Civil society welcomes new push by Congress to end anonymous company abuse
February 4th, 2016
Last Sunday, 60 Minutes aired a jaw dropping segment on the role lawyers, banks and anonymous companies play in allowing dirty money to flow into the United States. The piece, based off of an undercover investigation by FTC member Global Witness, revealed just how willing a number of New York lawyers were to offer advice on the financial methods that could be used to conceal the origin of money entering the US. Global Witness sent an undercover investigator, who posed as the financial representative of a fictional African minister, to more than a dozen law offices in New York City.
Aside from showing how willing some in the law and banking professions can be in turning a blind eye, or even facilitating, the movement of dirty money, the investigation explored how anonymous companies in the US can play a key role in hiding the true owner and origins of illicit money.
The response to the piece has been overwhelming, and fortunately, lawmakers are getting involved. Earlier this week, the Incorporation Transparency and Law Enforcement Assistance Act was introduced in Congress, aimed at making sure that the real (beneficial) owner of a company is disclosed at the time of incorporation. Right now, most states don’t even collect this information, making it incredibly easy for nefarious individuals to hide behind anonymity.
Many civil society organizations, including members of the FTC and our Allied Network, welcomed the bill.
“Anonymously-owned companies act as getaway cars for all sorts of criminals – this legislation will make life much harder for them,” said Stefanie Ostfeld, Acting Head of Global Witness’ U.S. office. “Swift passage of this bill will stop dictators, terrorists and drug traffickers from being able to legally hide their identities and their dirty money behind anonymously-owned American companies. It will help stop our financial system being used to launder the proceeds of crime.”
“These phantom firms facilitate sex slavery, terrorism, corruption, and tax evasion, and as we saw on 60 Minutes, it is far too easy to create them,” noted GFI’s Heather Lowe. “The New York Times series Towers of Secrecy exposed how anonymous companies are used to purchase high-end real estate, often in cash, with no questions asked about where the money came from or who the actual purchasers are. U.S. states incorporate more than two million companies each year, and it is impossible to know how many of them have hidden or disguised ownership. This secrecy undermines U.S. security, the justice system, and the economy. Congress must take action.”
“Whether you’re a terrorist or drug lord, anonymous companies are one of the primary tools for laundering dirty money to escape the eyes of law enforcement, yet the U.S. is the second easiest place on Earth for a criminal to set up an anonymous shell company that can be used to launder money,” said Clark Gascoigne, interim director of the FACT Coalition. FACT unites over 100 leading small business, faith-based, human rights, investor, anti-corruption, public-interest, government-watchdog, labor, and global development organizations from across the ideological spectrum on the issue of anonymous companies. “This commonsense legislation, with broad-based bipartisan support, will go a long way toward closing this absurd loophole—helping to keep the American people safe from terrorists and other criminals.”
“Over the years, the United States has committed to implementing beneficial ownership transparency in a number of different fora, including the G8, G20 and the Open Government Partnership. Enactment of this type of legislation would be a strong signal to the rest of world that the U.S. is taking the necessary steps to uphold its commitments to beneficial ownership transparency,” said Shruti Shah, Vice President of Programs and Operations, TI-USA.