April 4, 2016
The release of the so-called Panama Papers, possibly one of the largest leaks of secret intelligence ever and one that apparently reveals a vast network of financial shenanigans. “It’s not just the Virgin Islands and Panama where kleptocrats and criminals go to launder their illicit wealth,” said Shruti Shah, vice president of Transparency’s U.S. chapter. Read more
April 4, 2016
The massive leak of 11.5 million files dubbed the “Panama Papers” highlight the vulnerability of the global financial system and showcase how easy it is for public officials to use anonymous companies to hide their identities.
Washington D.C., 4 April, 2016 – The leaked Panama Papers reveal the offshore holdings of over 100 politicians and public officials from around the world. The list includes current and former world leaders and the offshore entities in the leak are connected to people in more than 200 countries and territories.
Unfortunately it is not just Panama and other tax havens that provide vehicles for kleptocrats and other criminals to launder their illicit wealth and enjoy it in financial centers around the world. In every state in the United States, one can incorporate a legal entity without having to disclose who controls the entity or derives economic benefits from it. In fact, so synonymous is Delaware with anonymous companies and ghost corporations that it was named in Transparency International’s Unmask the Corrupt campaign (Unmaskthecorrupt.org) as one of the most symbolic cases of corruption.
“It is time for the United States to end the secrecy around anonymous companies and help prevent the flow of illicitly acquired funds into the United States” said Claudia J. Dumas, President and CEO of TI-USA.
The U.S. government has pledged to increase transparency of companies formed in the United States in various fora such as the Open Government Partnership National Action Plan, G8 Action Plan for Transparency of Company Ownership and Control, and most recently the G20 High Level Principles on Beneficial Ownership transparency. However, meaningful progress in the U.S. remains elusive.
The U.S. Government should pass the Incorporation Transparency and Law Enforcement Assistance Act introduced earlier this year by Representative Carolyn Maloney (D-NY) and Senator Sheldon Whitehouse (D-RI) that would require Treasury/states to collect, maintain and update beneficial ownership information on legal entities for law enforcement purposes . Ideally, this information should be public so that corrupt individuals cannot hide behind layers of anonymous companies.
The initial stories coming out of the Panama Papers leaks also show the use of anonymous companies in real estate transactions to hide corruptly acquired funds by wealthy individuals from outside the United States.
In addition to legislation to collect beneficial ownership information upon company formation, gatekeepers involved in luxury good purchases such as the real estate industry should be required to conduct due diligence into buyers’ identities and the sources of their funds” said Shruti Shah, Vice President for Programs and Operations at TI-USA.
Several investigations in the past have also shown how corrupt officials and money launderers utilize the U.S. financial systems to conceal, transfer and spend the illicit funds. Therefore, the U.S. Department of Treasury should issue without delay rules requiring financial institutions to determine and verify the identity of the beneficial owners of corporate customers.
Over the years, the United States has committed to combating the flow of the proceeds of foreign corruption into the United States in a number of different fora. By adopting the reforms recommended above, the United States would send a strong signal that it is taking the necessary steps to uphold its commitments.
Transparency International-USA is the U.S. chapter of the global Transparency International movement, which is present in more than 100 countries around the world. TI-USA is committed to improving governance both in the United States and internationally.
Notes to Editors:
- The Panama Papers can be found here .
- Under its recent initiative, UnmasktheCorrupt, Transparency International is calling on governments around the world to deny the corrupt the ability to enjoy luxury lifestyles with ill-gotten gains and to take actions to support the return of funds to the countries from which funds have been stolen. It is calling for an end to secret companies, public registries that reveal the beneficial owners behind all companies, restrictions on the foreign travel of corrupt individuals and requirements for those selling real estate and luxury goods to do adequate due diligence on their customers.
- More information on beneficial ownership transparency can be found here.
- TI-USA’s previous letter to the Financial Crimes Enforcement Network (FinCEN) can be found here and here .
Programs and Operations
April 4, 2016
Documents from a Panamanian law firm obtained by several international news outlets appear to show how the global political and business elite — and maybe drug traffickers — have mounted complex systems to hide money in offshore accounts. Companies can incorporate in the U.S. without revealing sources of money.”It’s not just the Virgin Islands and Panama where kleptocrats and criminals go to launder their illicit wealth,” said Shruti Shah, vice president of Transparency’s U.S. chapter. Read more
March 24, 2016
Bipartisan legislation introduced last month would require the collection of the names of the ultimate beneficial owners of any company incorporated in the United States. The ownership information should be public to close the loophole that allows political donors to hide their identities. Read More.
December 16, 2015
The recently published U.S. EITI report covers payments made and received in 2013. There is much valuable information in both the report as well as the EITI website. The report also provides detailed information on natural resource extraction governance at the federal, state, and tribal levels on the size of the extractive sector (in terms of economic output and employment), as well as a valuable assessment of the revenue sustainability in 12 resource-dependent counties. That said, there are a couple of important respects in which the report falls short. Read more
October 1, 2015
On September 25th, the United Nations adopted the Sustainable Development Goals (SDGs). The SDGs identify development priorities and set measurable targets for progress that are to be met by 2030. Its Goal 16 — which seeks to promote just, peaceful, and inclusive societies, includes (among other governance-related targets) significant reductions in illicit financial flows, progress on the recovery and return of stolen assets, and substantial reductions in corruption and bribery – fills the lacuna that the SDGs’ predecessor Millennium Development Goals (MDGs) had. Read More.
September 16, 2015
The DOJ has unveiled new guidance to federal prosecutors about bringing criminal cases against individuals in instances of corporate wrongdoing. However, to truly deter wrongdoing, one needs effective enforcement directed at both corporations and individuals. If enforcement action is directed only at corporations, company officers and employees under pressure to meet performance targets will not have a meaningful incentive to refrain from improper conduct. Read more
September 14, 2015
The U.S. Department of Justice (DOJ) unveiled new guidance to federal prosecutors about bringing criminal cases against individuals in instances of corporate wrongdoing. The memo states that if a corporation wishes to resolve its own criminal charges and receive any credit for cooperation, it must provide the DOJ with all relevant facts relating to the individuals responsible for the misconduct. Read More
Co-written by Angela McClellan, Senior Global Advocacy Coordinator at Transparency International Secretariat and editor of Can justice be achieved through settlements?
August 4, 2015
What are your kids eating at school? Is your trash being picked up regularly? In what condition are your parks? Municipal procurement is where taxpayers most closely see how their money is being spent. This spring, TI-USA and students from the American University School of International Service monitored 21 procurements in Washington DC, Prince George’s County Maryland, and Arlington Virginia using TI-USA’s Civil Society Procurement Monitoring Tool. Read More