Transparency International (TI) has issued a statement calling on governments to no longer tolerate the existence of anonymous companies.

The global civil society organisation that specialises in fighting corruption says its calls were prompted by two big developments in corruption scandals involving US President Donald Trump.

Trade-based money laundering

In August, Trump’s 2016 presidential campaign chairman, Paul Manafort, was found guilty of fraud. In the same month his former lawyer, Michael Cohen, pleaded guilty to fraud and campaign finance violations.

Manafort lied to banks to obtain millions of US dollars in personal loans and hid his earnings from the US tax agency. He hid this money through anonymous companies and used trade-based money laundering techniques involving mis-invoicing of Iranian rugs in attempts to legitimise his earnings.

Ukrainian payments

Manafort’s companies received payments from Ukrainian businessmen and paid them into his personal bank accounts as if they were loans rather than income.

“Anonymous companies hide the identity of their owners, making it hard to connect them with criminal activity. They are a common tool for laundering money and paying bribes, and Transparency International is pressuring governments to stop them”, the TI statement says.

Beneficial ownership

Earlier this year TI said the majority of G20 countries still do not know who owns and controls shell companies and trusts in their territories because of inadequate beneficial ownership legal frameworks.

Publicly available central registers – where the details of every beneficial owner of every company are stored – would help gather this information. Only six G20 countries now have central registers, and only the UK’s is publicly available, TI says.

Categories: Trade Based Financial crimes News