How to stop fraudsters, smugglers & spies

How to stop fraudsters, smugglers & spies from doing business Curtis Ellis touts bill that inhibits the use of anonymous shell companies


Follow the money.

That's what Deep Throat supposedly told Woodward and Bernstein to do to find the perps behind the Watergate break-in and cover-up.

But what if they couldn't follow the money? What if the chain of custody was hidden?

That's the problem for law enforcement chasing Mexican drug cartels, Iranian terrorists, human traffickers and Chinese spies today.

Criminal organizations, fraudsters and spies hide behind anonymous shell companies to carry out their nefarious business.

A loophole in the law makes it easier to incorporate a company in the U.S. than to obtain a driver's license or even a library card.

Under current law, companies don't have to disclose their ownership unless they do business with a U.S. bank or financial institution.

Put it another way, the task of tracking ownership of shadowy companies is not done by law enforcement; it's been outsourced to banks. What could possibly go wrong? A lot.

An investigation by Reuters found more than 2,000 companies were registered at one address, a single family home in Cheyenne, Wyoming, population 60,000.

That's the headquarters for a "corporate services" company that helps clients "create a company, and more: set up a bank account for it; add a lawyer as a corporate director to invoke attorney-client privilege; even appoint stand-in directors and officers as high as CEO." It will even provide years of back-dated regulatory filings to make the company look more real.

Some of the thousands of companies registered in this sleepy Wyoming town have been sued for unpaid taxes, securities fraud and trademark infringement. State and federal authorities have filed liens against them to collect more than $300,000 in unpaid taxes.

A former Ukrainian prime minister (them again!) who had the dubious distinction of being named the eighth-most corrupt official in the world and served a prison term in California for money-laundering and extortion had his shell company in Cheyenne.

So if you thought secret bank accounts, paper companies and dodgy incorporation laws were the exclusive province of Switzerland and the Cayman Islands, think again. An international report ranks the United States right up there with those notorious tax-scam and money laundering havens when it comes to corporate secrecy.

The good news is Congress is ready to do something about it.

The Illicit Cash Act closes the legal loopholes that allow criminals and corrupt governments to hide. The bipartisan legislation sponsored by Sen. Tom Cotton, R-Ark., and Sen. Mark Warner, D-Va., requires shell companies to disclose their true owners to the Department of Treasury, so law enforcement can track down criminal networks.

The owners of these companies, flesh and blood people, would simply have to provide their name, address, date of birth and driver's license or passport number – the information you need to show to get on an airplane.

The information would be kept in a confidential federal registry that could only be accessed in a law enforcement investigation. Penalties for failing to comply would only apply to criminals; small businesses that slip up would not be hit.

Every day brings a new headline of spies using increasingly sophisticated means to steal advanced technology and research. Cut-out companies are part of the theives' tradecraft. Chinese telecom giant Huawei is charged with using shell companies to deceive U.S. banks and evade sanctions against Iran.

"The FBI has about 1,000 investigations involving China's attempted theft of U.S. based technology in all 56 of our field offices and spanning just about every industry sector," FBI Director Christopher Wray reveals.

The ILLICIT CASH Act is a straightforward piece of legislation to ensure law enforcement can follow the money and stop cartels, terrorists, fraudsters and spies.

Now that the Senate has finished with other distracting business, it should pass the ILLICIT CASH Act now.

Copyright © 2020 Curtis Ellis, All rights reserved.