone@nullgfintegrity.org) for any additional information or questions.

Thank you for your commitment to this important issue.

Sincerely,

AFCSME
Lee A. Saunders
President

AFL-CIO
Damon Silvers
Director of Policy and Special Counsel

ActionAid USA
Brandon Wu
Director of Policy and Campaigns

Americans for Tax Fairness
Frank Clemente
Executive Director

Business & Human Rights Resource Centre
Phil Bloomer
Executive Director

Citizens for Responsibility and Ethics in Washington (CREW)
Jennifer Ahearn
Policy Counsel 

Coalition for Integrity
Shruti Shah
Vice President of Programs and Operations

Consumer Action
Ken McEldowney
Executive Director

Demand Progress
Daniel Schuman
Policy Director

EarthRights International
Marco Simons
General Counsel 

Economic Policy Institute
L. Josh Bivens
Director of Research

Enough Project
John Prendergast
Founding Director

Fair Share
Nathan Proctor
National Campaign Director

Financial Accountability and Corporate Transparency (FACT) Coalition
Gary Kalman
Executive Director

Financial Transparency Coalition
Porter McConnell
Director 

Friends of the Earth
Ben Schreiber
Senior Political Strategist

Global Financial Integrity
Raymond Baker
Head of US Office

Global Integrity
Alan Hudson
Executive Director

Global Witness
Corinna Gilfillan
Head of US Office

Government Accountability Project (GAP)
Louis Clark
Executive Director

Institute on Taxation and Economic Policy
Alan Essig
Executive Director 

International Corporate Accountability Roundtable (ICAR)
Amol Mehra
Executive Director

iSolon.org
J.H. Snider
President

Jubilee USA
Eric LeCompte
Executive Director

Main Street Alliance
Amanda Ballantyne
National Director

National Latino Farmers & Ranchers Trade Association
Rudy Arredondo
President, CEO, and Founder

Natural Resource Governance Institute
Alexandra Gillies
Director of Governance Programs

New Rules for Global Finance
Jo Marie Griesgraber
Executive Director 

Norm Eisen
Scholar
Brookings Institute

Open Contracting Partnership
Gavin Hayman
Executive Director

Open Ownership
Zosia Sztykowski
Project Coordinator

Open the Government
Lisa Rosenberg
Executive Director

Oxfam America
Abby Maxman
President

Pax Advisory
Michael Dziedzic
Vice President 

Public Citizen
Robert Weissman
President 

Publish What You Pay – U.S.
Jana Morgan
Director

Responsible Sourcing Network
Patricia Jurewicz
Director

Rights and Accountability in Development (RAID)
Anneke Van Woudenberg
Executive Director

RootsAction.org
Norman Soloman
Co-Founder

Sunlight Foundation
Mike Klein
Chairman

Tax Justice Network USA
Jack Blum
Chair

The Center for Constitutional Rights
Vincent Warren
Executive Director

Transparency International
Robin Hodess
Acting Managing Director

U.S. Public Interest Research Group (U.S. PIRG)
Andre Delattre
Executive Director

 

Footnotes:

[1] Findley, Michael et al. “Global Shell Games: Testing Money Launderers’ and Terrorist Financiers’ Access to Shell Companies.”  https://www.griffith.edu.au/__data/assets/pdf_file/0008/454625/Oct2012-Global-Shell-Games.Media-Summary.10Oct12.pdf
[2]Findley, Michael et al. “Global Shell Games: Testing Money Launderers’ and Terrorist Financiers’ Access to Shell Companies.” https://www.griffith.edu.au/__data/assets/pdf_file/0008/454625/Oct2012-Global-Shell-Games.Media-Summary.10Oct12.pdf
[3]  http://www.cbsnews.com/news/anonymous-inc-60-minutes-steve-kroft-investigation/
[4]  Special Report: A little house of secrets on the Great Plains.” Reuters. June 28, 2011. http://www.reuters.com/article/us-usa-shell-companies-idUSTRE75R20Z20110628
[5] “Great Rip Off.” Global Witness. Accessed June 16, 2017.
https://www.globalwitness.org/en/campaigns/corruption-and-money-laundering/great-rip-off/.
[6] ibid.
[7] “Manhattan U.S. Attorney Announces Court Judgment Finding Midtown Office Building Secretly Owned And Controlled By Government Of Iran Subject To Forfeiture For Violations Of The Iranian Transactions Regulations And Money Laundering Offenses.” The United States Department of Justice. September 17, 2013,  https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-court-judgment-finding-midtown-office-building-secretly
[8] Great Rip Off.” Global Witness. Accessed June 16, 2017.
https://www.globalwitness.org/en/campaigns/corruption-and-money-laundering/great-rip-off/.
[9] ibid.
[10] Special Report: A little house of secrets on the Great Plains.” Reuters. June 28, 2011.
http://www.reuters.com/article/us-usa-shell-companies-idUSTRE75R20Z20110628
[11] “Great Rip Off.” Global Witness. Accessed June 16, 2017.
https://www.globalwitness.org/en/campaigns/corruption-and-money-laundering/great-rip-off/.

 

About the FACT Coalition

The Financial Accountability and Corporate Transparency (FACT) Coalition is a non-partisan alliance of more than 100 state, national, and international organizations working toward a fair tax system that addresses the challenges of a global economy and promoting policies to combat the harmful impacts of corrupt financial practices.

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