Press release / June 28, 2017

Congress moves to put an end to secret companies

Bipartisan Legislation Would Help Stamp out Anonymous Corporate Vehicles Used by a Rogue’s Gallery of Bad Actors Ranging from Human Traffickers to International Terror Networks

Today the US Senate and House of Representatives introduced bipartisan bills that would help stop the corrupt and other criminals from hiding behind anonymously-owned companies created in the US. Most major financial crimes and cases of grand corruption are facilitated through anonymous companies, with the US being one of the easiest places in the world to set one up, warned Global Witness.

“From multi-million dollar healthcare fraud to terrorist financing, anonymously-owned companies act as getaway cars for all sorts of criminals,” said Stefanie Ostfeld, Deputy Head of Global Witness’ US Office. “Swift passage of this legislation will make it harder to move, enjoy and hide dirty money and demonstrate that Congress is serious about making sure the US is not exploited by criminals and the corrupt who are a risk to national security.”

The True Incorporation Transparency for Law Enforcement (TITLE) Act, introduced by Senators Charles Grassley (R-IA), Dianne Feinstein (D-CA) and Sheldon Whitehouse (D-RI), and the Corporate Transparency Act, introduced by Representatives Peter King (R-NY-2), Carolyn Maloney (D-NY-12), Ed Royce (R-CA-39) and Maxine Waters (D-CA-43), would require companies formed in the US to disclose their ultimate owners when they are set up, and keep this information up to date. This would make it much harder for terrorists, money launderers, and other criminals to hide their identities behind webs of shadowy companies to stash their ill-gotten gains in banks.

The investigation into Russia’s interference in the 2016 US election and potential collusion between Russia and the Trump campaign has brought into the spotlight the role of anonymously-owned companies as vehicles for potentially suspicious financial activity. It has been reported that Paul Manafort, former manager of the Trump campaign, allegedly opened up a shell company which later received $13 million in loans from two businesses with links to Trump on the same day he resigned from his position. He has continually denied any wrongdoing.

Continuing this trend, USA Today reported that, since winning the Republican nomination, the majority of Donald Trump’s real estate sales have been to anonymous companies, with purchases by secretive buyers up by 66%, opening the door to the risk of corruption and undue influence. 

“As the majority of Trump real estate sales are to purchasers using anonymous companies, the public does not know who the Trump Organization is doing business with,” said Ostfeld. “As long as individuals, companies and foreign governments are able to hide behind secret companies, we cannot know which vested interests are trying to influence our political processes.”

Global Witness has shown how anonymously-owned American companies allow a wide range of criminals to cheat justice and rip off ordinary people – from forcing vulnerable families into foreclosure to luring individuals from overseas into a human trafficking scheme that stretched across the US.

Global Witness calls on Congress to swiftly pass these bills.

“Time and again we see how secret companies registered in the US or in offshore jurisdictions are used by the world’s criminal and corrupt to move suspect money through the international financial system,” said Ostfeld. “This makes it easy for unscrupulous people to steal state funds, launder money and cover up payments they don’t want the public to know about. It undermines democracy and poses a threat to US national interests. With this legislation, we can help put a stop to these practices.” 

/ ENDS

Contacts

Notes to editor:

Introduction of these bills comes at a time when there is growing support from diverse voices throughout the US for ending anonymous companies. The Clearing House Association, which represents the largest US Banks, and the Independent Community Bankers of America (ICBA), have both expressed support for legislation to end anonymous companies in the US. Roughly a dozen national law enforcement associations have also expressed support for legislation aimed at tackling anonymous companies. Investors representing more than $855 billion in assets have also called for legislation requiring the disclosure of company ownership information.


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