FACT Coalition Statement on the One Year Anniversary of the Panama Papers Leaks
WASHINGTON, D.C. – Monday, April 3rd marks the one year anniversary of the leak of the “Panama Papers” — more than 11 million documents from a Panamanian law firm obtained by the International Consortium of Investigative Journalists (ICIJ).
For more than a decade we have seen a steep climb in the amount of money kept offshore by multinational companies. This has resulted in $2.5 Trillion to remain untaxed—at an estimated cost of $700 billion to the US Treasury. Throughout the 2016 election, both presidential candidates pledged to close loopholes that allow corporations to dodge taxes and stop companies from booking their profits overseas. Though the follow-through has yet to be seen. Many have even argued that Donald Trump’s victory was the result of a frustrated middle class that increasingly feels over-burdened, while they see the wealthy and corporations—following their own set of rules—shifting their responsibilities onto them.
A new report from U.S. PIRG Education Fund finds that multinational companies dodge an estimated $147 billion in federal and state taxes annually through offshore tax haven loopholes, shifting that burden instead onto small businesses and individual taxpayers. Titled “Picking Up the Tab 2016: Small Businesses Bear the Burden for Offshore Tax Havens,” the study estimates that each small business, on average, owes $5,186 more on its annual tax bill to collectively make up for the federal and state corporate tax revenue lost to offshore tax havens.
On International Anti-Corruption Day, We Must Better Understand the Extent to Which Corruption Harms Individual Lives and Entire Communities
Last week, I attended the International Anti-Corruption Conference held in Panama City (an irony not lost on anyone). Riding the bus to the convention center, I spoke with an anti-corruption advocate from Guatemala. She was eager to hear about the impact of the U.S. election on our work and what it means for American engagement in multilateral discussions on transparency and anti-corruption initiatives.
We discussed the large and multiple conflicts between the incoming President’s public responsibilities and his private business interests. I mentioned a recent article about how a banking lobby already moved their events for the coming year to one of Trump’s Washington area hotels, presumably to curry favor. Another article detailed a leasing agreement between the federal government and Trump enterprises, effectively making the incoming President his own landlord. Not even in office, and the list of conflicts of interest and potential conflicts is long.
Her reaction: “Welcome to my world.”
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.
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.
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.”
