“Just the FACTs” is a round-up of news stories and information regarding efforts to combat corrupt financial practices, including offshore tax haven abuses, corporate secrecy, and the laundering of money through the financial system.
Send feedback or items for future newsletters to Jacob Wills at jwills@thefactcoalition.org.
New Administration, New Opportunities
Here’s the State of Play
Incorporation Transparency
Taking the CTA from Enactment to Implementation
More than a month after the January 1st passage of the Corporate Transparency Act within the NDAA, the hallmark legislation continues to receive praise as a “momentous victory” in anti-corruption. We join our partners in celebrating this decades-long victory in the making, but now is not the time to let up our efforts. It is now up to the Treasury to fully implement this important anti-money laundering tool. Janet Yellen’s own comments on the new law are encouraging, but the FACT Coalition will ensure that the final rule is strong and push to block the loopholes that would undermine its effectiveness. We are gearing up to protect the progress we’ve made so far.
New Anti-Corruption Wins in Sight
The Corporate Transparency Act is no doubt an historic win but more must be done. Spencer Woodman highlights some of these future opportunities and quotes FACT’s former Senior Policy Adviser Clark Gascoigne in this International Consortium of Investigative Journalists (ICIJ) report. Recent reporting from the #OpenLux investigation by Transparency International and the Anti-Corruption Data Collective underscore how watchdogs can use publicly available information on the beneficial owners of corporations. Similar commentary coming out of New York Daily News, Bloomberg Tax, and the Organized Crime and Reporting Project echoes our belief that passage of the Corporate Transparency Act was an important milestone in the fight against corruption, there is much work to be done.
Outside of beneficial ownership, work moves ahead in the broader anti-corruption battle. Just recently, our own Government Affairs Director, Erica Hanichak joined with our partners to welcome the introduction of another bipartisan bill–the CROOK Act–in Congress. The bill, if passed, would use foreign bribery fines to fund efforts to root out kleptocracy, adding to the tools to combat corruption.
Global Momentum Building
The recent beneficial ownership win in the United States joins “global momentum on anti-abuse tax initiatives.” The OCCRP has announced a new investigation into the British Virgin Islands, a famed tax haven. “FinCEN Files” investigations from the ICIJ have uncovered the “scandal of the century” in Niger, renewing attention to shady corporate kleptocracy. The Brookings Institute has held up a magnifying glass to beneficial ownership rules in foreign states like Mongolia. Meanwhile, Alexei Navalny’s ongoing anti-corruption fight in Russia has brought reinvigorated attention to the Kremlin’s authoritarian corruption. National governments are acting, too.
The civil society organizations spurring these efforts on are getting global applause. Three lawmakers in Norway have nominated the Global Alliance for Tax Justice (FACT is a member) and ICIJ for a Nobel Peace Prize for their work investigating dark money flows.
Tax Loopholes and Transparency
New Administration, New Congress, New Year in Tax
A new administration and a new Congress are making for big changes in the outlook for both US and global tax policy. The Biden administration has already committed to removing Trump era corporate tax breaks and raising the tax floor on corporations that try to skirt their tax obligations. These efforts have been echoed by administration appointees like Janet Yellen, who has made it clear that tax accountability and corporate competitiveness are not mutually exclusive. FACT has also welcomed Biden’s pick for SEC Chairman, Gary Gensler, who we hope will be a key voice in advancing other high priority provisions such as public country-by-country reporting of key financial information and strong implementation of the decade-old Dodd-Frank provision, ”Section 1504”, which requires oil, gas and mining companies to disclose their payments to governments around the world.
Back on Capitol Hill, new legislation has sprung up in the Democratic controlled Senate with the potential to bring about big change to American corporate tax law. Building off of long standing loopholes created by the Tax Cuts and Jobs Act, Senators Klobuchar, Van Hollen, and Duckworth introduced the Removing Incentives for Outsourcing Act, taking aim at the sneaky practices multinational corporations use to avoid paying their fair share.
Back at the Negotiating Table
In addition to long needed domestic policy updates, the new administration is also poised to bring the United States back to OECD tax negotiations designed to reform how multinational companies are taxed. After discussions stalled out last year following a sudden US withdrawal, Yellen is now committing the United States to talks on digital tax and the global corporate tax regime. She has already spoken with both French and German counterparts, reports Reuters. Better yet, it seems likely that global partners are eager to cooperate aftering hearing Biden administration remarks on tax reform. While negotiations are far from settled, it seems a deal could be done by the summer with a now cooperative Washington back at the table.
There’s movement beyond the OECD as well. While it remains contentious, public country-by-country corporate reporting of tax and other key financial information may soon be policy in the EU now that Portugal has the EU Council Presidency. Some nations are moving ahead on their own as well. Norway’s $1.3 trillion wealth fund has disinvested from several companies for a lack of tax transparency and is pushing all companies they invest in to “pay tax where the value creation takes place”.
