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Report Highlights Investor Risks from Anonymous Shell Companies

FACT Coalition Statement on New Global Witness and Global Financial Integrity Briefing
WASHINGTON, D.C. – A new report released today by Global Financial Integrity (GFI) and Global Witness emphasizes the importance to investors of knowing who owns and controls the companies with which they invest and with whom those companies do business.  Titled “Chancing It: How Secret Company Ownership Is a Risk to Investors,” the briefing highlights a number of financial and non-financial risks posed to companies and investors from anonymously-owned companies, and is published as global investors managing over $740 billion in assets released a letter calling on the U.S. government to adopt meaningful incorporation transparency legislation.

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Just the FACTs: September 2, 2016

It is estimated that between $7.6 trillion and $32 trillion in global wealth is secretly stashed offshore in tax havens.  A black hole in the world economy, offshore tax haven abuses drain invaluable resources from each and every country and undermine the rule of law worldwide—hampering our ability to act collectively to solve problems.  This week the European Union indicated that they will no longer tolerate these abuses.

Last week the European Union (EU) sent out a loud and clear message that “all companies, no matter their nationality, generating and recording their profits in an EU country should pay taxes in line with national tax laws”.   This week they followed through by showing the EU is willing to take steps to address aggressive tax avoidance and tax haven countries that facilitate the problem—ruling that Apple must pay Ireland roughly $14.5 billion in back taxes.

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On Apple, U.S. Should Follow Europe’s Lead – Level Playing Field for Small Business to Compete

Statement of the FACT Coalition on the E.U.’s Apple Ruling
WASHINGTON, D.C. – The European Commission today announced that Apple would have to re-pay Ireland roughly $14.5 billion in illegal tax breaks, after a three-year investigation discovered that the tech giant escaped with paying about 0.05% in taxes—compared to the official Irish rate of 12%.

Clark Gascoigne, the deputy director of the FACT Coalition, issued the following statement.

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Just the FACTs: August 19, 2016

In May, the Treasury Department released a final rule that was meant to increase scrutiny on banks to know the customers with which they do business.  Despite the fact that we believe the Treasury rule should have been much stronger, banks are on the front-line of the battle against terror financing and criminal money laundering and do have real anti-money laundering obligations.  But, there’s just one problem.  Banks are having a tough time verifying who their customers are because incorporating a company in the U.S. doesn’t require owners to disclose their real names.  Banks are now asking that the federal government change that.

The Clearing House Association, which represents the largest commercial banks, sent a letter to congressional lawmakers in support of the bipartisan Incorporation Transparency and Law Enforcement Assistance Act (H.R.4450, S.2489). The Clearing House includes major banks like Bank of America, Citibank, and JPMorgan Chase, and Wells Fargo. As FACT member  Global Witness explains, “without a way to ensure there’s comprehensive collection of beneficial ownership information for U.S. companies, it will be hard for banks to comply with new regulations that require them to find out who are the beneficial owners of their corporate clients.”

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Just the FACTs: August 5, 2016

It’s no secret, secret shell companies are dangerous.  A report by FACT member Global Witness in early July showed us how these companies are being used to defraud the federal government and put our armed forces at risk.  This week, a new report from another FACT member, Fair Share Education Fund, exposed connections to shell companies and the opioid epidemic.  The report, “Anonymity Overdose”, explains how ending the use of anonymous shell companies could make it significantly harder to keep drug profits hidden from law enforcement.

Likewise, shell companies are often used to launder illicit money through real estate.  A geographic targeting order from the Treasury Department began collecting information on high risk purchases in two of the biggest U.S. housing markets back in March.  According to an article in The New York Times, more than a quarter of the all-cash luxury home purchases made using shell companies in Manhattan and Miami were flagged as suspicious.  The Treasury Department will now expand the program to other major housing markets across the country.

 

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World’s Largest Banks Endorse Ending Anonymous Shell Companies

Letter from The Clearing House Endorses Bipartisan Incorporation Transparency and Law Enforcement Assistance Act
WASHINGTON, D.C. – On Monday, the Clearing House Association—representing the world’s largest commercial banks—sent a letter to Congressional lawmakers supporting strong measures to crack down on the abuse of anonymous companies.  The group, which counts among its owners Bank of America, Citibank, JPMorgan Chase, and Wells Fargo, explicitly endorses the bipartisan Incorporation Transparency and Law Enforcement Assistance Act (H.R.4450, S.2489).

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