“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 Thomas Georges at tgeorges@thefactcoalition.org
REGISTER NOW for the launch of FACT’s new report, “Dirty Money and the Destruction of the Amazon: Uncovering the U.S. Role in Illicit Financial Flows from Environmental Crimes in Peru and Colombia” on October 26.
Here is the State of Play
Treasury Releases Improved Beneficial Ownership Information Reporting Form Incorporating Feedback from FACT, Others
Last week, the Financial Crimes Enforcement Network (FinCEN) – the bureau of Treasury charged with implementing the landmark Corporate Transparency Act (CTA) – released a revised draft form that covered entities will use to submit beneficial ownership information under the law.
The revised form notably excludes fields that would have allowed reporting entities to claim that they are “unable to obtain” information statutorily required by the CTA. The inclusion of these fields in a previous draft was widely decried by transparency advocates, including the FACT Coalition, as having the potential to drastically undermine the effectiveness of the CTA by functionally rendering reporting optional under the law. In its release Friday, FinCEN acknowledged that commenters on the initial draft form were “uniformly critical” of the “unknown” and “unable to obtain” fields.
Though the current draft form – referred to as Beneficial Ownership Information Reports (BOIR) – will not present any option for covered entities to submit incomplete information when reporting begins on January 1, 2024, FinCEN notably left the door open for a future “alternative implementation” to be considered based on feedback from both filers and end users. Under this alternative implementation, the BOIR would “provide a mechanism for filers to temporarily indicate if they are unable to provide certain information for certain reasons,” such as being unable to contact a given beneficial owner. Reporting entities that make use of this mechanism would be considered non-compliant and subject to follow-up from FinCEN until their BOIR is updated with complete information. FACT is reviewing the proposal and plans to submit comments. Comments on the revised BOIR implementation are due by October 30.
As the initial reporting date of January 1, 2024 approached, FinCEN is steadily finalizing its implementation of the CTA, including by issuing guidance and conducting ongoing outreach to inform small businesses of their potential reporting obligations. A final rule governing access to the beneficial ownership information database by authorized users now represents the only remaining major measure necessary to fully implement the law.
FinCEN’s remit does not begin and end with the CTA, however. In addition to conducting day-to-day operations in its capacity as the nation’s primary financial intelligence unit, the bureau is also in the process of drafting a new draft rule addressing money laundering through U.S. real estate markets. That rule, previously expected to be released in September, is now slated for release “later this year,” per recent remarks by FinCEN Director Andrea Gacki.
Latest from FACT
Policy Brief: International Corporate Tax Transparency Update – September 2023
FACT’s latest policy brief provides updates on major tax transparency developments around the globe, including efforts to introduce public country-by-country reporting (public CbCR) in Australia, and last month’s unanimous approval of enhanced disclosure standards by the Financial Accounting Standards Board (FASB).
From the brief: “Progress on public CbCR in jurisdictions around the globe continues to reinforce the need for decisive action by the Securities and Exchange Commission (SEC) to set a consistent, strong standard for multinational public tax reporting…Without decisive U.S. action, businesses will face conflicting reporting obligations, market-distorting information asymmetries will continue to accumulate, and investors will be left blind with regard to major tax risks to their portfolios.”
Recent and Upcoming Events
Register now for the launch of FACT’s new report analyzing the linkages between U.S. financial secrecy and environmental crimes in the Amazon region.
This new report draws on interviews with local and regional activists, indigenous leaders, anti-money laundering experts, and government officials in Peru, Colombia, and the United States to show how financial secrecy contributes to facilitating these crimes and lay out a comprehensive U.S. reform agenda.
The report launch will be held both virtually and in-person at the Open Gov Hub in Washington, D.C. from 12:00–2:00pm EDT. Confirmed speakers include:
- César Ipenza, Professor, Peru’s Universidad del Pacífico
- Julio Cusurichi, President of FENAMAD and leader of Peru’s Shipibo-Conibo community, Madre de Dios Region
- Matthew Spivack, Senior Policy Advisor, Office of Terrorist Financing & Financial Crimes, Treasury Department
- Susanne Breitkopf, Deputy Director of the Forest Campaign, Environmental Investigation Agency
- Ian Gary, Executive Director, FACT Coalition
Additional speakers, including from the U.S. government and Congress, are being confirmed.
Live translation between English and Spanish will be available. We hope to see you there!
Watch: Taking on Tax – The Past, Present, and Future
Watch a full recording of the Brookings Institute’s recent launch event for a new tax reform blueprint by former Treasury officials Kimberly Clausing and Natasha Sarin, now at UCLA School of Law and Yale Law School, respectively.
The proposal includes a number of recommendations in line with FACT’s policy objectives, including further aligning U.S. tax law with the OECD Two-Pillar Solution, applying a corporate minimum tax on the foreign operations of U.S. multinationals on a country-by-country basis, and restoring recently-rescinded funding for the Internal Revenue Service.
Watch last week’s Senate Budget Committee hearing on the need for new federal revenues to ensure the long-term solvency of Medicare. Among the witnesses was Chye-Ching Huang, Executive Director of the Tax Law Center at New York University, who made the case for a number of reforms aimed at strengthening and broadening the federal income tax base.
These recommendations include bringing the Global Intangible Low-Taxed Income (GILTI) multinational tax regime introduced in the Tax Cuts and Jobs Act of 2017 into compliance with Pillar Two, closing loopholes related to pass-through income used by big businesses to avoid paying corporate taxes, and fully implementing the Corporate Transparency Act to crack down on tax avoidance through anonymous entities.
About the FACT Coalition