October 31, 2013
E.J. Fagan, +1 202 293 0740 ext. 227
New UK Public Registries to Become the Gold Standard to Combat Illicit Financial Flows
President Obama Ought Follow Cameron’s Leadership
WASHINGTON DC – Prime Minister David Cameron announced today that the United Kingdom plans to create a central public registry of corporate beneficial ownership information, and called on other countries to join the United Kingdom by establishing their own public registries.
Heather Lowe, Director of Government Affairs at Global Financial Integrity, praised the historic move, “David Cameron is proving to be the true global leader on tackling the kind of financial opacity that has stymied growth in developed and developing nations alike. Today’s announcement that the United Kingdom will not only be the first nation to collect information on who owns and controls the companies created in the UK, but that the information will be available to the public is truly groundbreaking.”
Throughout the United States and around the world, corporations can be formed without disclosing who actually owns or controls it. Criminals often exploit this ability to create anonymous shell companies, legal entities that are set up for the sole purpose of hiding the owner’s identity and do little or no real business. Such “phantom firms” are the most widely used method for laundering the proceeds of crime, corruption, and tax evasion.
Solving the phantom firm problem requires identifying the “beneficial owner” of a company when it is formed, and this task has become an international priority, thanks in large part to Prime Minister Cameron. His announcement today follows the commitment by all G8 countries, including the United States, to establish registries of beneficial ownership information, made at the Lough Erne summit hosted by Prime Minister Cameron this summer.
By also making this information available to the public, the UK is achieving the “gold standard” of transparency, enabling its citizens and other companies to always know with whom they are doing business and empowering civil society organizations to hold individuals accountable for their companies’ actions.
Action Lacking from the Obama Administration
GFI urged the Obama Administration to follow Prime Minister Cameron’s lead and include a strong commitment to collect and publish beneficial ownership information in its next OGP National Action Plan, due to be released in December. The previous Action Plan, released in September 2011, committed the Administration only to advocating for legislation on the issue.
Ms. Lowe explained, “The Obama Administration committed to tackling anonymous shell companies in the U.S. more than two years ago, but we have yet to see action to fulfill that commitment. Even so, the Administration’s commitments have never embraced the importance of being able to know who is behind U.S. companies for the general public – like people who would like to do due diligence on potential suppliers, people who want to ensure that we have fair elections, and people who want to avoid being taken by fraudsters.”
“The Administration will be unveiling its new international commitment on anonymous shell companies in early December, and we urge them to follow the UK’s lead and commit to public registries of corporate ownership and control.”
Global Financial Integrity supports the bi-partisan Incorporation Transparency and Law Enforcement Assistance Act, which would require collection of beneficial ownership information for all corporations created in the United States. While the bill, which President Obama co-sponsored when he was a U.S. Senator, does not address whether the information will be made public, only requiring that it is available to law enforcement, passage of the bill would be a major step forward for the United States.
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Notes to Editors:
- To schedule an interview with Ms. Lowe or other GFI spokespersons, contact E.J. Fagan at +1 202 293 0740 x227 (Office) / efagan@gfintegrity.org. On-camera spokespersons are available in Washington, DC.
- Click here (PDF) to download the Senate version of the Incorporation Transparency and Law Enforcement Assistance Act (Levin-Grassley-Feinstein-Harkin).
- Click here (PDF) to download the House version of the Incorporation Transparency and Law Enforcement Assistance Act (Maloney-Waters-Moore-Capuano).
- Click here to read the White House’s G8 Action Plan for Transparency of Company Ownership and Control, published June 18, 2013.
- Click here to read an op-ed, titled “It’s time to pry criminals out of their shell (companies),” by Dennis Lormel, the former Chief of the FBI’s terrorist financing office, published in August in The Plain Dealer.
- Click here to read a 2011 Reuters investigation, which found that anonymous shell companies defrauded Medicare of billions of dollars between 2007 and 2011.
Contact:
E.J. Fagan
efagan@gfintegrity.org
+1 202 493 0740 ext. 227
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Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system as a means to global development.
For additional information please visit www.gfintegrity.org.