“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.
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Here is the State of Play
Treasury Moves Forward with Beneficial Ownership Database
With a robust first rulemaking on the landmark Corporate Transparency Act (CTA), the Biden Administration has taken an important step toward delivering on its commitment to making the fight against corruption a foremost national security priority. The first final rule, released by Treasury’s Financial Crimes Enforcement Network (FinCEN) on September 29th, requires new entities formed or registered in the United States to disclose information about their true “beneficial” owners within 30 days while requiring pre-existing entities to report within one year of the law’s effective date.
This information – to be collated in a FinCEN database currently under development – will help to expose the hidden ownership structures used by international and domestic criminals to launder funds within the United States.
The passage of the historic CTA was the result of a decade of work by anti-corruption and anti-money laundering advocacy groups, many of which number among the FACT Coalition’s membership. Shortly after the release of the final rule, FACT members met with senior Treasury officials for a private roundtable to discuss next steps for implementation of the CTA, as well as to provide feedback on the final rule. Two rulemakings now remain before the law can come into full force on January 1st, 2024. The first of these will determine how users contemplated by the law – including domestic and foreign law enforcement, federal agencies, and financial institutions with certain anti-money laundering obligations – will be permitted to access the beneficial ownership database established by FinCEN, while the second will revise FinCEN’s customer due diligence standards.
Anti-corruption Caucus Applauds Introduction of ENABLERS Act to Senate NDAA
Leading representatives of the Caucus Against Foreign Corruption and Kleptocracy commended the filing of the ENABLERS Act as a bipartisan amendment to the Senate National Defense Authorization Act (NDAA). The United States remains a favorite destination for tyrants, criminals, and terrorists to hide their dirty money, as evidenced by the Pandora Papers and recent exposes on the sheltering of assets within the U.S. by Russian oligarchs.
Due to reporting requirements placed on banks by federal law, corrupt actors are increasingly turning to middlemen outside of the banking sector – professionals who provide financial services such as forming a company, setting up a trust, or managing money – to assist them in hiding their assets and identities.
The ENABLERS Act would patch this gap in U.S. anti-money laundering law by mandating common sense due diligence requirements for these American intermediaries. The FACT Coalition advocated strongly for the bill’s inclusion in the House version of the NDAA, which passed in July. Now the ball is in the Senate’s court to pass the ENABLERS Act and end the era of U.S. complicity in international money laundering and corruption. Last week, FACT hosted a briefing with more than 50 congressional staff to dive into the substance and status of the legislation.
News from FACT
|Press Release: FACT Applauds Major Step for U.S. Anti-Corruption Efforts and Urges Act’s Inclusion in Must-Pass Defense Bill|
October 3: The FACT Coalition applauded the introduction of the ENABLERS Act as an amendment to the Senate NDAA by Senators Whitehouse (D-RI) and Wicker (R-MS). The bill will help ensure the legitimacy of funds entering the United States by allowing the Treasury Department to mandate that professional service providers serving as “gatekeepers” to the U.S. financial system implement basic anti-money laundering protocols. “If enacted, the ENABLERS Act would represent a sea change in American law to directly address the complicity of U.S. professional service providers in the stashing of dirty money within our borders,” said Ian Gary, FACT’s executive director.
|Statement: The FACT Coalition Calls on Congress to Move Quickly on Budget Boost for the Financial Crimes Enforcement Network|
September 30: The FACT Coalition called for a timely increase in funding to FinCEN, in response to delays posed by Congress’ passage of a continuing resolution to finance the federal government through mid-December.
|Press Release: The FACT Coalition Welcomes First Final Rule to Implement Landmark Corporate Transparency Act|
January 15: The Financial Accountability and Corporate Transparency (FACT) Coalition, which led the organizing effort, praised the enactment of the Corporate Transparency Act for effectively ending the abuse of anonymous shell companies. “The timely implementation of the Corporate Transparency Act is absolutely critical to fulfilling U.S. commitments on global anti-corruption, especially in the lead up to the International Anti-Corruption Conference slated to be in Washington this December,” said Tom Cardamone, President and CEO of Global Financial Integrity, a FACT Coalition member.
Blog: Human Rights Violations and Illicit Finance – The Inexorable Tie
FACT’s newest Policy Fellow, Sofia Gonzalez, calls for institutional change toward ending the “financial fraud epidemic”. In this blog, Ms. Gonzalez considers the effects of illicit financial flows into the U.S., and the human rights implications of those flows for the countries in which they originate.
FACT in the News
|QUOTED IN: Treasury moves forward with database on corporate ownership|
On September 29, FACT Coalition Executive Director Ian Gary was quoted in an article covering the first final rule of the CTA. “The U.S. has fallen behind many jurisdictions in requiring the true owners of corporate and other entities to be disclosed – there is more work to be done to fully implement the rule.”
|QUOTED IN: Transparency Groups, Tax Pros Differ on Impact of Ownership Reporting Rules|
Thomson Reuters cited the FACT Coalition’s press statement on the first final rule of the CTA in an October 4 article. “The rulemaking brings the U.S. one step closer to casting off its reputation as the world’s top financial secrecy jurisdiction.”
Recent and Upcoming Events
|October 11: IMF Book Launch – Unmasking Control: How Beneficial Ownership Transparency Can Help Counter the Abuse of Corporate Structures|
During the World Bank/IMF Annual Meetings in Washington, D.C., the IMF will hold a high-level panel discussion to launch the IMF’s new guide on transparency of beneficial ownership, Unmasking Control: A Guide to Beneficial Ownership Transparency. As the IMF argues, “the lack of transparency of corporate structures negatively impacts the economies of countries.”
|October 13: Register to attend the GI-ACE Report Launch: Curbing IFFs and the Enablers of Corruption|
Join GI-ACE at the Open Gov Hub for a discussion of their new report, “Curbing IFFs and the Enablers of Corruption,” with authors Noah Arshinoff, Jane Humphreys, and Marc Tassé, moderated by GFI’s Lakshmi Kumar.
Social Media Shoutouts
@transparencyUSA, The Treasury Department released the first of three final rules to implement the Corporate Transparency Act today, a critical step in establishing the U.S.’s beneficial ownership registry. Our statement: https://us.transparency.org/news/corporate-transparency-rule-is-critical-step-to-effectively-protecting-u-s-financial-system-against-corrupt-and-criminal-money-laundering/
@SenWhitehouse, @USTreasury’s Financial Crimes Enforcement Network just took a big step to implement my bipartisan Corporate Transparency Act, which gives law enforcement officials new tools to track criminals and foreign enemies who hide their assets in shell companies.
@KleptoCaucus, @Ianpgary: “We are encouraged by the growing bipartisan support for these critical reforms… Washington is waking up to the importance of securing the U.S. financial system from abuse by criminals and kleptocrats.” #ENABLERSAct
About the FACT Coalition