September 25, 2014
Clark Gascoigne, +1 202 293 0740 ext. 222
Study Reveals the Astonishing Breadth of U.S. Phantom Firms’ Threat to Americans’ Livelihoods and Cost to U.S. Economy and Government
Report Demonstrates the Clear Need for National Legislation to End Anonymous Incorporation in the U.S.
WASHINGTON, DC – Global Witness, an international investigative and advocacy organization, today released a report, entitled “The Great Rip Off,” studying the use of anonymous U.S. companies for a wide range of illegal and otherwise fraudulent activities in the United States, and outlining the policy steps needed to curb this massive abuse of the incorporation system. Global Financial Integrity (GFI), a Washington DC-based research and advocacy organization that has worked closely with Global Witness over the years, recommends the report as a welcome new resource on an important but often misunderstood issue.
“Anonymous companies are by far criminals’ most preferred method of laundering their money, and they facilitate the flow of trillions of dollars of dirty money through the U.S. economy,” said GFI President Raymond Baker, a longtime authority on financial crime. “The U.S. government and individual states have done little to limit criminals’ access to the corporate form, and it’s time for them to step up and take action.”
The Global Witness report highlights numerous cases in which an anonymous company—any company for which the identity of its real, human owner(s) is not known or disclosed—was used in America to defraud the government, evade taxes, cheat vulnerable individuals or businesses, fleece developing countries of their resource wealth, or attempt to influence American elections or politicians. The examples involve anonymous companies, also known as a “phantom firms,” created in more than half of the U.S. states and offenses that span the country.
“Currently, anonymous companies can be created in every single U.S. state—this is truly a nationwide problem,” explained Joshua Simmons, GFI Policy Counsel. “The astounding range of activities which anonymous companies facilitate, such as sex slavery, terrorism, arms trafficking, corruption, and tax evasion, should make solving this problem an absolute no-brainer.”
The problem has a simple solution—require every company formed in the United States to disclose its “beneficial owners,” or the real, human individuals who own or control the company. The report notes that legislation that would accomplish this goal—a bill known as the Incorporation Transparency and Law Enforcement Assistance Act—has been pending in Congress since 2008. Nonetheless, and despite increasing progress on the issue overseas, Congress has yet to act.
“It’s time for the United States to get to work on anonymous companies,” Mr. Simmons continued. “The UK and the European Union are already well on their way to stamping out phantom firms once and for all.”
Notes to Editors:
- Click here to read an HTML version of this media advisory on our website.
- Click here to read Global Witness’s report, “The Great Rip Off.”
- Click here for more information on the Incorporation Transparency and Law Enforcement Assistance Act.
- Click here for an FAQ on the Incorporation Transparency and Law Enforcement Assistance Act from the Financial Accountability and Corporate Transparency (FACT) Coalition.
- Click here (PDF) to read a letter from small business owners in support of the Incorporation Transparency and Law Enforcement Assistance Act.
- Click here (PDF) to read a letter from Civil Society Organizations in support of the Incorporation Transparency and Law Enforcement Assistance Act.
- Click here (PDF) to read a letter from other concerned organizations in support of the Incorporation Transparency and Law Enforcement Assistance Act.
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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.