![]() |
|
![]() |
|
FOR IMMEDIATE RELEASE May 1, 2008 |
Contact:
Senator Levin's Office Phone: 202.224.6221 |
![]() |
|
Levin-Coleman-Obama Bill Introduced to Stop Misuse of U.S. Companies |
|
![]() |
|
![]() |
|
WASHINGTON – Today Senator Carl Levin (D-Mich.), Senator Norm Coleman (R-Minn.), and Senator Barack Obama (D-Ill.), Chairman, Ranking Minority Member, and Member of the U.S. Senate Permanent Subcommittee on Investigations, introduced the Incorporation Transparency and Law Enforcement Assistance Act to help law enforcement stop the misuse of U.S. corporations. Currently, nearly two million corporations and limited liability companies (LLCs) are formed within the United States each year. The States generally form these corporations without asking for the identity of the corporation’s beneficial owners, and numerous law enforcement problems have resulted when some of these corporations have become involved with money laundering, tax evasion, or other misconduct. The bill being introduced would require the States to obtain beneficial ownership information for the corporations formed under their laws and to provide access to this information to law enforcement upon receipt of a subpoena or summons. “Criminals are hiding behind U.S. corporations while committing all sorts of crimes – from terrorism to money laundering, fraud, and tax evasion,” said Levin. “Law enforcement has told us for years that they need the names of the true owners behind a corporation to find out who is responsible for the illicit activity, but they can’t get it, because the States don’t bother to ask. The bill we are introducing today will strike a blow against corporate secrecy, strengthen law enforcement, and curb the misuse of U.S. corporations.” “Criminal activities that exploit the lack of transparency in U.S. corporation registrations are more costly than ever,” said Coleman. “As our work on the Subcommittee has shown again and again, law enforcement has been frustrated by the ability of money launderers and tax cheats to hide behind privately-held corporations and LLCs. This bill will shed light on these illegal activities, in a fair and reasonable manner that does not burden the states with an unfunded mandate and protects individual privacy.” “It is unacceptable for American companies to be used by criminals and terrorists as shields for tax evasion, terror financing, and financial crimes," said Obama. "We must ensure our law enforcement agencies have the ability to properly investigate any financial criminal wrongdoing. This important legislation promotes transparency, fairness, and public safety, and sheds light on the people behind corporate entities so that criminal and terrorist activities can be deterred or detected more effectively.” The Subcommittee has been pursuing this issue since 2000, when Levin requested the Government Accountability Office (GAO) to conduct an investigation into an individual who set up over 2,000 Delaware shell companies and then established bank accounts for those companies, without revealing their identities, moving $1.4 billion dollars through the bank accounts. In April 2006, the GAO prepared another report in response to a Levin-Coleman request entitled, “Company Formations: Minimal Ownership Information Is Collected and Available.” This GAO report reviewed the legal requirements in all 50 states to set up corporations and LLCs, found that most states failed to request beneficial ownership information, and reported that the absence of this ownership information impeded law enforcement investigations of suspect corporations. In November 2006, the Subcommittee held a hearing in which the GAO report was released, and officials from the Department of Justice (DOJ), the Internal Revenue Service (IRS), and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) testified about an increase in the use of U.S. shell companies for illicit activities, and the problems caused by the lack of beneficial ownership information. The Subcommittee has collected numerous examples of these law enforcement problems, including the following.
In July 2006, the Financial Action Task Force on Money Laundering, which is the leading international organization combating money laundering, issued a report criticizing the United States for failing to comply with a FATF standard requiring beneficial ownership information to be obtained and urging the United States to correct this deficiency by July 2008. In response, the United States has repeatedly urged the States to strengthen their incorporation practices by obtaining beneficial ownership information for the corporations and LLCs formed under their laws. The States, however, have not changed their incorporation practices. All 27 countries in the European Union are already required to obtain beneficial ownership information for the corporations they form. For more information, see the bill [PDF], bill summary, and Senator Levin's floor statement. |