Senate Ratification of Treaties Crucial to Stopping Tax Evaders, Continuing International Momentum for Automatic Exchange of Tax Information

International Business Groups Have Also Called on Paul to Resolve the Legal Uncertainty Caused by Delay

May 2, 2013
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WASHINGTON, DC – Global Financial Integrity (GFI), a Washington, DC-based research and advocacy organization, urged Senator Rand Paul (R-KY) today to allow the U.S. Senate to vote on treaties negotiated by the U.S. with Switzerland, Luxembourg, Hungary, and other countries to implement the Foreign Account Tax Compliance Act (FATCA), ferreting out U.S. tax evaders.  Senate rules allow any Senator to place a “hold” on legislation removing it from consideration, and Sen. Paul has placed holds on bills to implement every tax treaty negotiated since his election in 2010.

FATCA—adopted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act—requires foreign financial institutions to report information on the accounts of U.S. customers to the Internal Revenue Service (IRS), or a tax on all of the foreign bank’s U.S.-source income will automatically be withheld before being transferred to the bank. The U.S. Treasury is in the process of negotiating inter-governmental agreements with over fifty jurisdictions to streamline the process.

Bipartisan Study Features GFI Research, Endorses Eliminating Phantom Firms

Senate Drug Caucus Report Quotes GFI’s Heather Lowe, Highlight’s GFI’s Research on Trade-Based Money Laundering

April 26, 2013
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WASHINGTON, DC / LONDON – A bipartisan Congressional report published Thursday by the U.S. Senate Caucus on International Narcotics Control (Senate Drug Caucus) emphasizes cracking down on money laundering as key to curtailing the illicit drug trade.  Quoting heavily from Global Financial Integrity (GFI) experts and research, the study endorses eliminating anonymous U.S. shell companies through the passage of the bipartisan Incorporation Transparency and Law Enforcement Assistance Act, bolstering enforcement of existing anti-money laundering (AML) policies, and strengthening anti-money laundering laws through passage of the bipartisan Combating Money Laundering, Terrorist Financing and Counterfeiting Act.

“You simply cannot curtail the drug trade without curtailing drug money,” said GFI Director Raymond Baker, a longtime authority on financial crime.  “The UN estimates that worldwide, over 40 percent of cocaine is seized somewhere between production and consumption.  However, less than half of one percent of laundered criminal money is interdicted globally.  We’ve put the cart before the horse, and the Senate Drug Caucus clearly recognizes that.”

British PM Endorses Public Registries of Company Ownership to “Break through the Walls of Corporate Secrecy”

France, Germany Also Call for Meaningful End to Anonymous Shell Companies

GFI Urges G8, U.S., EU to Follow Suit

April 25, 2013
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WASHINGTON, DC / LONDON – In a major victory for transparency advocates, British Prime Minister David Cameron called on members of the G8 and the European Union Wednesday to “break through the walls of corporate secrecy” that facilitates tax dodging, money laundering, and corruption—endorsing the disclosure of beneficial ownership information in central public registries.  Global Financial Integrity (GFI), a Washington, DC-based research and advocacy organization, lauded the statements by Mr. Cameron—included in a letter sent Wednesday to Herman Van Rompuy, President of the European Council—and the organization encouraged the United States, EU, and G8 to follow suit.

“Anonymous shell companies are the most-widely used method for laundering the proceeds of crime, corruption, and tax evasion,” said GFI Director Raymond Baker, a longtime authority on financial crime. “These phantom firms facilitate sex slavery, terrorism, and tax evasion.  Central public registries of meaningful corporate ownership information are essential to curtailing these pernicious crimes.  We’re thrilled to see Prime Minister Cameron take the lead on this issue.  It’s now time for the European Union, the United States, and the G8 to jump on the bandwagon.”

Fraudulent Trade Misinvoicing Drained US$9.54 Billion in Illicit Money from Argentina from 2001-2010

Trade-Based Money Laundering Technique Siphoned US$4.69 Trillion from Poor Countries between 2001-2010; Facilitates Sex Slavery, Terrorism, Tax Evasion

April 22, 2013
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WASHINGTON, DC – As the U.S. Department of Justice announced today that Ralph Lauren Corporation (Ralph Lauren) utilized fraudulent misinvoicing tactics to funnel bribes to Argentinean customs officials over the course of five years, Global Financial Integrity (GFI) noted that trade misinvoicing drained US$9.54 billion from the Argentinean economy between 2001 and 2010.  The deliberate misinvoicing of trade documents is used to launder all types of illicit money, and it costs the developing world roughly US$4.69 trillion in illicit financial outflows from 2001 through 2010, according research by GFI, a Washington, DC-based research and advocacy organization.

“More money flows illicitly out of developing countries through fraudulent trade misinvoicing than through any other vehicle,” said GFI Director Raymond Baker, a longtime authority on financial crime. “Sadly, Ralph Lauren’s transactions are emblematic of a problem draining roughly a billion from the Argentinean economy every year.” 

G20 Says Automatic Tax Information Exchange “Expected to Be the Standard”

Finance Ministers Fail to Adequately Address Anonymous Shell Companies

April 19, 2013
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WASHINGTON, DC – Global Financial Integrity (GFI) lauded G20 Finance Ministers and Central Bank Governors Friday for prominently focusing on the issue of tax haven secrecy and strongly declaring that automatic exchange of tax information is “expected to be the standard” moving forward, but GFI expressed disappointment in the leaders’ failure to sufficiently address the issue of anonymous shell companies.  The leaders released their communiqué Friday afternoon after two days of meetings in Washington ahead of the annual spring meetings of the World Bank and International Monetary Fund.

“Tax haven secrecy and anonymous shell companies facilitate crime, corruption, and tax evasion, costing the developing world roughly US$1 trillion in illicit outflows every year,” said GFI Director Raymond Baker, citing the organization’s research. “This secrecy costs the U.S. Treasury $150 billion annually in lost tax revenue, it siphoned $261 billion out of the Greek economy in the run-up to the Eurocrisis, and it drained $212 billion from Russia—the current chair of the G20—in the years following the collapse of the Soviet Union.  Automatically exchanging tax information between countries and getting rid of anonymous shell companies would significantly curtail these illicit flows, bolstering government revenues in poor and rich nations alike.”

On U.S. Tax Day, Rep. Lloyd Doggett (D-TX) Introduces Legislation to Close Offshore Tax Loopholes and Foster Transparency

5 More European Nations Join Compact to Automatically Exchange Tax Information Multilaterally

April 15, 2013
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WASHINGTON, DC – As the deadline arrived Monday for Americans to file their tax returns, U.S. Rep. Lloyd Doggett (D-TX) introduced the Stop Tax Haven Abuse Act (STHA) to initiate transparency measures and close several offshore tax loopholes that cost the United States Treasury an estimated $150 billion every year.  Beyond boosting tax revenue in the U.S., Global Financial Integrity (GFI) praised the legislation for its impact on developing nations, which lose an estimated $1 trillion per year in illicit outflows of money due to tax haven secrecy.

“Adopting the Stop Tax Haven Abuse Act would be a major victory for U.S., European, and developing country taxpayers,” said Raymond Baker, director of GFI, a Washington-DC based research and advocacy organization. “It would scrap several egregious offshore tax loopholes—helping to level the playing field between small businesses and multinational corporations, increasing information and transparency for investors, and strengthening law enforcement and tax collection abilities.”