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Cody Worthington
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Julie DiMauro
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Thomas Fox
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Bill Waite
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Shruti J. Shah
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Russell A. Stamets
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Richard Bistrong
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Eric Carlson
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Shruti Shah: The Panama Papers and the United States

Image courtest of TI-USAFollowing the release of the Panama Papers and the public outrage that followed, we at Transparency International-USA have set up a web page to explain anonymous companies and how they affect ordinary people in the United States.

Transparency International-USA is advocating for an end to secret companies because they allow corruption to flourish.

Please help by writing to members of Congress urging them to pass legislation to end anonymous U.S. companies.

Find your Senators here and your Representatives here.

You can also write to Congressman Jeb Hensarling (here), Chairman of the House Committee on Financial Services, and members of the Task Force to Investigate Terrorism Financing of the House Committee on Financial Services, to urge passage of bipartisan legislation recently reintroduced to address the problem of corporate anonymity.

One way to write is to copy and paste the message below and email it to your Senators and Representatives and other members of Congress:

We are outraged by the recent disclosures in the Panama Papers leak that expose how many rich, famous and politically connected people, from heads of state to crime bosses and business owners, hide their wealth behind the façade of secret companies.

This should be stopped. It is now time for Congress to act and pass bills (H.R. 4450 and S. 2489) introduced by Representative Carolyn Maloney (D-NY) and Senator Sheldon Whitehouse (D-RI) Both bills titled the Incorporation Transparency and Law Enforcement Assistance Act require the collection, maintenance and updating of beneficial ownership information on U.S. legal entities for law enforcement purposes.

Anonymous companies are used for dirty-money transactions and schemes that support drug traffickers and terrorists, defraud government agencies and cheat U.S. citizens, and undermine U.S institutions.

Congress should put a stop to them now.

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Shruti Shah is a contributing editor of the FCPA Blog. She’s Vice President of Programs and Operations at Transparency International-USA. She can be contacted here.

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3 Comments

  1. Dear Mrs. Shah,

    Your measure is one important step in favour of company transparency in the US, however as you know the source of the problem is wider and has to do with the offshore jurisdictions wihtin the US (Delaware, Nevada, Wyoming and so on).

    And as you also know this problem can only be solved through a political solution.

    Kind Regards from Lisbon

    Carlos Lelo Filipe

  2. As someone who once upon a time assisted US citizens to set up off-shore companies, I am bemused by the stuff and non-sense that is being bandied about concerning off-shore companies.

    First, the IRS already requires US taxpayers to disclose ownership of all offshore companies and accounts. It is an criminal offense, as well as an ethical offense, for any lawyer or other professional to assist a US taxpayer set up an off-shore corporation or account for the purpose of evading taxes.

    Second, the hype over this topic ignores the fact that the vast majority of foreign lawyers, accountants and off-shore banks conduct a due diligence examination of any new client, requiring – among other things – proof of identity and a letter from the client's existing bank to the effect that the client is a customer in good standing, precisely in order to avoid being an unknowing accomplice to money-laundering and drug running.

    There are other legitimate reasons to take advantage of off-shore corporations and trusts such as asset protection and taking advantage of a particular host country's network of tax treaties. With respect to the later, the United States does not have tax treaties with every country, and treaties for the avoidance of double taxation often are critical to whether a company can export US goods to another country. In fact, once upon a time, the IRS required that you set up an off-shore company, then called a Foreign Sales Corporation, in order to get a tax break for exports.

  3. Congress will not "settle" this as it now stands (Congress and the situation). Every law they pass has escape clauses that allow for abuse within the standard established.
    This type of manipulation has been going on since wealth first came into existence.
    One clear example: The Czars and rich folk from Russia always had strong connections to Paris and, presumably, Swiss banks. With the advent of electronic transfer/holding of wealth, the dance has changed immensely. The existing money is already sheltered, but taxation can attached to the new money as it develops.
    Michael – I was a tax attorney 30 years ago. All the rules you set out are in the law, but I heard audio tapes that confirmed that clients knowingly "skirted" the laws. The mere existence of rules of play do not mean that they are followed. Look at Martha Stewarts case, just as an example of someone with a lot of money who was willing to go down a risky path by which to make more money with her money, from a practice that was expressly excluded by law.


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