New Sentry Report Details how Bankers, Lawyers, and Accountants Enable Global Corruption Networks: “The Enablers Fueling Global Corruption and Building Violent Kleptocracies.”

“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 money laundering through the financial system.

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Here is the State of Play

New Sentry Report Details How Bankers, Lawyers, and Accountants Enable Global Corrupt Networks:  “The Enablers Fueling Global Corruption and Building Violent Kleptocracies”

The Sentry, a member of the FACT Coalition, published a report on September 21 describing how professionals such as bankers, attorneys, and accountants play a crucial part in driving global corruption and kleptocratic rule. The research provides a series of urgent recommendations for governments and financial institutions to counter the harmful impact of these actors.

The report, titled “Constructing Corruption: Identifying the Enablers Helping Build Violent Kleptocracies,” examines how a variety of often-overlooked operators, professionals, and insiders play a crucial part in the illicit operations of violent kleptocracies and global corrupt networks. 

The report focuses on 16 case studies to analyze the profiles and detrimental impact of facilitators, revealing their ties to illicit financial flows, conflict, and human rights violations. Targeting enablers with new common sense safeguards might alter the cost-benefit assessments of enablers and eliminate them as indispensable allies in the establishment and maintenance of violent kleptocracies. 

Gensler Expresses Support for More Corporate Tax Disclosure

On September 15, during a high-profile Senate Banking Committee appearance, Gary Gensler, the chair of the US Securities and Exchange Commission, said his agency was considering increased public reporting of taxes and other information by multinational companies. Gensler expressed his support for efforts by the Financial Accounting Standards Board (FASB) to introduce increased disaggregation of such information in company financial statements. The FACT Coalition has called on the SEC to require public country-by-country reporting by multinational companies and, in our recent report, showed the need for this information to protect investors.

Currently, multinational corporations reporting to the SEC  are not required to offer a breakdown of taxes paid and other key financial information on a jurisdiction-by jurisdiction basis. This makes it difficult for investors to assess the tax and other risks of companies. Investors worth trillions of assets under management have asked for greater tax transparency.

News from FACT

September 20: Press Release; Treasury Testimony Underscores Need for U.S. Action to Shut the Door on Illicit Russian Funds
On September 20, Elizabeth Rosenberg, Assistant Secretary for Terrorist Financing and Financial Crimes at the U.S. Department of the Treasury, and Andrew Adams, Director of the Task Force KleptoCapture at the Department of Justice, testified before the Senate Committee on Banking, Housing, and Urban Affairs on steps the Administration is taking in response to Russia’s invasion of Ukraine.
In response to this hearing, Erica Hanichak, Government Affairs Director of the FACT Coalition, said that Congress must play a pivotal role in addressing shortcomings in the current U.S. anti-money laundering system. She added that while the Treasury has been effective in freezing the assets of oligarchs like gold mogul and Putin financier Suleyman Kerimov’s $1 billion trust in Delaware, additional safeguards should be deployed to make the American economy less welcoming to dirty money.
“It’s time to change the status quo. U.S. professional ‘gatekeepers’ who arrange trusts, form entities, or manage money for a client should be required to conduct at least the most basic anti-money laundering checks. That’s why the Senate should follow its colleagues in the House and pass the ENABLERS Act.” she adds.
September 15: Press Release; SEC Chair Says Agency Considering Stronger Disclosures for Investors Regarding Corporate Tax Practices in Senate Testimony
In response to Gary Gensler’s testimony, FACT Executive Director Ian Gary said that in a changing and complex global tax climate, investors are left in the dark about where multinational firms report earnings and pay taxes. FACT’s July report “A Material Concern: The Investor Case for Country-by-Country Reporting” shows why investors are flying blind without more tax and transparency and the steps the SEC can take to properly inform investors. Action by FASB action should make it clear that broader country-by-country tax disaggregation should apply to all publicly traded firms, complementing and supporting any SEC rulemaking.
Sept 20: Blog Post; U.S. Must Address Its Own Credibility Gap to Be a Leader on Combating Corruption and Ensuring Resources for UN Sustainable Development Goals
In the context of the United Nations General Assembly meetings in New York this month, FACT’s Policy Fellow Chris Boose argues that the U.S. must make needed financial transparency reforms to be a credible actor in the fight against global corruption and illicit financial flows.

FACT in the News

QUOTED IN: SEC Eyeing Public Country-By-Country Reporting, Chair Says
September 15: FACT’s Executive Director Ian Gary was quoted in an article announcing the SEC’s views on the need for Public Country by Country Reporting.  “We are pleased that Chair Gensler indicated today that the SEC is looking at the need for increased tax and financial reporting by big multinational companies to inform investors and other stakeholders,” Gary said. “Jurisdictions worldwide, including the European Union and Australia, are moving to increase tax transparency, and the U.S. should follow suit,” Gary said.

Recent and Upcoming Events

September 28-29: Register to attend –The 10th Pan African Conference on IFFs and Taxation
The primary purpose of this year’s PAC conference is to investigate strategies to reduce the impact of global external shocks on the continent by combating illegal money flows and implementing progressive domestic resource mobilization.

Social Media Shoutouts

@KleptoCaucus: Next stop: @KleptoCaucus leaders push for inclusion of #ENABLERSACT in NDAA to stop Putin’s cronies from hiding their dirty money in America!

About the FACT Coalition

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