News & Events

Just the FACTs: April 19, 2018

Welcome to our “Just the FACTs” newsletter, which aims to highlight pertinent news stories and information related to our goals of curtailing offshore tax haven abuses, increasing the transparency of company ownership, and curbing the laundering of illicit money through the financial system.

Send feedback or items for future newsletters to Jacob Wills at

State of Play

In January, we were optimistic that this would be the year anonymous companies would end.  Since then, the momentum for disclosure has only grown. Legal scholars and international affairs experts have recently called for action, a recent poll showed overwhelming support from small businesses, and a report from Fair Share reminded us that anonymous companies are continuing to fuel the opioid epidemic.  Between these and a recent investigation by Reuters that found Russians are using a web of anonymous companies to skirt U.S. sanctions and boost the government of Syria’s Bashar al-Assad, Iran’s Revolutionary Guard, and the Hezbollah militia, the arguments for secrecy are becoming more and more invalid.

A few weeks back, Amol Mehra, the executive director of the International Corporate Accountability Roundtable, authored an op-ed published by The Washington Post that confronted the ABA stance on legislation to require beneficial ownership disclosure. Mehra points to similarities between the definition of ownership used by the ABA and the one in the bills to call for them to support bills that collect beneficial ownership.

Also in The Washington Post, Anders Aslund, a senior fellow at the Atlantic Council, had a piece published on the threat to national security that stems from anonymous companies. By analyzing the role of Vladimir Putin’s laundered money in the West, Aslund determines that the US needs beneficial ownership policies to find the sanctioned entities hiding behind anonymity. These concerns have also been echoed by scholars at the American Enterprise Institute and the Hudson Institute’s Kleptocracy Initiative.

While the national security concerns are justified, it’s important to remember that these entities are a nuisance — sometimes a deadly one — at the local level. Anonymous companies allow criminals to smuggle illicit goods with an identity shielded by U.S. law. These illicit goods include, for example, fentanyl — an incredibly deadly opioid which has become more accessible throughout the US.  In an update to their 2016 report, Anonymity Overdose, which looked at the link between the opioid epidemic and anonymous companies, Fair Share Education Fund details what has changed and what has not, noting that corporate transparency legislation is still an inexpensive way to combat drug traffickers.

While the urgent need for action has always been supported by the evidence, some have argued that transparency would be a burden on business.  Yet, recent findings prove this to be false.

A poll conducted by the Small Business Majority found that small business owners overwhelmingly support the collection of beneficial ownership information.  77% agreed that Congress should enact requirements that the information be collected. 76% believe that beneficial ownership transparency would benefit them. Contrary to arguments opposing disclosure, only 9% of small business owners said that disclosure requirements would be a burden.

From the FACT Coalition and Its Partners

Incorporation Transparency

Priced Out: How Anonymous Companies Contribute to the Rising Cost of Housing

FACT Coalition, April 4, 2018

By Claire Coleman

Housing has long been a preferred vehicle for money laundering mostly for its effectiveness.  Illicit cash used to purchase luxury real estate becomes legally acquired capital after the property is sold.  The real trick is to mask where the money comes from initially. So, criminal networks set up anonymous companies shielding themselves from any connection to the purchase of the property and, when the property is sold, the money is clean.

Read the full blog

Small Business Owners Support Legislation Requiring Transparency in Business Formation

Small Business Majority, April 4, 2018

The survey, conducted by Chesapeake Beach Consulting for Small Business Majority, revealed that 77% of small business owners agree Congress should pass legislation that would require businesses to list the true identity of their owners when forming, with roughly half (49%) in strong agreement. The poll was an online survey of 500 small business owners nationwide conducted between March 5 and 11, 2018.

Additionally, the survey found a vast 84% of small business owners say the use of shell companies to win contracts or obtain government set-asides reserved for small businesses is a problem. What’s more, the survey results indicate that small business owners do not believe this disclosure would place a burden on their business. Indeed, 76% of small business owners feel legislation requiring small businesses to list the true identities of their owners would benefit them by protecting them from contract fraud and giving them fair access to government set asides. Importantly, nearly all small business owners disclose their true identities when establishing their business. A mere 3% of respondents say they did not disclose their identity when setting up their small business.

Read the full report
Read The Hill op-ed

As opioid crisis evolves, anonymous company loopholes remain a gap

Fair Share, April 2, 2018

Our 2016 report, Anonymity Overdose, charted the connection between the opioid epidemic and the problem of anonymous shell companies.