In the Press
From FACT
 | FACT Welcomes Bipartisan Bills to Counter Kleptocracy and Combat Global Corruption February 5: U.S. Senators Ben Cardin (D-MD) and Roger Wicker (R-MS) introduced legislation Thursday that would establish a global anti-corruption action fund at the State Department, dedicated to shoring up the rule of law abroad and combating global corruption. |
 | STATEMENT: FACT Welcomes Biden Pick for SEC January 18: Gary Gensler brings key public sector experience to the position, having served top roles in the U.S. Treasury Department and as Chairman of the Commodity Futures Trading Commission (CFTC) for five years under President Obama. |
 | BLOG: An Impressively Broad Coalition Just Did Something Big to Combat Money Laundering January 15: The Financial Accountability and Corporate Transparency (FACT) Coalition, which led the organizing effort, praised the enactment of the Corporate Transparency Act for effectively ending the abuse of anonymous shell companies. |
Quoted in
 | A momentous victory for global anti-corruption efforts January 28: In Brookings’ “Up Front,” Kelsey Landau and Norman Eisen discuss anti-corruption opportunities for 2021 and beyond following the passage of the Corporate Transparency Act. |
 | INTERVIEW: The Corporate Transparency Act January 24: The Volkov Law Group’s Liz Smith interviews Scott Greytak from Transparency International and FACT’s own Erica Hanichak on the passage of the Corporate Transparency Act. |
 | Klobuchar, Van Hollen, Duckworth Introduce Legislation to Keep Jobs in the United States January 21: U.S. Senators Amy Klobuchar (D-MN), Chris Van Hollen (D-MD), and Tammy Duckworth (D-IL) introduced the Removing Incentives for Outsourcing Act to close a loophole that encourages U.S. companies to move jobs and operations overseas in order to minimize their tax liability. |
 | Seven things to watch after historic anti-money laundering overhaul in the US January 19: The landmark legislation contains several loopholes, exemptions and shortcomings that may become key vulnerabilities in the fight against corruption and financial |
Recent and Upcoming Events
 | European Policy Center Panel on Illicit Finance: A Transatlantic Challenge February 25: This Policy Dialogue brings together officials and experts from both sides of the Atlantic to discuss how the financial system should be reformed and how the US and EU can best work together to tackle illicit finance. |
| Launch of the FACTI Panel Report February 25: The event is being convened to present the final report of the FACTI Panel to United Nations Member States and all other stakeholders. The report will provide evidence-based recommendations, building on the successes and ongoing work of existing mechanisms, and priority actions for addressing the identified challenges for tax cooperation, anti-corruption, and anti-money laundering. |
| RUSI: Reforming Companies House February 26: In this discussion, RUSI CFCS Associate Fellow Helena Wood will be joined by Martin Swain, Director of Policy, Strategy and Planning at Companies House, to introduce the new Companies House strategy and its emerging role in tackling financial crime and the potential framing of future legislation to aid the registrar in protecting UK corporate integrity. |
| Chatham House: Illicit Financial Flows 2021 March 1-2: The 2021 Illicit Financial Flows LIVE conference will explore the ‘real-world’ impact of illicit finance, the situation surrounding the regulation and enforcement of financial crime and address the barriers that are in place which impede public-private partnerships from effectively collaborating. FACT Executive Director Ian Gary will be joining as a speaker. |
Social Media Shoutouts
@RonWyden, Chair @JanetYellen’s nomination to be Treasury Secretary just passed the @SenateFinance Committee by unanimous vote. Her nomination should be brought to the Senate floor for a final vote today so she can get our economy back on track for working families as soon as possible.
@SenWarren, For too long, our banking regulators have behaved like they work for the financial institutions they regulate – not the American people. But big change is coming. President-elect Biden couldn’t have made two better picks to lead the SEC and CFPB: Gary Gensler and Rohit Chopra.
@RepMaloney, My #CorporateTransparencyAct will be an invaluable asset to law enforcement as they #FollowtheMoney to build major economic crimes cases. We need to prevent shady actors from using the US financial system for money laundering and financing criminal acts.
@USRepKeating, I introduced the CROOK Act to prevent Russian oligarchs and elites who engage in criminal activity from misusing Western financial institutions and spending their ill-gotten gains abroad. We cannot allow Russian criminals to continue to profit off the Russian people.
@HelsinkiComm, .@SenatorCardin & @SenatorWicker reintroduce Countering Russian and Other Overseas Kleptocracy (CROOK) Act to enable Foreign Corrupt Practices Act fines to be used for global #ruleoflaw promotion and streamline anti-#corruption in US foreign policy.
About the FACT Coalition