Global Financial Integrity

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GFI Welcomes Introduction of Bills to Expose Anonymous Shell Companies

Christine Clough, PMP

Incorporation Transparency and Law Enforcement Assistance Act in House and Senate Would Tackle Anonymous U.S. “Phantom Firms”

WASHINGTON, DC—In the wake of a searing segment on CBS’s 60 Minutes exposing how some New York attorneys are more than willing to create anonymous companies that foreigners may use as vehicles for laundering money in the U.S., Global Financial Integrity (GFI) welcomes the introduction by Representative Maloney and Senator Whitehouse to introduce legislation (bipartisan in the House) that would require companies to disclose the people that own or control them when these entities are formed. The two bills would bring the United States in line with international anti-money laundering (AML) standards, target individuals responsible for laundering money, and bring an end to the abuse of anonymous U.S. shell companies.

“Anonymous U.S. shell companies leave the door wide open for dirty money to flow into U.S. banks and the U.S. economy,” said GFI President Raymond Baker. “Democrat and Republican Members of Congress have introduced these bills because they understand the danger this illicit money poses to the United States. The Senate Judiciary and House Financial Services Committees need to prioritize these bills for a vote.”

Phantom Firms Haunting the U.S. Economy

The U.S. Department of Justice has warned that anonymous shell companies are the most widely used method for laundering criminal proceeds. Every U.S. state currently allows for the incorporation of anonymous shell companies. The Incorporation Transparency and Law Enforcement Assistance Act), as the bill is titled in both the House and the Senate, proposes to fix this problem by requiring that firms incorporated in the U.S. disclose their true, human, “beneficial owners.” The information will be available in registries that are accessible by law enforcement.

“These phantom firms facilitate sex slavery, terrorism, corruption, and tax evasion, and as we saw on 60 Minutes, it is far too easy to create them,” noted GFI’s Heather Lowe. “The New York Times series Towers of Secrecy exposed how anonymous companies are used to purchase high-end real estate, often in cash, with no questions asked about where the money came from or who the actual purchasers are. U.S. states incorporate more than two million companies each year, and it is impossible to know how many of them have hidden or disguised ownership. This secrecy undermines U.S. security, the justice system, and the economy. Congress must take action.”

Versions of incorporation transparency legislation in previous Congresses have had widespread support from law enforcement, including the Fraternal Order of Police, the Federal Law Enforcement Officers Association, and the Society of Former Special Agents of the F.B.I. A wide array of civil society organizations, transparency advocates, financial watchdogs, labor unions, investors, and small businesses have also supported past bills.

“The Treasury Department and the Department of Justice supported previous versions of these bills, which included provisions to provide $40 million in forfeiture funds to help states update their incorporation systems to collect beneficial ownership information,” noted Liz Confalone, Policy Counsel at GFI. “The Obama administration has also pledged through its G7, G20, and Open Government Partnership commitments to advocate for legislation to address anonymous U.S. shell companies; we are calling upon the Administration to renew that important financial commitment.”

For all press inquiries or to schedule an interview with Mr. Baker, Ms. Lowe, or Ms. Confalone, contact Christine Clough at / +1 202 293 0740, ext. 231. On-camera spokespersons are available in Washington, DC.


Notes to Editors:

  • Peter King (R-NY), Rep. Stephen Lynch (D-MA) and Rep. Dan Donovan (R-NY) are original co-sponsors of the House bill, and Sen. Feinstein (D-CA) is an original cosponsor of the Senate bill.
  • Click here to read the White House’s G8 Action Plan for Transparency of Company Ownership and Control.
  • Click here to read the White House’s Action Plan to Implement the G20 High Level Principles on Beneficial Ownership.
  • Click here to read the White House’s National Action Plan under the Open Government Partnership endorsing the need to require the disclosure of meaningful beneficial ownership information.
  • Click here to read “It’s time to pry criminals out of their shell (companies),” by Dennis Lormel, the former Chief of the FBI’s terrorist financing office.
  • Click here to read a Reuters investigation on how anonymous shell companies defrauded Medicare of billions of dollars between 2007 and 2011.

Journalist Contacts:

Christine Clough
Acting Communications Director
Global Financial Integrity
+1 202 293 0740 ext. 231 (office)
+1 202 510 1548 (mobile)