In order to make sound and responsible investment decisions, investors need to know who they are dealing with and what their track record is.
If the criminal and corrupt are able to hide behind secret or anonymously-owned companies, it is very hard for shareholders to manage all types of risk—both financial and non-financial. This is because sometimes it can be nearly impossible to identify the real people who own and control the companies that investors and companies do business with (also known as “beneficial owners”).
Chancing It shows the scale of that risk, and launches as global investors managing over $740 billion in assets have called for laws that require disclosure of the real owners of American companies. This influential coalition, including Hermes Equity Ownership Services and Trillium Asset Management has sent letters to Congress calling for an end to shell company secrecy. Read the full letter to the U.S. Senate here and the U.S. House here.
The report sets out examples from across several industries of the hidden dangers that anonymously-owned companies pose for investors and businesses. It also provides tools to help the business community manage risks stemming from anonymously-owned companies, which can result in significant, negative financial impacts.
So-called ‘anonymous companies’, in which the corporate veil is used to conceal illegal activities, have no place in a modern economy and bring the entire business sector into disrepute. - Simon Walker, Director General of the UK Institute of Directors
Even after the Panama Papers exposé, a little known fact is that the U.S. is the easiest place in the world to create a company and to hide the fact that you own it. It’s also a preferred destination for corrupt politicians to hide their loot. This means that the U.S. Congress should take action without delay. However, the U.S. government is lagging behind a growing global movement to address the problem.
For this reason, we recommend that:
- Investors call on all governments to make beneficial ownership
information public for all to see;
- Investors assess the steps taken by companies to manage risk by publicly
disclosing their ultimate beneficial owners and uncovering the beneficial
owners among their business partners and supply chains;
- Investors engage the U.S. Administration to ensure that it supports
legislative and regulatory efforts to determine the ultimate, true beneficial
owners of American companies as a priority;
- All companies publicly disclose who ultimately owns and controls them as
an expression of business integrity and ethics.
Eryn Schornick, Senior Policy Advisor, AML
+1 202 580 9711
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