November 3, 2023

"Just the FACTs" is a round-up of news stories and information regarding efforts to combat corrupt financial practices, including offshore tax haven abuses, corporate secrecy, and money laundering through the financial system.

Send feedback or items for future newsletters to Thomas Georges at [email protected]

Here's the State of Play:
FACT Launches New Report Detailing Linkages Between U.S. Financial Secrecy and Environmental Crimes in the Amazon

On October 26, FACT launched its latest report, Dirty Money and the Destruction of the Amazon: Uncovering the U.S. Role in Illicit Financial Flows from Environmental Crimes in Peru and Colombia, detailing the links between U.S. financial secrecy and a broad array of environmental crimes in Latin America. Drawing on interviews with government officials, activists, indigenous leaders, and anti-money laundering professionals from Peru, Colombia, and the U.S., the report lays out a comprehensive domestic reform agenda to help deny financial safe haven to environmental criminals.

The report launch event featured remarks by a number of anti-money laundering and environmental policy professionals, including representatives from the U.S. government. During his remarks, Jimmy Kirby, Acting Deputy Director of the Treasury's Financial Crimes Enforcement Network (FinCEN), noted that the report contained "overlap with a lot of things that FinCEN is working on, and several FinCEN priorities."

This overlap included the ongoing implementation of the Corporate Transparency Act (CTA), which establishes a database detailing the true, or "beneficial," owners of many small entities formed in the U.S., including previously anonymous "shell entities." Kirby noted that "Illicit actors, including those engaged in nature crimes, often use opaque corporate structures to facilitate their criminal activity... Simply put, successful implementation of the CTA in requiring reporting of beneficial ownership information will help untangle these opaque corporate structures, thereby allowing enforcement authorities to go after criminals and combat a range of illicit activities, including environmental crimes." FACT has long advocated for effective implementation of the CTA as perhaps the single most important step that the U.S. can take in cracking down on money laundering and numerous other forms of financial crimes.

Kirby also outlined measures being taken by FinCEN and the broader U.S. Treasury to address illicit financial flows from environmental crimes, and echoed the report's assertion that environmental crimes are particularly attractive to transnational criminals because they are "perceived as low risk, with the promise of high reward, largely because of some of the limitations surrounding enforcement efforts and enforcement resources."

Kirby's Treasury colleague, Senior Policy Advisor, Office of Terrorist Financing & Financial Crimes Matthew Spivack, expanded on existing measures to crack down on nature crimes, including through support of information sharing networks, sanctions enforcement efforts, national risk assessments, and collaboration with non-profit organizations.

Other speakers included Vivian Calderoni of the Brazilian Instituto Igarape, professor at the Universidad del Pacifico Cesar Ipenza, Susanne Breitkopf, Deputy Director of the Forest Campaign with the FACT-member Environmental Investigation Agency, and Julio Cusurichi, President of FENAMAD and leader of Peru's Shipibo-Conibo community.

The launch event was attended by over 60 in-person attendees, with another 80+ online attendees from across the Americas, Africa and Europe. The report was covered widely by both the English and Spanish language press, including the Guardian, NowThis, ICIJ, Ojo Publico, and EFE.

The full report includes recommendations to both the U.S. Administration and Congress to help curb environmental crimes in the Amazon, as well as the systems of financial secrecy that fuels them, including:

* Fully and effectively implementing the bipartisan Corporate Transparency Act;
* Completing long-awaited rulemakings clamping down on money laundering through U.S. real estate markets;
* Increasing technical assistance and capacity building efforts for countries in the Amazon basin to tackle transnational illicit financial flows;
* Making all environmental crimes predicate offenses for money laundering;
* Supporting passage of the ENABLERS, FOREST, and United States Legal Gold and Mining Partnership Strategy Acts, and;
* Increasing funding for Treasury's Financial Crimes Enforcement Network.

For press inquiries, please contact Ian Gary at [email protected].

UK Passes Sweeping New Anti-Money Laundering Measures

The UK's long-awaited Economic Crime and Corporate Transparency Act received royal assent last week, ushering in sweeping new anti-money laundering and anti-corruption reforms in one of the world's largest financial markets.

These reforms include major improvements to, and new powers for, Companies House, which hosts the UK's public beneficial ownership register for businesses. Per the UK government's official press release, "Companies House will receive enhanced abilities to verify the identities of company directors, remove fraudulent organizations from the company register and share information with criminal investigation agencies."

Introducing identity verification for all new and existing registered companies represents a major step toward solidifying Companies House as a reliable and effective anti-money laundering tool. Recent reports have indicated that substantial numbers of entities registered with Companies House do not list real or accurate information about their beneficial owners due to lax verification standards.

The Economic Crime Act also takes measures to tackle newer avenues of financial abuse - including through crypto assets and limited partnerships - alongside a set of broader anti-money laundering reforms.

New Report Sheds Light on Progress and Setback to International Tax Reform Efforts

The EU Tax Observatory released its 2024 Global Tax Evasion Report last month, which seeks to analyze and distill broad trends in tax evasion and avoidance by major multinationals and wealthy individuals over the past decade.

