Unmask the corrupt

Unmask the corrupt

Who says secret companies are bad? We do!

Do you ever wonder how a corrupt public official manages to shift stolen funds to a luxury resort to build a beachfront getaway? Or how the son of the president of one of can make use of stolen cash ? It’s actually quite easy. The first step is to find a country where lax corporate registration rules allow a person to set up a secret company.

These places are called “secrecy jurisdictions” and they exist all over the world from the Cayman Islands in the Caribbean to the U.S. state of Delaware.

Once a corporate home has been chosen, a pack of eager facilitators including bankers, lawyers, accountants and others can quickly and easily set up secret companies and bank accounts. Thus begins the oft-used process to move illicit cash flows around the world. 

Shell companies, secrecy jurisdictions and opaque corporate ownership structures allow the corrupt to hide their ill-gotten wealth. At Transparency International, we say it’s time for governments to unmask the corrupt and make it mandatory to reveal who really benefits from every company registered on their soil.

Today too many leading economies don’t require or record information about who really owns or controls companies registered in their country, making it easier for the corrupt, terrorists or organised criminals to hide their stolen money.

Step right up! Companies here! Set up your cheap companies here!

With an internet connection, a credit card, and as little as US$935, it can take under 10 minutes to set up a shell company. Read more .

That is why we are asking the members of the G20 countries meeting in Australia to make it impossible for the corrupt to hide their identity behind secret companies.

G20 countries need to make it mandatory for business registers to include information about the ultimate “beneficial owner” of any asset and to make that information public. If that happens, law enforcement and the public will know who really benefits from every company registered on their soil.

This will make a difference in the fight against corruption. A World Bank report said that among the 213 cases of grand corruption it investigated over the last 30 years, more than 70 per cent showed ownership of the stolen funds had been disguised through the misuse of corporate entities, half of which were anonymous shell companies.

The dead come back to life

A Global Witness report, , found that in one case, the identity of a dead man from Russia was used as the front for a UK company. While this person had died three years before the company was set up, he was listed as the company’s owner and he even ‘attended’ a company meeting in London.

What needs to be done

Last year the UK government committed to introduce legislation to ensure that beneficial ownership information is incorporated into public registries. France passed a law to incorporate the beneficial ownership information of trusts into public registries.

More needs to be done. Corruption is a transnational problem that connects bribery and stolen assets to fancy resorts and financial centres around the world, through a maze of secret mechanisms. The G20 can raise the game by showing global leadership and pushing its members to be more transparent, share information on illicit flows and work together to unmask the corrupt.

Transparency International recommends:

Preventing luxury lifestyles derived from corruption

Cover of policy brief

Alongside efforts to stop illicit flows, more work needs to be done on the denial of entry for the corrupt to keep them from traveling freely across borders to enjoy luxury lifestyles funded by theft and corruption.

Furthermore, governments should make sure that luxury retailers are not handling corrupt money by enforcing legislation requiring proper checks and due diligence on their customers.

It may be easy for a luxury car dealer to turn a blind eye and accept cash for a luxury car from someone who on paper should not be able to afford one. But it should be against the law. Corruption is not a victimless crime. An investigation might show that the money used to buy the luxury automobile should have been used to buy medicines to save lives.

Resources

For more on beneficial ownership, secrecy jurisdictions and denial of entry, please see our policy brief, 'Ending secrecy to end impunity: tracing the beneficial owner'

For more on denial of entry, please see our policy brief, 'Leaving the corrupt at the door: from denial of entry to passport sales'

For more on luxury goods retailers, please see our policy brief, 'Regulating luxury investments: what dirty money can't buy'

For any press enquiries please contact [email protected]

Solicitude

Support Transparency International

La Justicia española debe investigar el lavado de imagen de Azerbaiyán en Europa

Tres políticos españoles —Pedro Agramunt, Agustín Conde Bajén y Jordi Xuclá— se encuentran entre los delegados ante la Asamblea Parlamentaria del Consejo de Europa (APCE) sobre los que pesan sospechas de haberse beneficiado con la maniobra del “Laundromat”.

Clean up Spain – Justice for Azerbaijan’s reputation laundering in Europe

In Azerbaijan, critical voices are routinely suppressed. Meanwhile in Europe, politicians suspected of helping whitewash Azerbaijan’s record on human rights enjoy impunity. Join our campaign to urge authorities in Spain to investigate.

Everything you need to know about the 18th International Anti-Corruption Conference (#18IACC)

The #18IACC will take place from 22-24 October in Copenhagen, Denmark under the theme Together for Development, Peace and Security: Now is the Time to Act. Get the latest info and updates here!

Risky business: Europe’s golden visa programmes

Are EU Member States accepting too much risk in their investor migration schemes?

Future Against Corruption Award 2018

TI is calling on young people across the globe to join the anti-corruption movement. People between the age of 18 and 35 are invited to submit a short video clip presenting their idea on new ways to fight corruption. Three finalists will be invited to Berlin during the International Anti-Corruption Day festivities to be awarded with the Future Against Corruption Award.

The Azerbaijani Laundromat one year on: has justice been served?

In September last year, a massive leak of bank records from 2012 to 2014 showed that the ruling elite of Azerbaijan ran a $3 billion slush fund and an international money laundering scheme. One year on, has enough been done to hold those involved to account?

Right to information: knowledge is power

The right to information is vital for preventing corruption. When citizens can access key facts and data from governments, it is more difficult to hide abuses of power and other illegal activities - governments can be held accountable.

Why rather

Follow us on Why rather