Owners of anonymous companies registered in U.S. states are ripping off innocent people and businesses across America, says a new report by Global Witness. Drawing on 22 cases involving anonymous companies from 27 states, The Great Rip Off shows how fraudsters, mobsters, money-launderers, tax-evaders and corrupt politicians are able to use anonymously-owned American companies to cover their tracks and evade the authorities.
“We looked at all sorts of crimes across the U.S. and found two things in common. They were all carried out by anonymous owners of American companies, and the authorities are spending lots of time and money trying to stop them. These untraceable companies are the getaway cars for criminals – and it’s time to take away the keys,” said Charmian Gooch, Global Witness Director.
WASHINGTON, D.C.—The G20’s recent focus on financial transparency is a welcome development, but instituting bare minimum requirements, or plans that allow for exclusion, simply give illicit flows an opportunity to continue their hazardous drain on the world’s most vulnerable economies.
Last Tuesday, the OECD released recommendations on Base Erosion and Profit Shifting (BEPS), which are aimed at cutting down on the ability of corporations to shift profits into tax havens. It’s well intentioned, but the execution leaves much to be desired.
“Apparently, transparency now takes place behind closed doors,” said Porter McConnell, Manager of the Financial Transparency Coalition (FTC). “From a small group of nations setting the standard for the rest of the world, to the OECD’s extreme measures to preserve total confidentiality in country-by-country reporting requirements, G20 Finance Ministers are ultimately getting flawed guidance.”
WASHINGTON, D.C. — The Organization for Economic Cooperation and Development’s (OECD) new recommendations to fight multinational corporate tax avoidance look robust from the onset, but there’s something missing. Since the most vital reporting information will remain out of the reach of ordinary citizens, the recommendations don’t do enough to bring transparency to a global financial system badly in need of it.
The OECD’s project on Base Erosion and Profit Shifting (BEPS) is intended to crack down on the ability of corporations to move profits overseas, through mis-invoicing trade transactions to avoid taxes and other dubious practices. With nearly a trillion dollars leaving developing country economies each year in illicit cash, coordinated global action to plug the loopholes is desperately needed. But key elements of the financial data collected will be kept confidential, and out of the public’s view.
RIO DE JANEIRO, Brazil / WASHINGTON, DC – More than US$400 billion flowed illegally out of Brazil between 1960 and 2012— draining domestic resources, driving the underground economy, exacerbating inequality, and facilitating crime and corruption—according to a new report to be published Monday, September 8th at a press event in Rio de Janeiro by Global Financial Integrity (GFI), a Washington DC-based research and advocacy organization.
Titled “Brazil: Capital Flight, Illicit Flows, and Macroeconomic Crises, 1960-2012,” the study finds that trade misinvoicing—the fraudulent over- and under-invoicing of trade transactions—accounted for the vast majority (92.7 percent) of the country’s illicit financial outflows over the 53-year period analyzed.
WASHINGTON, DC – As New York regulators announced that British bank Standard Chartered PLC will pay a fine of $300 million for failing to rectify anti-money laundering deficiencies as required by the bank’s August 2012 settlement with New York regulators, Global Financial Integrity (GFI) warned that the agreement underscored the fact that fines and monitoring are insufficient for deterring illicit activity at international banks.
“As I noted in August 2012 when the original Standard Chartered settlement was first announced, monitoring and paltry fines are not an effective response in this case,” said Heather Lowe, GFI’s legal counsel and director of government affairs. “In 2004, Standard Chartered was forced to submit to monitoring by regulators for significant anti-money laundering deficiencies. The illicit activity covered in the August 2012 settlement was happening while the first round of monitoring was already in place. Now it appears that the monitoring and fines imposed in 2012 did little to rectify the situation at Standard Chartered. They say that the definition of insanity is doing the same thing over-and-over-again and expecting a different result. The settlement today is a prime example of that.”
WASHINGTON, DC – Global Financial Integrity (GFI) welcomed the announcement from the White House and African leaders today regarding the establishment of a bilateral U.S.-Africa Partnership to Combat Illicit Finance, but the Washington-DC based research and advocacy organization cautioned that any effective partnership must be sure to address deficiencies in both the U.S. and in Africa that facilitate the hemorrhage of illicit capital from Africa.
