WASHINGTON, DC – Two recent articles published in The New York Timesexpose how criminals, terrorists, corrupt foreign politicians, and tax evaders abuse anonymous U.S. shell companies to launder their profits and impede law enforcement investigators, highlighting the need—says Global Financial Integrity (GFI)—for Congress to enact legislation requiring disclosure of the true (human) beneficial owners of corporations, trusts and foundations.
An article published over the weekend on the front-page of The New York Times Sunday Business section, titled “How Delaware Thrives as a Corporate Tax Haven” detailed how the oldest state in the union enables some of the most heinous crimes by allowing arms traffickers, corrupt Washington lobbyists, and drug smugglers, among others, to anonymously shield their activities from law enforcement under the guise of a legitimate U.S. corporation. While Delaware may be the biggest example, it is not alone. Nevada, Wyoming and most other states allow varying degrees of anonymity while incorporating.
“Almost two million corporations are formed in the U.S. each year, and the vast majority of those corporations are not required to provide any information—neither names nor addresses—about the true human (beneficial) owners of the firms,” explained Tom Cardamone, managing director of GFI.
“Shells are the No. 1 vehicle for laundering illicit money and criminal proceeds,” Assistant U.S. Attorney General Lanny A. Breuer is quoted as saying in the article. “It’s an enormous criminal justice problem. It’s ridiculously easy for a criminal to set up a shell corporation and use the banking system, and we have to stop it.”
“Anonymous shell companies are a nightmare for law enforcement and a serious U.S. national security risk,” added Cardamone. “Viktor Bout, the infamous criminal known as ‘The Merchant of Death,’ who provided arms to the Taliban, the FARC, and child soldiers in Sierra Leone, controlled at least a dozen anonymous U.S. shell companies, which were registered in Florida, Texas, and—of course—Delaware.”
An op-ed by Ken Silverstein published this morning in The New York Times further illustrates the point, explaining how corrupt foreign dictators, such as Equatorial Guinea’s Obiang family, have used anonymous U.S. corporations to steal from their people. Indeed, a recent World Bank report revealed that the United States was the top destination for corrupt foreign officials establishing offshore shell companies to launder their money and gain access to the global financial system.
Titled “Keep the Dictators Out of Malibu,” Silverstein’s column makes the case for the Incorporation Transparency and Law Enforcement Assistance Act—bi-partisan Congressional legislation which would ban anonymous shell companies from the U.S. financial system.
Endorsed by the Justice, Treasury, and Homeland Security Departments, in addition to numerous law enforcement organizations—including the Federal Law Enforcement Officers Association, the Fraternal Order of Police, and the Society of Former Special Agents of the F.B.I.—the legislation would create registries of the true beneficial owners of U.S. companies, easily providing law enforcement and tax authorities with this valuable information.
Supported by the White House, the Justice and Treasury Departments have additionally offered to provide $30 million in forfeiture funds to assist state governments in the costs of implementing the law.
“Adopting the Incorporation Transparency Act and Law Enforcement Assistance Act would send a strong message to the rest of the world—signaling the U.S. will no longer serve as a playground for the dirty money of criminals, kleptocrats, and tax evaders,” noted Cardamone.
To talk to Global Financial Integrity spokespeople about the issue, please contact Clark Gascoigne at +1 202 293 0740 ext 222 or at email@example.com.
Click here to read further analysis of the topic on the Task Force on Financial Integrity & Economic Development’s blog.
+1 202-293-0740 ext.222
Notes to Editors:
Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system.
For additional information please visit www.gfintegrity.org.