“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 money laundering through the financial system.
Send feedback or items for future newsletters to Patricia Ainembabazi at painembabazi@thefactcoalition.org
Here is the State of Play
Treasury Announces Timeline for New Rule Cracking Down on Money Laundering Through US Real Estate
In an encouraging signal of anti-corruption progress to come in 2023, the Treasury Department announced its intention to release a draft rule targeting money laundering through US real estate markets this April.
A draft rule on real estate money laundering (REML) has been a long time coming: an advance notice of proposed rulemaking (ANPRM) was released by the Treasury in December of 2021 as a part of the rollout of the Administration’s Strategy on Countering Corruption, though no official timetable for the eventual rollout of a draft rule had emerged until this week.
Real estate transactions remain a preferred means for international and domestic criminals to launder money within the US, as few existing AML regulations cover real estate markets with the same diligence applied to banking and other sectors.
Careful design will prove vital to the success of a final rule, however. In comments submitted in response to the initial ANPRM in February, 2022, the FACT Coalition made a series of recommendations to guarantee the ultimate efficacy of the final REML rule, including ensuring that the new AML framework be applicable nationwide, cover both commercial and residential real estate transactions, apply to both the buyer and seller of a given property, and cover low-dollar transactions.
Investors Push Corporate Tax Transparency Back into the Spotlight During Shareholder Resolution Votes
Last month, shareholder advocates advanced resolutions at the annual general meetings of tech giants Microsoft and Cisco calling for greater transparency regarding the companies’ offshore operations and tax practices. These votes represent the latest in a series of such motions, demonstrating burgeoning investor demand for public country-by-country reporting (PCbCR) of corporate tax and financial data.
Notably, the Microsoft PCbCR proposal received the largest share of votes of any independent resolution considered during the company’s annual general meeting – with shareholders representing a combined $305 billion voting in favor – while the Cisco proposal was supported by more than 27% of shareholders. Both votes exceeded the margin of a previously-filed shareholder resolution at Amazon in May, which garnered support from 21% of independent shareholders.
Just one week before Microsoft’s shareholders met to vote, FACT Policy Director Ryan Gurule appeared alongside experts and industry professionals before the Securities and Exchange Commission’s Investor Advisory Committee to recommend swift SEC action to mandate PCbCR for large multinationals operating within the United States.
Investor demand for PCbCR continues to mount. This spring will see votes on proposals similar to those put before Microsoft and Cisco against extractive industry leaders Chevron, Exxon Mobil, and ConocoPhillips, while the Newmont and Hess corporations became the first large voluntary US filers of PCbCR data last summer.
Meanwhile, efforts to enact PCbCR on a jurisdictional level – including through a landmark Australian government PCbCR proposal with the potential to impact American multinationals – have continued to push the ball forward toward a new international standard of tax transparency for the world’s largest corporations.
Latest from FACT
Press Release: Investors Representing More Than $305 Billion Back Public Reporting Proposal
Investors representing more than $305 billion voted in support of a shareholder resolution requiring Microsoft to publish PCbCR tax and operational information during the corporation’s annual general meeting on December 13. A previous vote in November at Cisco’s annual meeting saw 27 percent of shareholders, representing $38.3 billion, support a similar resolution.
FACT policy director Ryan Gurule noted that “These votes are just the latest call from investors who increasingly recognize that they are throwing darts blindfolded when it comes to assessing the material risks posed by the opaque offshore practices of the companies they own.”
He added, “These investors should have more information at the ready to understand their exposure – whether that be from increased tax enforcement or tax reform risks, or geopolitical concerns, such as the recent corporate withdrawal from Russia after it invaded Ukraine.”
Press Statement: FinCEN receives a budget boost from New Omnibus Spending Bill
Congress’ final omnibus budget package for fiscal year 2023, signed by the President on December 29, included $190.2 million in funding for the Financial Crimes Enforcement Network (FinCEN) – an increase of roughly 18 percent over the agency’s current budget.
In a statement, FACT government affairs director Erica Hanichak praised the funding increase, and noted the vital national security and sanctions enforcement role that FinCEN plays as the nation’s chief financial intelligence unit.
“In including these overdue resources for FinCEN in a year-end spending bill, Congress is finally reinvesting in our nation’s financial defenses to deny criminal and kleptocratic funds safe haven in the United States.”
FACT in the News
Published In: Why Investors and Multinationals Should Push The U.S. for Public CbC Reporting
In an article published through Tax Notes, FACT policy director Ryan Gurule weighs upcoming efforts by the Financial Accounting Standards Board (FASB) to recommend greater disaggregation of tax data reporting for US multinationals in light of the emerging international trend towards full PCbCR reporting.
Though potential improvements by FASB to reporting standards are encouraging, argues Gurule, the SEC “can and should” simultaneously use its existing authority to begin the rulemaking process to require full PCbCR from the largest multinationals operating within the US.
Recent and Upcoming Events
March 15 – 17: Pan-African Network Conference on Fighting Illicit Financial Flows in Africa Theme: From Words to Actions.
The African Union’s upcoming conference aims to inform international and regional audiences about various anti-IFF initiatives intended to curb the flight of resources from the African continent, promote sustainable development, and encourage economic growth.
March 29-30: Second Summit for Democracy
The mixed-format Second Summit for Democracy will bring together government, civil society, and private sector leaders from around the globe to reflect on progress made during the past “year of action,” and to establish new anti-corruption, pro-democracy, and accountability commitments.
About the FACT Coalition