Corporate anonymity : Ultimate privilege | The Economist

/21543132

  • Corporate anonymity: Ultimate privilege | The Economist
    http://www.economist.com/node/21543132

    THAT a company can conceal who really owns it is a longstanding privilege in many countries. This is not just convenient for the shareholders. It makes money for the authorities that register such firms and for the lawyers who handle the details.

    But it incenses crimefighters and sleazebusters. A World Bank report last year, “The Puppet Masters”, investigated 150 big corruption cases. Almost all involved the misuse of corporate vehicles, such as companies and trusts, to the tune of $50 billion. The Obama Administration’s action plan for open government calls for “meaningful” information about beneficial ownership to be recorded at the time of incorporation. Britain’s Financial Services Authority says concealed ownership is a big feature of money-laundering.

    The improvements that the World Bank and other official bodies want are modest: corporate registries should make up-to-date details of a company’s name, address and directors publicly available. They should keep track of its real beneficial ownership and share that data with law-enforcement officials when needed.

    Yet change of any kind is painfully slow. In America anonymously owned companies have featured prominently in recent scandals about campaign financing and health-care fraud. Despite that, a bill by Senator Carl Levin to require American companies to declare their beneficial ownership (if only to officials) has stalled in the Senate’s finance committee. Some suspect that pressure from states that thrive on providing anonymity, such as Delaware, helps keep the bill in limbo.

    For those wanting more radical change, such as the public disclosure of beneficial ownership, the picture is even gloomier. The Financial Action Task Force (FATF), the world’s main anti-money-laundering body, is revamping a set of 40 recommendations to tighten rules on everything from tax dodging to terrorist financing. But reaching agreement on changes to ownership rules was particularly tricky and progress has been modest. Anthea Lawson of Global Witness, a campaigning group, says that the result is “carte blanche for tax-evaders, organised crime and the corrupt to carry on business as usual.”