Anonymous companies provide human traffickers the secrecy they crave. Opaque ownership structures make it difficult to track the individuals involved, while providing plausible deniability for those who profit from human trafficking operations.
Anonymous companies have been used by rogue employees to embezzle money, fraudulent vendors to undermine supply chains, and bogus competitors to steal contracts.
With fewer resources than larger enterprises, small businesses are often easy targets for scammers and criminals.
The Corporate Transparency Act of 2019 takes the simple, yet effective, step to require corporations and limited liability companies (LLCs) to disclose to law enforcement and others with legally mandated anti-money laundering responsibilities (e.g. financial institutions) information on who is the real, natural person (a.k.a. beneficial owner) who owns and controls an entity at the point of formation.
Additional provisions include a) outlawing the formation of bearer share corporations and LLCs, and b) requiring that bids for large federal contracts include the beneficial ownership data of the prospective contractors and subcontractors.
Anonymous companies facilitate everything from corruption and money laundering to transnational organized crime, sanctions evasion, and terrorism — all of which directly harm U.S. foreign policy interests. Such companies have been used to divert from their intended purposes U.S. security and overseas development funds into the hands of those who seek to do the United States harm, and they can help fund the very insurgents and terrorists U.S. troops are fighting.
Numerous stories have been written exposing how anonymous companies are used around the world for criminal purposes, including in media reports stemming from the Panama Papers, Paradise Papers, and Lux Leaks; the Russian and Troika Laundromat episodes; Global Witness reports, The Great Rip Off and Hidden Menace; and many more.
In addition to the examples, there is mounting evidence showing the widespread use of anonymous companies to launder money and allow dangerous actors to escape accountability and that the United States is a prime secrecy jurisdiction.
Anonymous companies are behind just about every financial crime. They are the vehicle of choice for laundering money obtained through illicit activity. Schemes involving terror financing and the trafficking of drugs, illegal weapons, and humans all use anonymous companies to move money, fund operations, and allow bad actors to escape with the proceeds of their crimes as well as impunity.
The pervasive use of secret shell and front companies also impacts the broader economy. As such, more and more businesses are speaking out.
