Anonymous shell companies are corporations created on paper that don’t do significant business and don’t disclose the company’s true owner. They are often used as vehicles for financial crimes, including tax evasion, Medicare fraud, terrorism, drug dealing and weapons dealing. Our partners at Global Witness call these companies the “getaway cars” for financial crime. Shell companies contribute to the estimated one trillion dollars that leaves the developing world annually through crime, tax evasion and corruption. This flow of dirty money takes resources away from the world’s poorest countries and their people.
The United States is the second-easiest country in the world in which to open an anonymous shell company, after Kenya. In many states, creating a shell company requires less information than acquiring a driver’s license. When someone forms a company in the US, they do not have to disclose the real people who profit from its existence or activities, known as “beneficial owners.” Instead, individuals can conceal their identity by using front people (such as a lawyer) to represent the company.
Financial transparency is critical to ending poverty and protecting both resources and tax revenues in poor countries. Here in the United States, we have an important role to play in promoting transparency and stopping the flow of dirty money out of developing countries.
The bi-partisan Corporate Transparency Act would ensure that companies formed in the United States disclose their true owners. This will make it much easier for law enforcement to track down criminals and prosecute and prevent illegal activity. Corporate transparency can reduce the flow of dirty money and ensure that vulnerable populations can access resources to build schools, hospitals and infrastructure. This bill will make it harder for those stealing from the most vulnerable to use the United States financial system as their “getaway car.”
Jubilee USA and its partners work actively to win policies that improve corporate transparency and reduce crime generated by anonymous companies. If you’re interested in getting involved in our work, contact Zach Conti at firstname.lastname@example.org.