Financial Transparency Coalition

U.S. Discloses Action to Seize Kleptocrat’s Loot; In Separate Report, UNODC Measures Laundered Funds at $1.6 Trillion in 2009

Global Financial Integrity

WASHINGTON, DC – The past twenty-four hours has seen the publication of two reports and the disclosure of an asset forfeiture complaint which, collectively, lay bare the size and seriousness of a global money laundering epidemic—underscoring the need for better incorporation transparency measures.

The Puppet Masters: How the Corrupt Use Legal Structures to Hide Stolen Assets and What to Do About It, published yesterday by the Stolen Asset Recovery Initiative (StAR)—a partnership between the World Bank and the UNODC, calls on world leaders to require the disclosure of the names of the beneficial owners of corporations, trusts and foundations upon formation, in addition to conducting a review of the effectiveness of anti-money laundering enforcement.

A civil forfeiture complaint, filed today by the U.S. Department of Justice (DOJ) against Teodorin Obiang, accuses the infamous son of Equatorial Guinea’s president of amassing over $70 million in ill-gotten gains, which he used to purchase “a Gulfstream jet, a Malibu mansion and nearly $2 million in Michael Jackson memorabilia.”

 A separate report, Estimating Illicit Financial Flows Resulting From Drug Trafficking and Other Transnational Organized Crime, released this afternoon by the United Nations Office on Drugs and Crime (UNODC), estimates roughly $1.6 trillion was laundered globally by criminals in 2009.

The reports underscore the need for legislation like the bi-partisan Levin-Grassley Incorporation Transparency and Law Enforcement Assistance Act in the United States, which would help prevent criminals and tax evaders from laundering illicit money through U.S. financial institutions.

“Criminals, tax evaders, and kleptocrats from around the world like Teodorin Obiang are taking advantage of corporate secrecy structures in the U.S. to hide and launder illicit money here,” said Global Financial Integrity’s Legal Counsel & Director of Government Affairs, Heather Lowe. “This financial opacity puts law enforcement at a major disadvantage. Too often cases are dropped, or investigations are closed, due to a lack of evidence connecting the illicit funds held in accounts owned by anonymous corporations to the criminal owners of those companies.”

“The U.S. financial system is a playground for corrupt, criminal, tax evading individuals from other countries,” said Ms. Lowe. “It is far too easy to gain access to financial services in the U.S. through anonymous U.S. corporations, while it is far too difficult for law enforcement groups to figure out who is really behind those corporations.”

Moreover, The Puppet Masters validates calls by the Financial Accountability and Corporate Transparency Coalition (FACT Coalition), of which GFI is a member, for the U.S. to perform a regulatory review to determine the extent to which American banks are complying with anti-money laundering laws designed to keep criminal money, including the proceeds of corruption, out of U.S. banks.

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Contact:

Clark Gascoigne
cgascoigne@gfintegrity.org
+1 202 293 0740 ext. 222

Monique Perry Danziger
mdanziger@gfintegrity.org
+1 202 904 3113

Notes for Editors:

1. Click here for more information on the StAR Initiatve, and to download the new report, The Puppet Masters: How the Corrupt Use Legal Structures to Hide Stolen Assets and What to Do About It.
2. Click here for more information on/to download the new report from the UN Office on Drugs and Crime, Estimating Illicit Financial Flows Resulting From Drug Trafficking and Other Transnational Organized Crime.
3. Click here for more information on the Incorporation Transparency and Law Enforcement Assistance Act.
4. Click here to read Global Financial Integrity’s statement on the Incorporation Transparency and Law Enforcement Assistance Act
5. Click here to read Sen. Carl Levin’s statement on the civil forfeiture actions filed against Teodoro Obiang
6. Click here to read Global Witness’ statement on the civil forfeiture actions filed against Teodoro Obiang
7. Click here to download the FACT Coalition’s letter to U.S. bank regulators calling on them to conduct a review of U.S. anti-money laundering compliance.