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Senate moves to end anonymous shell companies to crack down on money laundering, tax dodging and corruption

1st August 2013

Global Witness applauds Senators Levin (D-MI), Grassley (R-IA), Feinstein (D-CA) and Harkin (D-IA) for introducing legislation that would make it much harder for the corrupt and other criminals to misuse American companies to launder dirty money into American banks. The bill will allow the Obama Administration to implement its G8 commitment to enhance transparency of the real owners and controllers of American companies.

The Incorporation Transparency and Law Enforcement Assistance Act would require companies to disclose their ultimate, or real, owners, when the company is set up, and keep this information up to date. This would make it much harder for money launderers to hide their identity behind webs of shadowy companies to stash their ill-gotten gains in banks.

“Anonymous companies are the getaway car for financial crime, so this legislation is crucial in the fight against corruption, organized crime and Medicare fraud,” said Stefanie Ostfeld, Global Witness Senior Policy Advisor. “Swift passage of this bill will stop dictators, terrorists and drug traffickers from being able to legally hide their identities, and therefore their dirty money, behind anonymous American shell companies.”

The Obama Administration committed to create registries of the ultimate owners of companies at the G8 Summit in June. “Obama’s commitment at the G8 Summit represents a long overdue pledge to roll back corporate secrecy,” said Ostfeld. “Now it is time for Congress to act to prevent American companies from being misused to facilitate all types of crimes.”

The Senate Permanent Subcommittee on Investigations has exposed how easy it is for foreign officials to mask their identity behind U.S. shell companies so they can stash their ill-gotten gains in American banks. The World Bank found that the U.S. was the favorite destination of corrupt politicians trying to set up shell companies and a Griffith University study ranked many U.S. states among the easiest jurisdictions in the world to form a company without revealing the identity of who ultimately owns and controls it.

“Shining a light on the ultimate owners of companies would stop the U.S. from being a haven for dirty money from around the world. This would be transformative for millions of people living in resource rich developing countries, where government revenues are all too often siphoned offshore by corruption and tax evasion facilitated by phantom firms,” said Ostfeld.

/Ends

Contacts:

Washington, DC: Stefanie Ostfeld, sostfeld@globalwitness.org, +1 202 577 5858

Global Witness investigates and campaigns to prevent natural resource-related conflict and corruption and associated environmental and human rights abuses

Notes to editors

1.    Global Witness has documented how corporate secrecy in the U.S. and around the world fundamentally undermines global anti-money laundering laws and how corrupt foreign politicians and pariah regimes exploit the secrecy provided by anonymous American shell companies to access the U.S. financial system. Our investigations have also consistently highlighted the reluctance of major banks to turn away suspect funds.

2. To read more about Global Witness's work on anonymous company ownership, and to download our Idiot's Guide to Money Laundering, click here

3.    The Obama Administration committed to create registries of the ultimate owners of companies at the G8 in June. The Obama Administration also committed to advocate for legislation that would require meaningful disclosure of beneficial ownership information in the U.S. Open Government Partnership National Action Plan and the Strategy to Combat Transnational Organized Crime.