“We welcome the move by President Obama and certain African leaders to form this partnership on curbing illicit financial flows from African economies,” said GFI President Raymond Baker, who also serves on the UN High Level Panel on Illicit Financial Flows from Africa. “Illicit financial flows are by far the most damaging economic problem facing Africa. By announcing the creation of the U.S.-Africa Partnership to Combat Illicit Finance, President Obama and African leaders have taken the first step towards tackling the most pernicious global development challenge of our time.”
WASHINGTON, DC – As African leaders descend on Washington this week for the historic U.S.-Africa Leaders Summit, Global Financial Integrity (GFI) called on the Obama Administration and Heads of State from across the continent to prioritize efforts to curtail illicit financial flows from Africa, which GFI estimates cost the continent roughly US$55.6 billion per year over the past decade.
“Illicit financial outflows are by far the most damaging economic problem facing Africa,” said GFI President Raymond Baker, who sits on the UN High Level Panel on Illicit Financial Flows from Africa. “In 2011 alone, US$76.9 billion flowed illegally out of Africa. That’s nearly US$77 billion that could have been invested in local businesses, in healthcare, in education, or in infrastructure. It’s money that could have been used to help pull people out of poverty and save lives. This Summit provides an historic opportunity for the United States and for leaders across Africa to focus their efforts on curtailing this hemorrhage of illicit capital.”
On Monday, the Organization for Economic Cooperation and Development (OECD) released detailed guidelines on the common reporting standard for automatic exchange of financial information (AEOI). The plan inches closer to implementation of a global standard but continues to keep developing countries looking in from the outside.
Rather than offer a period of non-reciprocity, where developing countries could simply receive financial data, the only mention of non-reciprocity agreements is catered to tax havens.
WASHINGTON, DC – Global Financial Integrity (GFI) expressed skepticism today that the settlement reached between the United States government and BNP Paribas SA would effectively punish the company for its systematic subversion of U.S. sanctions over a decade-long period or effectively deter similar conduct in the future.
U.S. Attorney General Eric Holder announced late on Monday that “between 2004 and 2012, BNP engaged in a complex and pervasive scheme to illegally move billions through the U.S. financial system on behalf of sanctioned entities” in Sudan, Iran, and Cuba, going “to elaborate lengths to conceal prohibited transactions, cover its tracks, and deceive U.S. authorities.” This pattern of behavior continued despite warnings by U.S. officials, opinions from reputable international law firms, and repeated statements from the bank’s own compliance officials that this conduct was illegal. According to the New York Department of Financial Services, the transactions involved totaled greater than $190 billion.
G8 countries have yet to live up to the important commitments they made on tax and transparency at their Northern Ireland summit a year ago. According to new analysis by Christian Aid, Action Aid, Global Witness and the Financial Transparency Coalition the UK government needs to build on its leadership if there is to be a strong and lasting legacy to the tax commitments made at Lough Erne.
At the gathering hosted by David Cameron at Lough Erne on 17th and 18th June 2013, G8 leaders declared that they would tackle some of the ways in which rich and poor countries alike lose billions each year to tax dodging, corruption and other financial crimes.
Civil Society Experts Call on Delaware to Create Public Registry of Beneficial Ownership Information
WASHINGTON, DC – Global Financial Integrity (GFI) and Global Witness expressed disappointment that the Delaware House of Representatives passed two bills this evening that do little to stop criminals from using Delaware companies to launder their illicit proceeds.
The two pieces of legislation are House Bill 327 and House Bill 328, which would establish a chain of people that need to be consulted, in turn, in order to identify a person at a limited liability company or limited partnership who has a list of the entity’s legal owners. Legal owners may be other companies with hidden ownership or nominees, which are essentially front people for the real owner. The bills will now proceed to the State Senate for consideration.
13 May 2014 – The secrecy surrounding thousands of subsidiaries created in tax havens by leading UK companies has created a black hole at the heart of the FTSE100, a new Christian Aid report warns today.
FTSEcrecy reveals an information void which threatens investors, customers and government regulators, because it leaves them without the facts they need to make good decisions about FTSE100 companies.