The White House tonight rolled out new measures by the IRS and U.S. Treasury department, as well as proposals for several congressional bills, to go after “tax cheats, kleptocrats, and other criminals” who “abuse the financial system or shell companies and other legal entities”.
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Under the proposed legislation, companies would be required to name the owners of any new entities they created and would expand the justice department’s power to call for information in some corruption cases.
“We saw what happened with the release of the Panama Papers”, he said.
On the foreign front, the Justice Department announced it would send legislation to Congress to increase its authority over transnational money-laundering cases by speeding up the subpoena process, adding foreign corruption laws to its arsenal, and extending the amount of time the USA can freeze assets at the request of a foreign government.
In a letter to the Senate, Treasury Secretary Jacob Lew urged Senators to finally approve earlier tax treaties that have been pending for several years that could aid the battle against offshore tax evasion.
While the Panama Papers investigation focused on the actions of one Latin American law firm, Fusion found that many criminal investigators blamed USA states’ corporate secrecy provisions for hindering their efforts.
“In recent weeks, the disclosure of the so-called “Panama Papers” – millions of leaked documents reportedly revealing the use of anonymous offshore shell companies – has brought the issues of illicit financial activity and tax evasion into the spotlight”, said the White House in a statement.
The Obama administration announced several major initiatives aimed at countering money laundering on USA soil, just days before the names of thousands of companies implicated in the Panama Papers investigation are expected to be made public. The most recent GTOs temporarily require certain USA title insurance companies to record and report the beneficial ownership information of legal entities making “all-cash” purchases of high-value residential real estate. “This loophole can be used to shield the foreign owners of non-U.S. assets or non-U.S. bank accounts”, said Treasury Deputy Assistant Secretary for International Tax Affairs Robert Stack.
The Treasury Department also announced a plan to extend the reporting requirements to certain foreign-owned companies that have been exempt: single-member limited liability companies.
“Fundamentally our financial system should not provide the rich, the powerful, and the corrupt with the opportunity to shield their assets”, said Wally Adeyemo, the US deputy national security advisor for global economics, in a call with reporters on Thursday.
The administration also made a push on another front.
The CDD Final Rule harmonizes BSA regulations and makes explicit several components of customer due diligence that have always been expected under existing regulations, as well as incorporating a new requirement for covered financial institutions to collect beneficial ownership information.
But, she added, “there are vulnerabilities that we need to address in order to maintain an effective regime”.
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The administration also proposed tax rules aimed at closing a loophole which enables foreigners to “hide assets or financial activity behind anonymous entities established in the United States”, by relieving foreign-owned companies of the duty to report to the IRS. Obama and Lew both urged lawmakers to ratify eight tax treaties that have languished in the Senate.
