The phrase “shell company” conjures up images of offshore paradise such as Panama or the British Virgin Islands, but one of the world’s foremost enabler financial secrecy is actually the United States. In each state, more personal details and proof of identity are needed to obtain a library card than forming a company; The United States is one of the last developed economies that does not require company ownership information that can help crush terrorists, drug lords and those who avoid US sanctions.
That might change soon. Last week, the House of Representatives approved its version of an extensive $ 740 million defense authorization bill, which includes amendments to require companies to disclose their original owners. If those provisions persist in the final congressional bill – the Senate has its own defense authorization law – advocates say it will be the most significant anti-corruption measure taken by the United States in decades.
“This is a fundamental reform for the United States [anti-money laundering] system. “This will be a powerful tool for domestic law enforcement, whether they are investigating drug cartels, international kleptocrats, or terrorists,” said Nate Sibley, a researcher at the Hudson Institute’s Kleptocracy Initiative.
Congress has debated the law to make disclosure of what is known as “beneficial ownership” mandatory for more than a decade. Now, with independent legislation gaining bipartisan support in both chambers this year, advocates for this step are increasingly convinced that it will pass, whether in defense omnibus or alone. Hundreds organizations from the FBI to religious groups have given their support to increase financial transparency in the ownership of benefits. After years of strong opposition, the US Chamber of Commerce this year for the first time signaled its support for the creation of a beneficial ownership register.
“This is one of the few bills that has Dow Chemicals and Friends of the Earth on the same side,” said Gary Kalman, director of the US Transparency International office. “I think we have turned the corner where we are now at the point where it’s about when, not if, this will pass.”
The lack of US financial transparency was brought home this week thanks to a Senate report that revealed that Boris and Arkady Rotenberg, two Russian oligarchs close to Russian President Vladimir Putin, avoided sanctions by using shell companies to invest in the largely unregulated United States. art industry.
“The Senate investigation described how American enemies ridiculed US sanctions by exploiting shell companies and the secrecy of the art market. Given the time, and the fact that the NDAA amendments would address both of these vulnerabilities, it would be very disappointing if Congress missed another opportunity to act,” said Sibley.
And the United States is really slow globally in terms of financial transparency – and not just in the US offshore jurisdiction which is already included in the European Union. money laundering blacklist. Great Britain has a favorable register of ownership, while EU anti-money laundering directives require all member states to make their own centralized lists.
“The US should be a leader in fighting corruption,” said Debra LaPrevotte, a former special surveillance agent for the FBI International Corruption Unit. “We talk abroad, and I say, ‘You don’t have transparency in ownership of your company,’ and they say,” Yes, you don’t either. “
Not only the European Union and the United Kingdom who are ahead of the United States.
“Egypt and the Seychelles have just passed the law, Indonesia issued a favorable ownership register, Ghana and Nigeria have committed to beneficial ownership registers, and we still don’t have a law on bookkeeping,” said Lakshmi Kumar, a policy director with Global Financial Integrity, a think tank.
The fact that the move has been included as part of the defense budget is an indication of a fundamental change in the way in which threats posed by illicit finance have been seen for years.
Before the September 11, 2001 terrorist attacks, money laundering was largely seen as a development problem because kleptocrats and criminals tried to park their wrong profits in the financial paradise of the world. United Nations Office on Drugs and Crime estimate that between $ 800 billion and $ 2 trillion is washed every year – the equivalent of 2 to 5 percent of the global economy.
After 9/11, the US government made terrorist financing an integral part of its counterterrorism strategy. But over the past decade, a series of investigations have revealed that the threat of anonymous shell companies to US national security is more formless and goes far beyond terrorist financing.
Military investigation 2011 was found that $ 3.3 million in Defense Department contract funding has been channeled through anonymous companies and then used to buy weapons and explosives for the Taliban. In New York, the 2017 court case revealed how the Iranian government owns and collects rent from the Fifth Avenue skyscraper, despite US sanctions. A 2017 investigation by the Office of Accountability The government cannot determine who ultimately owns one third of the high-security buildings that are leased to federal agents because of unclear ownership structures, raising significant questions for operational security.
Even pending US law is imperfect, because the beneficial ownership list will not be published, as in Europe. But at least it will be accessible to US law enforcement and can dramatically speed up investigations that depend on time-consuming subpoenas to separate Russian puppets from opaque leather companies.
“That will make it much easier if there is a directory, because it will make it much faster in the investigation process because you don’t talk for months to get that data,” said LaPrevotte, now senior researcher at The Sentry, a nonprofit investigation and policy initiative which tracks the finances of war crimes suspects.