The United States is stepping up efforts to combat government corruption, the self-dealing and out-right theft of public resources for private gain that undermines democracy, stifles economies, facilitates other kinds of crime and thwarts justice.
To fight corruption abroad, efforts are being made to interrupt the flow of ill-gotten gains through companies and banks here at home. Our government works hard to recover and return illicitly acquired assets found here to the people of the plundered nations. One way to prevent the laundering of the corrupt proceeds and deter further graft is to prevent the registration of anonymous shell companies on our shores. This also makes it easier for U.S. law enforcement to trace plundered funds.
According to financial experts, nearly all cases of grand corruption have one thing in common. They rely on so-called corporate vehicles - such as companies, foundations and trusts - to conceal ownership and control tainted assets.
For example, according to court documents, Teodoro Nguema Obiang Mangue, the son of Equatorial Guinea’s President, used intermediaries and corporate entities to acquire numerous assets here that were bought with the proceeds of corruption. They included a $30 million California mansion, a Ferrari automobile and various items of Michael Jackson memorabilia. After a lengthy investigation, he agreed to forfeit the money, which the U.S. will use to benefit the people of Equatorial Guinea.
The U.S. Treasury Department recently moved to limit the use of such corporate vehicles for illicit purposes by requiring financial institutions to collect and verify the identity of the people behind them. In his 2015 budget, President Obama proposed doing even more, requiring all companies to identify who owns or controls them to federal tax authorities, and make that information more readily available to law enforcement.
Most U.S. companies that have a bank account or pay taxes here already disclose their beneficial ownership. It is foreign criminals and corrupt officials who can benefit from being able to conceal their identities. If they register a paper legal entity in the United States, they can use it to open a bank account offshore. Indeed, they can create a web of anonymous entities. When law enforcement agencies investigate corruption or other crimes, often all they have is a company’s meaningless name.
These steps will deter corruption, support law enforcement and international cooperation, and make the financial system more transparent. They also will provide a platform to engage a wide range of countries to follow suit. The more nations that take such action, the harder it will be for criminals to stash their money.
Fighting corruption – including in the key area of improving financial transparency -- makes an important contribution to holding governments around the world accountable to their people and protecting the world’s poorest.