As Congress ramps up funding for the national response to this crisis (though not at the levels some had hoped for), we wanted to provide an update on how the opioid trafficking operations are changing, and why ending anonymous shell companies is still an incredibly low-cost, bipartisan approach to help take on the opioid crisis.

Read the full blog

My law degree wasn’t meant for money laundering. But boy, it would make it easy.

The Washington Post (ICAR), March 29, 2018

By Amol Mehra

Anonymous companies are ubiquitous in most money-laundering schemes, and in the allegations against Trump campaign associates Paul Manafort and Richard Gates. Shell companies are formed with no record of the true owners, and because they are so easy to set up — especially if you’re a lawyer — you can easily layer dozens of them to confuse investigators and hide dirty money.

Read the full article

Regulation of Beneficial Ownership in Latin America and the Caribbean

Tax Justice Network, March 26, 2018

By Andres Knobel

Most of the Tax Justice Network’s work (e.g. the Financial Secrecy Index) considers beneficial ownership registration with a government authority to be the only acceptable standard. This paper checks availability of beneficial ownership regulation in different countries, and whether they are compliant with the OECD’s Global Forum’s and the Financial Action Task Force (FATF)’s much less demanding standards. According to these organisations, as long as beneficial ownership is available and authorities may ask for it, that’s considered good enough.

Hopefully, in the near future, both the OECD and the FATF will join us, and other civil society organisations in considering that the only acceptable standard should be beneficial ownership registration in public registries available in open data format.

Read the full blog

The Real Wolves of Wall Street

Global Witness, March, 2018

This analysis reveals for the first time the unique insights this case gives into how financial professionals enable high-level corruption. In many ways this analysis, by following one complex case in forensic detail, sheds far more light on this system than the vast range of less detailed revelations from the Panama Papers and Paradise Papers. This analysis does not try to cover the full story of the scandal, or of every bank or lawyer involved, but focuses on some of the most significant players in the 1MDB scandal to reveal insights about the state of the international financial system.

A global anti-money laundering system exists to prevent the laundering of the proceeds of crime through the international financial system. This costs banks and other financial professionals around $8 billion per year. Yet as expensive as this system is, it is not nearly as effective as it needs to be. The UN estimates that law enforcement seize and freeze less than 1% of criminal funds laundered through the international financial system.

Read the full report


A Taxing Headache from Congress

The Hill (FACT), April 17, 2018

By Gary Kalman

Just in time for tax day, the nonpartisan Congressional Budget Office is out with a new analysis of the Tax Cuts and Jobs Act. It is one of the many reminders that, as we file this year, we are already thinking about next year, thanks to the recent rewrite of the nation’s tax laws.

The CBO weighed in with estimates that are worth a serious review. They looked at, among other provisions, the international corporate tax changes and attempted to answer these questions: Will the new rules stop corporations from using accounting gimmicks to shift profits offshore? Will the law stop the gaming?

In the past, corporations were taxed on all their profits, regardless of where they were booked, but they could defer paying what they owed if profits were shifted overseas. The policy of deferral led to widespread gaming. Just prior to passage of the tax law,  U.S. corporations held an estimated $2.6 trillion offshore. Apple alone had $250 billion overseas. Collectively, companies owed more than $750 billion in deferred taxes.

Read the full op-ed

Tax overhaul risks jobs, rewards offshore tax avoidance

The Elkhart Truth (FACT), March 31, 2018

By Clark Gascoigne

It turns out the tax law is Washington at its worst. Outside special interests pressuring lawmakers to pass changes to a tax code – already skewed to benefit wealthy corporate interests – that will only make things worse.

The law overhauls the system for taxing multinational corporations. In the past, we taxed all the profits of U.S. companies regardless of where they were booked, which was supposed to limit the gaming. But, the rules permitted companies to delay paying taxes on profits booked overseas, a significant loophole that allowed multinationals to avoid hundreds of billions in taxes. Instead of ending the loophole, the “fix” in the new law is to not tax overseas income at all. As one commentator wrote, moving to this new system to solve offshore tax dodging is like solving shoplifting by legalizing it.

Read the full op-ed

New Bill Removes Tax Incentives to Move Jobs, Profits Offshore

FACT, February 27, 2018

The simple fix — to even up the rates — levels the playing field for domestic companies and reverses some of the worst damage caused by the new law.

It wasn’t that long ago that there was justifiable outrage over tax rules that allowed billionaire Warren Buffett to pay a lower tax rate than his secretary.  We should be equally concerned that the new law means the richest multinationals will pay lower rates than their smaller, wholly domestic counterparts. The new system is backwards.

