Friday, July 14, 2017

Money Laundering Makes the Drug Wars Go Round

gfintegrity |  My name is Jack Blum. I am a Washington attorney specializing in money laundering compliance and issues of offshore tax evasion. I am appearing on behalf the Tax Justice Network-USA and Global Financial Integrity. Both organizations endorse the bill sponsored by Senator Levin, S. 569, the Incorporation Transparency and Law Enforcement Assistance Act.

The single most important tool in the toolkit of people trying to hide money from law enforcement and tax collection is the anonymous shell corporation. These shell corporations have no physical place of business, use nominee officers and directors, and as a rule do no business in the place of incorporation. Their sole purpose is hiding where money is, who controls it, and where it is moving, from law enforcement and tax collectors. These shell companies should not be allowed remain anonymous.

States that offer corporations to individuals without insisting on information on beneficial ownership are undermining the efforts of law enforcement to prevent crime, recover stolen assets and collect tax. They are also putting the United States out of compliance with international standards for customer identification. From our perspective gathering basic information about ownership for government use is essential to protect national security and to limit financial crime and tax evasion.

Anti-money laundering compliance is dependent on 'know your customer .' Without that knowledge financial institutions cannot evaluate the legitimacy of a transaction. Knowing that one shell corporation is owned by another shell corporation is not helpful. Having the details of the "owner's" directors who are usually professional directors who work for a corporate service company in another jurisdiction is useless. Financial institutions need to know who is behind a company to judge whether the transactions they monitor are suspicious. They need to know whether the beneficial owner is on the OFAC list, the other sanctions lists is a politically exposed person.

The proposed legislation would end the all too frequent use of loopholes in State incorporation laws to hide money.  Fist tap Bro. Makheru


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