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How Anonymous Shell Companies Finance Insurgents, Criminals, and Dictators

The Panama Papers leak of eleven million documents in April 2016 revealed that former Iraqi Prime Minister Ayad Allawi, the brother-in-law of Chinese President Xi Jinping, longtime friends of Russian President Vladimir Putin, drug kingpins, and even a soccer megastar had something in common: they all channeled money through anonymous shell companies. Anonymous shell companies are entities that usually employ few or no workers, do not conduct any substantive business, and allow their owners to store or route money while hiding their identities.

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FACT Sheet: Use of Anonymous Companies Cause Widespread Harm

The conversation about the dangers of anonymous companies has largely focused on corrupt foreign leaders and threats to national security, human trafficking, and disruption to business. Additional harms include bidding up prices that fuel the loss of affordable housing, environmental degradation, and tax evasion.

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Countering International Money Laundering

Worldwide anti-money laundering efforts are currently just a decimal point away from total failure, according to this August 2017 report published by the Financial Accountability and Corporate Transparency Coalition (FACT Coalition).

Authored by former Treasury Special Agent John Cassara, an internationally renown expert on financial crime, the study details the near failure of current efforts to combat money laundering and the rationale for comprehensive reform.

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FACT Sheet: Anonymous Companies and National Security

The 2016 release of the Panama Papers was an avalanche of data on the nefarious use of anonymous companies for corrupt activities.  The leak showed that shell companies can represent an important nexus of corruption, money laundering, transnational organized crime, and terrorism, all of which directly harm U.S. foreign policy interests. Such companies have been used to divert U.S. security and overseas development funds from their intended purposes 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.

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FACT Sheet: Anonymous Shell Companies (August 2017)

America Is the Easiest Country in the World in which to Form an Anonymous Shell Company.
Creating a U.S. shell company takes less information than acquiring a library card.  A 2015 academic study found that the U.S. is the easiest country in the world for terrorists and criminals to open anonymous shell companies to launder their money with impunity.

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Letter to the IRS Supporting Treasury’s Corporate Inversion Regulations

The Financial Accountability and Corporate Transparency Coalition (FACT Coalition) sent a letter to the IRS in support of the Department of the Treasury’s Final and Temporary Regulations under Section 385 on the Treatment of Certain Interests in Corporations as Stock or Indebtedness. The full letter can be read below or downloaded here.

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