Global Financial Integrity

 

FACT Coalition Welcomes Introduction of Bill to End Anonymous Shell Companies

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Clark Gascoigne, +1 202 293 0740 ext. 222

Transparency Advocates, Small Business Groups, Investors, Labor Unions Hail New Legislation as Key to Curtailing Crime, Corruption, Fraud, Tax Evasion

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WASHINGTON, DC – The Financial Accountability and Corporate Transparency (FACT) Coalition applauded today’s introduction of bipartisan legislation in the U.S. Senate crucial to stemming the flow of dirty money hidden behind anonymous American shell companies. The alliance of civil society organizations, small business groups, investors, and labor unions urged lawmakers to move quickly to pass this critical piece of legislation.

The Incorporation Transparency and Law Enforcement Assistance Act, sponsored by Senators Carl Levin (D-MI), Chuck Grassley (R-IA), Dianne Feinstein (D-CA), and Tom Harkin (D-IA), requires corporations and limited liability companies (LLCs) in the United States to disclose the natural person(s) who maintain(s) an economic interest in or control over the company at the time it is created (the “beneficial owner(s)”). The bill seeks to put an end to the secrecy of “phantom firms”, anonymous shell companies with no physical presence formed to hold assets and disguise their source or true owner.

“The tide is turning against corporate secrecy,” said Stefanie Ostfeld, Senior Policy Advisor for Global Witness. “Swift passage of this bill would enable the U.S. to implement its G8 commitment to enhance transparency of the real people who own and control companies, making it harder for the corrupt and other criminals to hide behind American shell companies to move dirty money.”

“The Department of Justice has made it clear that anonymous shell companies are the most-widely used method for laundering the proceeds of crime, corruption, and tax evasion,” said Heather Lowe, Legal Counsel and Director of Government Affairs at Global Financial Integrity.  “They are used to facilitate sex slavery, arms trafficking, and drug dealing. Ending the anonymity behind these phantom firms is just common sense.  The Obama administration has endorsed the need for this legislation, and now it’s time for Congress to do its part.”

Brandon Rees, Acting Director of the AFL-CIO Office of Investment, stated, “Criminals should not be permitted to hide from authorities using artificial legal structures. This legislation will shine a light on anonymous shell companies, revealing the human beings that stand to benefit from their operations.”

Nicole Tichon, Executive Director of Tax Justice Network USA, added, “The United States is currently a very attractive destination for corrupt officials and tax evaders to hide the proceeds of their crimes, and anonymous shell companies provide a prime vehicle to do so. These entities have been implicated in trafficking of drugs, arms, and humans; terrorist financing; government corruption; fraud; tax evasion; and many other illicit activities.”

Many U.S. states rank among the easiest jurisdictions in the world to form a company without revealing the identity of who ultimately owns or controls it. The increased accountability made possible by the bill would make it much harder for criminals to hide behind American shell companies to perpetrate schemes to defraud investors and other innocent Americans or to steal millions of dollars from Medicare. It would also provide important benefits to small businesses.

“Most real American business owners are proud to have their names on their incorporation papers, if not on the door,” Scott Klinger, Tax Policy Director for the American Sustainable Business Council, said. “Having hundreds of thousands of anonymous shell corporations lurking in the shadow economy creates unnecessary risks and added costs for legitimate businesses and for the economy.”

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Note to Editors:

  • Click here to read a summary of the legislation on Sen. Carl Levin’s website.
  • Click here to download a PDF of the full bill text from Sen. Levin’s website.
  • Click here to read a letter of endorsement from civil society organizations for the Incorporation Transparency and Law Enforcement Assistance Act sent to the Senate.
  • Click here to read a letter of endorsement from concerned investors for the Incorporation Transparency and Law Enforcement Assistance Act sent to the Senate.
  • Click here to read a letter of endorsement from concerned small business groups for the Incorporation Transparency and Law Enforcement Assistance Act sent to the Senate.
  • Click here to read the White House’s G8 Action Plan for Transparency of Company Ownership and Control, published June 18, 2013.

Contacts:

Clark Gascoigne
Communications Director
Global Financial Integrity
+1 (202) 293-0740 x222
cgascoigne@nullgfintegrity.org

Nicole Tichon
Executive Director
Tax Justice Network USA
+1 (202) 758-9552
nicole@nulltjn-usa.org

Stefanie Ostfeld
Senior Policy Advisor
Global Witness
+1 (202) 621-6674
+1 (202) 577-5858
sostfeld@nullglobalwitness.org

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Founded in 2011, the Financial Accountability and Corporate Transparency (FACT) Coalition unites civil society representatives from small business, labor, government watchdog, faith-based, human rights, anti-corruption, public-interest, and international development organizations. We seek an honest and fair corporate tax code, greater transparency in corporate ownership and operations, and commonsense policies to combat the facilitation of money laundering and other criminal activity by the legitimate financial system.

For additional information on the FACT Coalition, please visit www.tjn-usa.org/current-campaigns.

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