The report found that, while offshore tax evasion by wealthy individuals dramatically shrunk since 2014, domestic tax evasion among the global rich has swollen, in part because of the widespread use of anonymous shell entities and real estate to hide wealth.

Latest from FACT

Comment Letter: FACT Submits Comments Praising Treasury's Revised Beneficial Ownership Reporting Form

FACT submitted comments on October 30 praising Treasury's FinCEN for its revised proposed form (BOIR) to collect beneficial ownership information under the CTA. Specifically, FACT applauded the removal of fields included in a previous draft form that would have allowed reporting entities to claim that they were "unable to obtain" information required by the statute of the CTA.

In its notice, FinCEN notably left the door open for a potential "alternative implementation" of the BOIR form, which would allow filers to submit incomplete information with the understanding that their filing would be considered non-compliant until all required fields were updated. FACT emphasized that before any such alternative implementation is adopted, it must be subject to a public opportunity to comment as required by the Administrative Procedure Act.

Press Release: FACT Receives New Grant Funding to Expand Work at the Intersection of Environmental and Financial Crime

Just weeks before the launch of FACT's latest report, the Coalition secretariat secured new funding from the Gordon and Betty Moore Foundation to expand its existing work at the intersection of environmental and financial crimes.

This major phase of expansion of the Coalition's work to combat environmental crime builds on a convening hosted by FACT last year on the intersection of environmental crime and illicit finance. Over the past two years FACT has also welcomed a number of new members dedicated to environmental conservation and the prevention of environmental and nature crimes, including the Center for Climate Crime Analysis, Greenpeace USA, and the Wildlife Justice Commission.

In September, 2023, FACT joined the newly-formed Nature Crime Alliance, a cooperative network of more than two dozen governments and non-governmental organizations dedicated to fighting nature crime, hosted by the World Resources Institute.

Now Hiring: FACT Seeks Senior Policy Advisor on Environmental Crimes and Illicit Finance

FACT is hiring a Senior Policy Advisor to help develop and implement advocacy strategies to combat environmental crimes and illicit financial flows in the Andes-Amazon region. Spanish language proficiency is required for the position.

Click here to apply.

FACT in the News

Quoted In: Environmental Crime Money Easy to Stash in U.S. Due to Loopholes, Report FindsFACT executive director Ian Gary was quoted in coverage of FACT's latest report on illicit financial flows from environmental crimes in the Amazon by the Guardian's Jonathan Watts.

"The US needs to step up," Gary said. "Our report shows the importance of the US cleaning up its own financial secrecy house and the need to collaborate with law enforcement partners in the Amazon region to combat illegal financial flows ... for the US to have such financial secrecy is a problem for the whole world."

Quoted In: US 'Perfect Playground' for Laundering Money Linked to Environmental Crimes, New Report FindsFACT's latest report - which describes how rampant financial secrecy makes the U.S. "in some ways the perfect playground for criminals looking to stash the illicit proceeds of environmental crimes," - was cited heavily in coverage by the ICIJ.

ICIJ's coverage also cited remarks made by FACT's executive director Ian Gary during last Thursday's report launch. "Many of the people we interviewed highlighted the importance of anonymous shell companies in these environmental crimes," said Gary.

"They can be used to conceal payments to criminal organizations. They can be used as a getaway vehicle to launder the proceeds of environmental crimes. They can be used to evade civil accountability, and they can be used to facilitate [other] kinds of convergent crimes, such as corruption and tax evasion."

Quoted In: US Treasury Department Removes 'Escape Hatch' for Criminals from Beneficial Ownership Reporting Form

FACT policy director Zorka Milin was quoted in coverage of FinCEN's revised BOIR form by ICIJ's Brenda Medina.

"We are pleased to see the changes and we applaud FinCEN for taking into account the concerns that we and others have raised," said Milin. "The previous proposal would have rendered reporting effectively optional and that's something that has no precedent and no legal basis in the text of the statute, and, also, we see no policy justification for that."

Milin noted concerns with FinCEN's proposed "alternative implementation" of BOIR, however. "[We] expect that, if FinCEN is seriously considering that alternative proposal, there will be another opportunity to comment and to reiterate our concerns," she said.

Recent and Upcoming Events

The Long View of Tax Justice: 20 Years of the Tax Justice Network, and the Emerging Agenda for the Next Decade

Watch a full recording of the Tax Justice Network's 20th anniversary webinar celebration, featuring remarks from Tax Justice Network members and allies from around the world. The event includes the findings of an evaluation of the first 20 years of the Tax Justice Network, and looks ahead to the coming decade.

About the FACT Coalition

The Financial Accountability and Corporate Transparency (FACT) Coalition is a non-partisan coalition of more than 100 state, national, and international organizations working toward a fair and honest tax system that addresses the challenges of a global economy and promotes policies to combat the harmful impacts of corrupt financial practices.

For more information, visit www.thefactcoalition.org

Find us on social media below:

** This is email id #340772 sent by Financial Accountability and Corporate Transparency (FACT) Coalition. To unsubscribe from this list, please reply to this email. **