Read the full press release
Read the ITEP blog
Read the Jubilee USA Network blog

Key Takeaways from John Oliver’s Segment on Corporate Tax Avoidance

ITEP, April 16, 2018

The HBO television show Last Week Tonight with John Oliver has become known for its longer segments that examine important issues facing the country. In its latest segment on Sunday, the show took a deep dive into corporate taxes and how many companies manage to avoid paying their fair share. Between its hilarious interludes, the segment painted a striking portrait of problems in our corporate tax code and how the Tax Cuts and Jobs Act (TCJA) failed to address them.

Read the full blog

Tax Cuts Likely Make U.S. Corporate Tax Level Lowest Among Developed Countries

ITEP, April 11, 2018

Based on estimates from the Joint Committee on Taxation (JCT) and our own calculations, we find that the tax changes specific to corporations that pay the corporate income tax are estimated to reduce revenue by $135.5 billion in 2018, which is equal to 0.7 percent of GDP. U.S. corporate tax revenue as a share of GDP was 2.2 percent in 2016 according to the OECD data, but if TCJA had been in effect and had lowered that figure by 0.7 percentage points, it would be just 1.5 percent of GDP, lower than any other OECD country.

Read the full report

A lower effective corporate tax rate is associated with a lower rate of job creation: new research

Tax Justice Network, April 5, 2018

By Naomi Fowler

We’re often told that cutting corporate tax rates will lead to the creation of more jobs. We all want to see more jobs created but what does the evidence say about that? Australian economist and Member of Parliament Andrew Leigh has recently published new research on the subject which makes for interesting reading. His research looks at data for 1,000 profitable Australian firms, comparing their tax rates with the pace of job creation. The data shows that companies that pay less tax actually tend to create fewer jobs.

Read the full blog

Republican Tax Cuts are Failing Small Businesses, New Report Finds

Main Street Alliance, April 6, 2018

By Angela Simaan

Senator Ron Wyden joined Main Street Alliance in a press conference today to release a new report that shows that the Republican tax overhaul is harming small businesses far more than it’s helping them.

Read the full blog

Unintended Consequences of the New Tax Bill Keep Cropping Up

ITEP, March 23, 2018

By Dacey Anechiarico

In the latest omnibus spending bill, lawmakers moved to fix the grain glitch by repealing the provision that allowed an extra tax break for cooperatives, so all pass-through businesses will be able to deduct 20% of their net income regardless of what type of income it is. This sensible fix will help restore a level playing field between cooperatives and other businesses, and will raise $108 million according to the Joint Committee on Taxation. In exchange for agreeing to include the fix, Democrats succeeded in adding a provision to expand the low-income housing tax credit by about $2.8 billion.

While the grain glitch is now fixed, this is just one technical error that needs to be addressed. The laundry list of mistakes and fundamental problems in TCJA is much longer and fixing them will take Congress more than last minute negotiations. It will take a Congress committed to real tax reform.

Read the full blog

Issues in the News

Incorporation Transparency

Improving our anti-money laundering operations will help prevent great-power war

American Enterprise Institute, April 17, 2018

By Clay Fuller

Interest is growing in illicit finance because great-power competition is playing out in boardrooms, stock markets, trade wars, and compliance departments. The US anti-money laundering (AML) regime needs an update that enhances national security and sets an example for the rest of the world.

The US leads in crafting and enforcing global standards of financial integrity and accountability. However, like most US economic regulations, the current AML regime is a haphazard, ad hoc patchwork riddled with loopholes and inefficiencies. An illicit finance bill should encourage communication between and within compliance and law enforcement, safeguard individual privacy rights, and help smaller businesses and financial institutions. It has been 17 years since the last AML overhaul. It is time to address the clear and present danger — dirty money.

Read the full article

Campaigner prosecuted over stunt to expose UK company records fraud

Financial Times, April 16, 2018

By Naomi Rovnick

Global Witness, a financial campaign group, discovered in February that there were 4,000 businesses registered with Companies House that listed ultimate owners who were under 2-years-old, including one that had yet to be born.

A study by Transparency International in November, meanwhile, reported that British shell companies were implicated in nearly £80bn of money laundering scandals. The non-governmental organisation’s researchers claimed the UK was home to a network that operated much like the offshore vehicles at the heart of the Panama and Paradise papers leaks.

Read the full article

Backpage CEO Carl Ferrer pleads guilty to conspiracy, money laundering

ABC News, April 13, 2018

By Justin Doom

The founder and chief executive officer of, a website linked to human trafficking, has pleaded guilty to charges including conspiring to facilitate prostitution and money laundering.

