“Just the FACTs” is a round-up of news stories and information regarding efforts to combat corrupt financial practices, including offshore tax haven abuses, corporate secrecy, and the laundering of money through the financial system.
Send feedback or items for future newsletters to Patricia Ainembabazi at [email protected]
Here’s the State of Play
The U.S. Ranked Most Secretive Financial Jurisdiction in the World
The United States has been ranked the most secretive financial jurisdiction in the world for the first time, according to the 2022 Financial Secrecy Index (FSI), a comprehensive study from the Tax Justice Network launched in the U.S. by the FACT Coalition on May 17th. The report attributes the unprecedented U.S. score, in part, to unaddressed loopholes and lax rules in U.S. anti-money laundering and tax laws.
There are at least four steps the U.S. can take to reverse course as the world’s top secrecy jurisdiction, which would also aid in U.S. efforts to enforce sanctions. The U.S. should:
- Bring greater transparency to the $50 trillion U.S. real estate market;
- Engage in more reciprocal automatic information exchange of financial account information for tax purposes and sharing the very information that the U.S. has required from foreign financial institutions since 2014;
- Introduce consistent anti-money laundering due to diligence and reporting requirements to the $11 trillion dollar U.S. private investment fund industry; and
- Regulate certain financial gatekeeper professions in line with international best practices, such as certain lawyers, trust and company service providers, and formation agents.
The Biden Administration has already committed to advancing a number of these reforms as part of the U.S. Strategy on Countering Corruption, announced in December. The FSI rankings align with Treasury Secretary Yellen’s own recognition that, “… right now, the best place to hide and launder ill-gotten gains is actually the United States.” In addition to the financial transparency reforms pushed by FACT, the Administration’s ban last week preventing U.S. corporate and trust service providers from working with individuals in Russia highlights the role these “enablers” play in providing financial secrecy services which undermine our own national security.
New Treasury Strategy Identifies 2024 Timeline for Final Rulemakings on Corporate Transparency Act
Congressional appropriators are seeking input on how they should prioritize items in the FY2023budget. The subcommittee overseeing FinCEN’s budget is seeking public input on budget priorities by May 30th. Consider submitting letters of support for a total FinCEN budget of at least $210.3 million.
According to the “National Strategy for Combating Terrorist and Other Illicit Financing“ published on May 13, the U.S. Treasury Department has committed to finalizing rules implementing the Corporate Transparency Act by 2024. These structural improvements will enable law enforcement and national security officials to abandon the sanctions “whack-a-mole” strategy in favor of attempts to comprehend the structure of U.S. entity ownership and combat large-scale sanctions evasion. The FACT Coalition continues to urge faster implementation of the CTA, advocating for the law’s implementing regulations to be finalized by the December 2022 International Anti-Corruption Conference to be held in Washington, D.C., with an effective date of no later than January 1, 2024.
FACT Applauds Push to Appropriate More Funds for the Financial Crimes Enforcement Network
The FACT Coalition applauds Congress’ approval of $52 million in emergency funds for the U.S. Treasury Department – including $30 million for the Financial Crimes Enforcement Network (FinCEN) – as part of the $40 billion Ukraine aid package passed yesterday.
Still, FinCEN faces funding shortfalls that hamstring its ability to finalize the Corporate Transparency Act or move forward rulemakings to safeguard the U.S. real estate and private investment markets from money laundering abuses. A group of 23 bipartisan senators, led by Senators Whitehouse (D-RI) and Chuck Grassley (R-IA), sent a letter to the congressional appropriators urging additional funding. See FACT’s statement in the letter here. This letter follows a similar letter by Rep. Abigail Spanberger (D-VA) in the House of Representatives, which had the support of 28 bipartisan colleagues.
Latest from FACT
|BLOG POST: The FACT Coalition commends the approval of $52 million in emergency funds for the Treasury Department to boost the U.S. Anti-Money Laundering Reforms in the Ukraine Aid Package|
May 19: The May 19 vote sends the larger $40 billion Ukraine aid package to the President’s desk to sign into law. “Combatting Russian aggression includes engaging on the financial battlefield. This bipartisan approval of emergency funds will help fill the coffers of our nation’s financial crime fighters,” said Ian Gary, FACT’s executive director.
|VIDEO RECORDING: Financial Secrecy Index launch 2022|
May 17: Rep. Carolyn Maloney joined FACT and the Tax Justice Network in discussing the launch of the 2022 Financial Secrecy Index and what it means for the U.S. transparency agenda.
