Ending Anonymously-Owned Companies Would Be Widely Seen as an Effective Strategy in Crippling Those Who Pose a Real Danger to the U.S.
The President’s executive order banning refugees and legal immigrants from seven Muslim-majority nations has led to large protests in the U.S. In a conversation yesterday with anti-corruption advocates based in Canada and Belgium, I listened as they discussed the outrage this order has generated around the globe. The action, it appears, only reinforces the worst fears they held about the new administration.
The order is unconscionable, likely unlawful and—according to a growing list of security experts— unhelpful in protecting the nation against acts of terror. Just a few days in and the stories of harm and disruption are piling up.
FATF Evaluation Notes the U.S. Anti-Money Laundering “System Has Serious Gaps that Impede Timely Access to Beneficial Ownership Information”
Last week, the Financial Action Task Force (FATF)—the international body that sets anti-money laundering and counter-terror financing (AML/CFT) standards—released its first review of the United States’ efforts to combat dirty money since 2006. While the FATF report finds that the U.S. generally has a decent AML/CFT framework, it notes that there remains a gaping hole in the regime: the problem of anonymous shell companies.
The FATF release states:
“The United States has a well-developed and robust anti-money laundering and counter-terrorist financing (AML/CFT) regime through which it is effectively investigating and prosecuting money laundering and terrorist financing. However, the system has serious gaps that impede timely access to beneficial ownership information.”
Indeed, the U.S. remains one of the easiest places in the world for criminals, terrorists, and kleptocrats to open anonymous shell companies to launder illicit money with impunity, according to leading academics. That is because no U.S. state requires that information on the true, human owner (known as the “beneficial owner”) of an entity be disclosed to authorities at the time of incorporation.
The FACT Coalition sent this memo to the Trump-Pence Presidential Transition Team regarding actions to combat terror financing; criminal money laundering; and waste, fraud, and abuse in government contracting.
25 Organizations Send Letter to Congress Urging Beneficial Ownership Transparency in Procurement Process
The U.S. government has long recognized that it does not have enough information on the identities of its contractors—those that help protect our national security, provide medical and educational services, and build infrastructure.
“‘[T]here is no database in the U.S. government’ that provides reliable subcontractor information.”
— Ray DiNunzio, Special Investigator General for Afghanistan Reconstruction chief investigator from August 2009 to 2011 (via the Washington Post)
This lack of information can harm us all.
The FACT Coalition joined 24 other organizations in sending a letter to the U.S. House of Representatives Committee on Oversight and Government Reform on October 28, 2016. The letter calls upon Congress to urge the Administration to begin exploring alternatives for how contractors are identified without delay, to adopt a contractor identifier that is a non-proprietary, open system and that includes the collection and publication of beneficial ownership information.
Conservative Think Tank Scholars Note “Ending Criminal Secrecy Might become that Rarest of Political Beasts: a Truly Non-Partisan Issue.”
Scholars at the Hudson Institute recently announced in an article their support for action to curtail the abuse of anonymous shell companies. The conservative think tank’s Kleptocracy Initiative argues that the U.S. efforts around the world to stabilize governments and root out corruption are being undermined by an irrational contradiction where U.S. laws are at the same time providing a “safe haven to their dirty cash.”
Ending Anonymous Shell Companies Will Enable Us to Follow the Money Driving the Illicit Opioid Trade
Opioids are killing more Americans than ever before.
On average, 78 people die from opioid overdose everyday. From 1999 to 2014, more than 165,000 lives were lost due to overdoses related to prescription opioids. This crisis is being described as “one of the worst public health epidemics” in U.S. history.
The prevalence of opioid abuse is pushing families apart, tearing at the fabric of our communities, and killing our loved ones. So what or who is to blame for this prevalence? What is allowing opiates to be transported into the heart of our communities? There are a number of reasons, but a recent report published by Fair Share Education Fund reveals one of the less-discussed—yet systemic—drivers of opioid abuse: anonymous shell companies.
U.S. Among the Easiest Places in the World to Open Anonymous Shell Companies to Launder Money
WASHINGTON, D.C. — A new trove of leaked documents published today by the International Consortium of Investigative Journalists (ICIJ)—the group that brought the world the “Panama Papers” in April—continues to demonstrate the harms facilitated by 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.
Anonymous shell companies are impressively flexible tools. They can be used to launder money, evade taxation, covertly channel the payment of bribes, stash away a nation’s stolen wealth, and facilitate trafficking in drugs, weapons, and human beings. It’s a challenge to grasp the scale of the harm they help bring about.
It’s also challenging to find an appropriately scaled response. One place to start is for governments to require all companies within their jurisdiction to disclose their beneficial ownership for inclusion in a central registry—a step already taken by the United Kingdom, Denmark, and Norway. Going further, data from such registries can be aggregated and combined with other public registration materials to produce a gigantic database of company information, such as the one maintained by the UK for-profit OpenCorporates’ project.