Read the full article

How a secret Russian airlift helps Syria’s Assad

Reuters, April 6, 2018

By Rinat Sagdiev, Maria Tsvetkova and Olena Vasina

The ownership histories of some of the aircraft tracked by Reuters showed how the U.S. restrictions on supplies to Iranian and Syrian airlines may be skirted. As the ownership skips from one country to the next, the complex paper trail masks the identity of those involved in Syria’s procurement of the planes.

Read the full report

Russia sanctions highlight need for United States to fight illicit finance

American Enterprise Institute, April 6, 2018

By Clay Fuller

On Friday, Treasury Secretary Steven Mnuchin said that “Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilizing activities.” Here is how and why the new sanctions on seven oligarchs and 12 companies might, and should, go down, and how beneficial ownership reporting is related to the larger picture.

The Countering America’s Adversaries Through Sanctions Act (CAATSA) required specific beneficial ownership reporting. Russian oligarchs collectively have billions of Vladimir Putin’s and their own assets stored in the United States and other Western democracies through various financial accounts and business holdings. The Treasury Department report behind today’s sanctions has been seen by Congress and is likely to have actionable intelligence on Russian beneficial owners. Federal law, until CAATSA, allowed them to hold and invest this money here anonymously.

Read the full article

Countering Russian Kleptocracy

Hudson Institute, April 5, 2018

By Ben Judah and Nate Sibley

The Central Intelligence Agency, Federal Bureau of Investigation, National Security Agency and Director of National Intelligence all agree “with high confidence” that Russia interfered in the 2016 U.S. presidential election. National Security Adviser H.R. McMaster recently called the evidence of Russian interference “incontrovertible.”

Kleptocratic regimes use corruption as a means of control at home and a weapon of influence abroad. Russian oligarchs and other Kremlin agents have become adept at exploiting the global financial system to launder illicit funds and convert them into new forms of power projection, including attacks on Western democratic institutions.

The threat posed by Russian kleptocracy should not be measured only by the objectives that its representatives may have achieved so far. Russian interference, however limited, has the capacity to delegitimize U.S. elections and institutions, inflicting lasting damage on U.S. credibility internationally. The Kremlin’s attempts to influence the presidential election have exposed a series of systemic vulnerabilities in the United States, whose national security now requires a long-term strategic response. This report outlines a policy checklist that, if implemented, would amount to a comprehensive and effective strategy for countering Russian kleptocracy.

Read the full report

It’s time to go after Vladimir Putin’s money in the West

The Washington Post, March 29, 2018

By Anders Aslund

In 2015, the U.S. treasury assessed that $300 billion a year was laundered in the United States. According to Raymond Baker, founder of Global Financial Integrity, in a good year, the U.S. government detects 0.1 percent of that money. The reason? Anonymous companies are allowed to invest in this country. The same is true of Britain, where the National Crime Agency estimates that $125 billion is laundered annually. This must be stopped for the sake of national security.

Read the full article


Politicians, groups step up tax law messaging for Tax Day

The Hill, April 16, 2018

By Naomi Jagoda

Senate Democrats released a video Monday that argues that most of the benefits of the tax cuts so far have largely gone to corporations and wealthy shareholders. They also released a report finding that corporations have announced more than $250 billion in stock buybacks this year.

“As millions of Americans finish preparing their taxes, corporate executives are laughing all the way to the bank thanks to the Republican tax bill,” Senate Democrats wrote in the report.

Read the full op-ed

Tax and spending legislation disarms us against next recession

Brookings Institution, April 12, 2018

By Henry J. Aaron

The situation with respect to fiscal policy is even more disturbing. Congress’s action to cut taxes and raise spending at a time when the economy is already near full employment could cause the economy to overheat and weakens the ability to use fiscal policy to fight the next recession.

Read the full op-ed

Sen. Bob Corker says vote for tax bill may be worst of his career

Tennessean, April 12, 2018

By Michael Collins

“None of us have covered ourselves in glory,” the Tennessee Republican, who is retiring at the end of the year, said at a Senate Budget Committee hearing. “This Congress and this administration likely will go down as one of the most fiscally irresponsible administrations and Congresses that we’ve had.”

Read the full article

U.S. companies found ways to avoid taxes before tax bill: report

Reuters, April 10, 2018

The 15 corporations had profits of $24.5 billion in 2017 but managed to obtain nearly $1.4 billion in rebates from the U.S. Treasury for a combined tax rate of minus 5.6 percent, according to the ITEP report, which examined corporate income tax disclosures.

Read the full article