April 26, 2022
“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 the laundering of money through the financial system.
Send feedback or items for future newsletters to Patricia Ainembabazi at [email protected].
Here’s the State of Play:
Lawmakers, Civil Society, and States Look for Faster Pace on Beneficial Ownership Reform
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This month, Treasury Secretary Yellen appeared before the House Financial Services Committee and responded to concerns over the Corporate Transparency Act’s (CTA) delayed implementation. In her answer, Yellen assured lawmakers that the second of the CTA’s three required rulemakings would be drafted “this year, in the coming months.” Lawmakers will get another chance to press Treasury on anti-money laundering priorities this Thursday, as Acting Director Him Das of the Financial Crimes Enforcement Network (FinCEN)–the agency responsible for setting up the beneficial ownership registry–testifies before Congress. Sustained congressional oversight will be key to delivering on a timely and impactful final rule.
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FACT echoed these calls in a letter sent to FinCEN earlier this month, which was reported on by TaxNotes and Law360. In the letter, FACT reiterated the need for strong CTA implementation to help “enforce sanctions targeting certain Russians fueling the war in Ukraine” and support the Biden Administration’s stated priorities around corruption. FACT also called on FinCEN to adhere to data standards consistent with those put forward by Open Ownership. These standards were recently endorsed by the U.K. government as it looks to plug gaps in their own AML framework. Fortunately, the U.S. can learn from early data stumbles faced by other countries, like the U.K., and start with a well-functioning, accurate and highly useful directory from the start.
There are also signs that beneficial ownership reform may be advancing not only in Washington, D.C., but in state capitals around the country. This March, lawmakers in New York offered up legislation to require limited liability companies to disclose their beneficial owners–a move that would both clean up shady money from New York’s real estate market and support tenants against anonymous landlords. Most recently, FACT’s Policy Director Ryan Gurule testified virtually before Alaska’s legislature to illuminate the current state of U.S. financial secrecy, the impact on local communities, and how Alaska could lead the way toward transparency.
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SEC Ruling Adds to the Momentum for Tax Transparency
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Earlier this month, the SEC staff handed down an important decision on public country by country reporting (PCBCR) of tax and other key financial information about the activities of multinational corporations. For months, Amazon investors, led by FACT member Missionary Oblates, have organized behind a shareholder proposal urging the company to adopt the Global Reporting Initiative’s (GRI) voluntary public country-by-country reporting standard.
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Despite efforts by Amazon to block the “first of its kind” resolution from being discussed at the company’s annual general meeting next month, the SEC staff said that the proposal should be allowed to move forward for shareholder consideration at Amazon’s annual general meeting.
As FACT discussed in our recent blog on the subject, this ruling paves the way for other investors to lead similar proposals across the corporate landscape, bringing U.S. multinational companies into the light of transparency one vote at a time. The outcome–and strong investor support for the shareholder proposal–also serve as a clear rejection of the Financial Accounting Standards Board’s shortsighted decision to exclude investors’ demands for PCBCR from their agenda.
Shareholder activism, however, is no substitute for responsible policymaking. To realize the benefits of public country-by-country reporting, a competent authority–such as the SEC, FASB, or Congress–will need to pass universal disclosure requirements to give investors and the public the information they need to make meaningful investment decisions and hold corporations accountable.
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Latest From FACT
FACT in the News
Recent and Upcoming Events
Social Media Shoutouts
@SenWhitehouse, American real estate can’t be a dark repository for oligarch money.
@SenWarren, Russian oligarchs are continuing to profit from illegal investments in the U.S. because they can hide their money in private equity firms and hedge funds with almost no restrictions. I'm calling on @USTreasury and @SECGov to close this loophole immediately.
@RepMaloney, Russian oligarchs are busy moving their money out of reach right now. Treasury needs to SPEED UP their rulemaking on my Corporate Transparency Act so that we can hold Russian oligarchs accountable.
@BradSherman, Today I spoke with Treasury Secretary @SecYellen on the importance of the U.S. government doing more to identify and prevent #Russia and its oligarchs from evading sanctions through the private securities market and cryptocurrency. See the exchange below:
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.
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