Tuesday, August 04, 2009

NY Assistant DA: “U.S. financial transparency: trying to catch up to Panama.”

Adam S. Kaufmann, Assistant District Attorney for New York County State of New York, explained at a hearing why a U.S. company is as good as an offshore company for hiding the identity of its non-U.S. owners:

We regularly speak to law enforcement agents and prosecutors around the world. It is difficult to speak with moral authority in criticizing offshore bank secrecy jurisdictions when they can point an accusing finger back at us. The British Virgin Islands is a well-known (in law enforcement circles) bastion for dirty shell companies, but even the British Virgin Islands can level criticism at the lack of transparency in the incorporation processes in our states. That we were deemed “non-compliant” by the Financial Action Task Force is an embarrassment. That we have made no progress in the three years since then is absurd. Our statement of national transparency standards should be something more than: “U.S. financial transparency: Better than Lichtenstein and trying to catch up to Panama.” Simply put, we lag behind many other countries in the world in this regard, and it makes our statements concerning transparency and tax evasion ring hollow and hypocritical.
Foreign law enforcement authorities even refer to certain states as “offshore U.S. jurisdictions.” And when asked, I am hard-pressed to define why these well-known states are any different from Cayman or the British Virgin Islands. The Committee should also know the imprimatur of respectability that a certificate of incorporation from a U.S. state carries with it, and the access it gives a foreign citizen to open bank accounts and engage in all manner of business, both legitimate and otherwise. And, for many foreign persons wishing to hide their income in an “offshore jurisdiction,” there is no need to turn to a Caribbean hide-away. In one case where we rendered assistance to foreign prosecutors, we were able to connect the head of a foreign central bank to an “offshore” Delaware corporation. He used the corporate entity to open a bank account in Florida. He used black market money systems (prosecuted in New York) to move funds to this secret account he held in Florida. By obtaining a corporate entity, this corrupt official could rest assured that his funds would be safe in the United States, and his name would not easily be linked to the corporation. I am hard-pressed to find a difference between his use of a Delaware corporation to open a Florida bank account and the use by a U.S. taxpayer of a Lichtenstein corporation to open a Swiss bank account. At the end of the day, both systems provide a security blanket of anonymity for those who seek it

Examining State Business Incorporation Practices: A Discussion of the Incorporation Transparency and Law Enforcement Assistance Act
Thursday, June 18, 2009 02:30 PM Dirksen Senate Office Building, room 342 The hearing will examine the impact of the "Incorporation Transparency and Law Enforcement Assistance Act," S. 569, which would create a minimum standard--and greater transparency--for the ownership information businesses have to provide to states when they form a business.
Member Statements
Senator Joseph I. Lieberman [View PDF]
Panel 1
Janice Ayala [view testimony] Deputy Assistant Director, Office of Investigations, U.S. Immigration and Customs Enforcement U.S. Department of Homeland Security
Jennifer Shasky Calvery [view testimony] Senior Counsel to the Deputy Attorney General U.S. Department of Justice
The Honorable Elaine F. Marshall [view testimony] Secretary of State State of North Carolina
Adam S. Kaufmann [view testimony] Assistant District Attorney for New York County State of New York
Harry J. Haynsworth [view testimony] Chair, Drafting Committee on Uniform Law Enforcement Access to Entity Information Act Uniform Law Commission

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