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Civil society groups call on EU to require firms to disclose true ownership

Source: Thomson Reuters Foundation - Mon, 11 Jun 2012 14:42 GMT
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(Rewrites lede and paragraph one)

NEW YORK (TrustLaw) - A coalition of over a thousand civil society organizations is urging European regulators to support legislation requiring corporations to provide greater transparency regarding their true ownership.  

In a letter sent June 9 to European Internal Markets Commissioner Michel Barnier, the coalition complains that current laws make it “too easy” for “corrupt politicians, money launderers, tax evaders and other criminals” to hide their identities behind companies, according to the Task Force on Financial Integrity & Economic Development, an international group advocating for transparency and accountability.

The letter to Barnier comes nearly a month after a similar letter was sent to members of the U.S. Congress by dozens of American business and civil society groups.  The letter urged politicians to support the bipartisan Incorporation Transparency and Law Enforcement Assistance Act, which would require companies to disclose their actual owners at the time of incorporation.

“In Europe as in the U.S., civil society groups concerned about corruption are joined by environment and religious groups who understand that we simply must have greater transparency if we are to fight financial crimes,” said Robert Palmer of Global Witness, one of the European letter’s co-authors.

“Knowing who exactly owns a company would stop criminals from being able to easily hide their identities—and ill-gotten gains—behind otherwise legal companies,” he said.

According to the letter sent to members of the U.S. Congress, “Approximately two million corporations are formed in the U.S. each year.  Most states allow the anonymous incorporation of companies….Typically, less information is provided to incorporate than is required to obtain a driver’s license or open a bank account.”

Passage of the proposed Incorporation Transparency and Law Enforcement Assistance Act “would enable law enforcement to more effectively and efficiently conduct investigations to combat terrorism and financial crime,” said the letter to American politicians.

 “In addition, increased corporate transparency would curb corruption and tax evasion, promote an equitable market economy, reduce the opacity of corporate campaign contributions, help ensure a fair and level playing field for small-and-medium-sized businesses, foster global development and enhance national security,” it said.

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