Raymond Baker in Huff Post: Update Incorporation Transparency Laws

November 24th, 2009

GFI Director Raymond Baker has an essay published in the Huffington Post today talking about the need for updating the incorporation transparency laws in the United States.  From the Huff Post:

In the war on drugs the most powerful ammunition law enforcement has is information. Whoever calls the shots is usually the same person who sits atop the money pyramid and while law enforcement may know who these persons are, they have a much more difficult time proving guilt and securing convictions.

Much of the blame for this lies in the calamitous state of justice and rule of law in Mexico. The rest though, lies squarely with the United States, which for far too long has maintained a dangerously laissez-faire attitude about what is permissible conduct in its domestic financial practices.

One such practice is company formation. Every year some two million corporations and limited liability companies (LLCs) are formed within the U.S. under a patchwork of state-by-state laws that require a surprisingly scarce amount of information from those seeking to incorporate. In many states, starting a company is easier than obtaining a library card. The most glaring omission in the company formation process is a lack of requirement for disclosure of beneficial ownership. In other words, when forming a company it is not necessary to disclose who the primary beneficiary and controller of the newly formed entity will be.

Operating in this shrouded process, these U.S. corporate entities serve as fiscal engines for some of society’s worst crimes, both on U.S. soil and abroad. For criminals, this presents a tantalizing opportunity for money-laundering-usually by forming a multi-tiered structure of shell companies and dummy corporations.

For law enforcement officials, such as those who will now be working to put La Familia members in jail, this means that it is a lot more difficult to successfully investigate crimes because the money trail too often dead ends far short of those at the top of the chain.

Check out the full essay at

Written by Clark Gascoigne

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