Financial Transparency Coalition

Proposed legislation would prevent foreign corrupt officials, tax evaders, terrorists and other criminals from taking advantage of anonymous U.S. shell companies

Global Witness

WASHINGTON, DC – Global Witness applauds Senators Levin (MI-D) and Grassley (IA-R) for introducing legislation that would make it harder for corrupt politicians, tax dodgers, drug traffickers, terrorists and other criminals to form and hide behind anonymous U.S. shell companies. The Incorporation Transparency and Law Enforcement Assistance Act would require those who set up companies in the U.S. to provide information about the beneficial, or ultimate, owner of the company to the state.

Global Witness’ research has revealed that the secrecy provided by American shell companies has been exploited by corrupt foreign politicians and pariah regimes such as Iran to access the U.S. financial system. The Senate Permanent Subcommittee on Investigations has also exposed how easy it is for foreign officials to hide their identity behind U.S. front companies before stashing their ill-gotten gains in American banks. A recent Reuters report also uncovered a link between foreign corruption and an anonymous shell company incorporated in Wyoming.

“Until this law is passed, foreign corrupt politicians, terrorists and drug traffickers can continue legally to hide their identities and their dubious assets behind the secrecy provided by American companies,” said Stefanie Ostfeld, Global Witness Policy Advisor.

This corporate secrecy undermines both U.S. laws to combat money laundering and tax evasion, and the exemplary role the U.S. plays on the international stage in tackling corruption. Once corrupt and other illicit funds have been moved through an anonymous corporate vehicle into the financial system, it is much harder to track them down. Passage of this bill would make it easier for law enforcement to do its job tracking down tax evaders and other criminals.

The Incorporation Transparency and Law Enforcement Assistance Act is complementary to President Obama’s new Strategy to Combat Transnational Organized Crime which was released earlier this year. The strategy includes disclosure of beneficial ownership of legal entities at the time of company formation as critical to the efforts of law enforcement.

“This is a bipartisan effort to bring greater transparency to the corporate sector, which will not only benefit U.S. national security, but also help to curb corruption and promote development around the world” said Ostfeld.  

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Contacts:

Washington, DC:

Stefanie Ostfeld,
+1 202 621 6674

London:  

Robert Palmer,
+44 20 7492 5860

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The Task Force on Financial Integrity and Economic Development addresses inequalities in the global financial system that penalize billions of people, and advocates for improved transparency and accountability.

Global Witness is a   coordinating committee  and founding member of the Task Force on Financial Integrity & Economic Development  .

For additional information please visit   http://www.financialtransparency.org