|PRESS RELEASE: FACT Coalition Calls for Urgent Action on Financial and Tax Transparency Reforms|
May 17: The United States was ranked the most secretive financial jurisdiction in the world for the first time, according to the 2022 Financial Secrecy Index (FSI), a comprehensive study from the Tax Justice Network launched in the U.S. by the FACT Coalition on May 17th. The report attributes the unprecedented U.S. score, in part, to unaddressed loopholes and lax rules in U.S. anti-money laundering and tax laws.
|PRESS RELEASE: FACT Applauds Push to Appropriate More Funds for the Financial Crimes Enforcement Network|
May 17: The FACT Coalition welcomed a bipartisan letter signed by nearly one-quarter of the U.S. Senate advocating for greater funds for the Financial Crimes Enforcement Network.
FACT in the News
|QUOTED IN: Russian Billions Hidden in US Spur Backlash to Financial Secrecy.|
May 18: Ryan Gurule – “New York is one of the most desirable commercial and real estate markets in the world, and kleptocrats, sanction evaders and otherwise bad actors want to access those markets anonymously. New York is basically saying: “enough.”
|QUOTED IN: The U.S. is now the best country for illegally hiding money, report finds|
May 18: “The U.S. often says ‘We’re No. 1’ but this is one thing we don’t want to be No.1 in,” said Ian Gary, FACT Coalition’s executive director.
|PODCAST: Which countries are aiding financial secrecy?|
May 19: In this episode of the podcast, “Taxcast,” Ryan Gurule of the FACT Coalition talks about the U.S. implications of this year’s Financial Secrecy Index, which identifies the world’s biggest suppliers of financial secrecy.
QUOTED IN: The US is the number one place in the world for dictators, oligarchs and crooks to stash their dirty money, a new report claims
May 18: Ian Gary says the U.S. must also support more reciprocal automatic information exchange between countries; bring sunlight to the US real estate, private investment, and financial enabler industries; and boost funding to key agencies.
QUOTED IN: World’s Top Enabler of Financial Secrecy Is the United States
May 17: Ian Gary comments on the U.S. high rankings to have shown how corrupt actors are weaponizing the U.S. financial system against democracy.
QUOTED IN: ‘A Shameful Distinction’: US Ranked World’s Biggest Perpetrator of Financial Secrecy.
May 17: FACT’s recommendations on actions the Biden administration and Congress should take, including “introducing consistent anti-money laundering due diligence and reporting requirements to the $11 trillion U.S. private investment fund industry.
QUOTED IN: Legislators take no action on Trust, LLC Laws
May 4: Ryan Gurule’s briefing before the committee pointed to Igor Makrov, a Russian oligarch on how he protects portions of his immense fortune via a Wyoming trust, managed by an unregulated Wyoming private trust company.
Recent and Upcoming Events
|(UPCOMING) Amazon Annual General Meeting (AGM)|
May 25: Amazon shareholders, including FACT Coalition member Missionary Oblates, are urging all Amazon shareholders to vote for #YesOnProp12 to support tax transparency at the company’s annual meeting on May 25.
The shareholder proposal recommends that Amazon adopt the voluntary Global Reporting Initiative (GRI) Tax Standard in order to publicly disclose tax, revenue, and operations information on a country-by-country basis. The GRI is the most commonly adopted voluntary reporting standard for sustainability worldwide. Currently, Amazon sends country-by-country reporting (CbCR) to the IRS and OECD tax authorities, so any additional reporting burden will be small. However, this information is not publicly available, leaving investors, policymakers and the public in the dark about how one of the world’s largest and most profitable international companies generates revenue and operates worldwide.
|Book Launch of “The Butler to the World:”|
June 22: The FACT coalition will host Oliver Bullough as he launches his latest book “The Butler to the World” here in the U.S. In this book, Oliver explains how the UK has developed a system of bankers, lawyers, accountants and PR professionals, who work to help Russian kleptocrats hide their wealth.
Social Media Shoutouts
@SenWhitehouse: We ought to be the city on a Hill; instead, we’re a dark repository for dirty money. We need to close the loopholes, end the secrecy, and fund our enforcement agencies like Treasury’s FinCEN.
@EmilyAssembly: The @TaxJusticeNet says the U.S. is the single most complicit country in the world when it comes to hiding wealth. Our LLC Transparency Act with @bradhoylman is “leading the charge” for reform, @businessreports. Let’s pass it now.
@SenWhitehouse Russia’s oligarchs are part and parcel of how Putin has manipulated his country and accreted enormous wealth to himself. We’re poised to pass nearly $100M to target those oligarchs and their dirty assets.
About the FACT Coalition