Recently, 22 institutional investors told U.S. Congress they want all American companies to disclose who owns and controls them.
The investors support a bipartisan act called the Incorporation Transparency and Law Enforcement Assistance Act (S. 2489), which would oblige such companies to be transparent about their operations and to keep ownership records updated – the act has been read twice but has yet to be passed.
In a letter, the group of 22 investors said: “Currently, in all 50 states, companies can be created anonymously, effectively removing personal responsibility or accountability […] As a result, anonymously-owned American companies have been used by the criminal and corrupt to evade taxes, skirt sanctions and win U.S. government contracts in order to steal taxpayer dollars.”
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This is a problem, the letter notes, because investors “rely on access to accurate information […] Opaque corporate structures are not just an obstacle for law enforcement, but also inhibit investors’ abilities to identify risks.”
A recent release says the administration in the U.S. supported the proposed act in 2014, but that it then proposed an alternative approach should be taken for collecting information about U.S. companies. However, no further progress was made. Then, in light of the information revealed by the Panama Papers dump, there has been renewed interest.
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In their letter, the group of investors conclude: “There’s a real cost of corruption to investors, shareholders, small businesses, consumers and the general public.” Further, “International business leaders have stated that ending anonymous companies will mean more competitive markets, more stable financial systems and more sustainable development.”
This article was originally published on Benefits Canada‘s companion site, Advisor.ca