Corruption

How to Stop Kleptocrats From Stashing Their Cash in America

The U.S. has, in recent years, enabled some of the most notorious crimes associated with anonymous shell companies around the world. This is down to the fact that the formation of such companies has been left to individual states to oversee—and that states like Delaware, Nevada, and Wyoming have reaped untold profits setting up anonymous shell companies on a no-questions-asked basis. Snatching up an American shell company of your own remains easier than getting a library card. As Jason Sharman, an Australian academic and one of the leading researchers on financial anonymity recently wrote, there’s “strong reason to think” that the U.S. “is the worst in the world when it comes to regulating shell companies.”

These anonymous shells are the perfect financial getaway vehicle for crooks and criminals of all stripes and nationalities. Former Panamanian law firm Mossack Fonseca—the offshore machine at the heart of 2016’s gargantuan Panama Papers leak—pointed its clients to American states like Nevada and Wyoming to set up their anonymous shell companies. It’s little wonder that the Tax Justice Network ranks the U.S. second globally for financial secrecy, just after Switzerland.

Now, lawmakers are looking to curb this corruption. Earlier this summer, a first-of-its-kind bill that would effectively eliminate anonymous American shell companies was passed out of a House committee—a significant victory in the fight against kleptocrats, arms traffickers, and brutal regimes everywhere.