Sir
BANNED
- Messages
- 42
- Reaction score
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- Points
- 8
If you were a criminal looking to hide money-laundering operations, anonymously rent swaths of Web infrastructure for Internet badness, or create a financial base to threaten national security, where would you look? Panama? Liechtenstein? Offshore islands?
Try a leisurely two-hour drive from the White House and the Capitol, in the great state of Delaware.
Delaware holds the No. 1 spot in the recent Financial Secrecy Index (FSI) rankings of secretive jurisdictions compiled by the internationally respected Tax Justice Network, an independent organization promoting justice in tax issues. This undesirable accolade for Delaware was earned for its policies permitting cheap and easy company formation and the hiding of details about corporate ownership, all of which adds up to non-disclosure of the most important corporate information.
Several other U.S. states -- Nevada, Oregon, and Wyoming -- have also received international criticism for lax company registration laws, but it is only inDelaware that an applicant can delay providing company member names, and if timed right, for as long as a year before the state steps in, allowing plenty of time for deals to be completed and illicit funds laundered out of the U.S. Once a company has served its purpose in this way, it can simply shut up shop, and little can be done to trace the perpetrators, invariably resulting in the frustration of international law enforcement.
This short-term corporate environment is perfect for organized cybercrime operations. We only have to look at the examples of the RBN, McColo, and other cybercriminals that were able to mislead reporters, researchers, and investigators for considerable time by hiding behind what are essentially “Mickey Mouse”corporate shields in Delaware.
As Spamhaus points out in its recent analysis of “snowshoe spam,” mass spamming is usually enabled by an endless array of anonymousDelaware and Wyoming shell companies operating from UPS mailboxes and purchasing lots of IP space.
The variety of illicit uses for loopholes such as these, which allow the formation of shell companies, has been regularly commented upon and documented for many years. TheFinancial Crimes Enforcement Network issued a report, "The Role of Domestic Shell Companies in Financial Crime and Money Laundering: Limited Liability Companies,” in November 2006, naming Delaware as at risk.
Other coverage of gaps in state company regulations and abuse by criminals -- and not just foreign criminals, it has to be said -- has been extensive. News network Al Jazeera printed an article on this subject back in June 2009, indicating that most foreign banks see the U.S. as the worst offender in terms of offering tax safe havens, ironically when the U.S. is trying to crack down on such activity.
More recent articles have shed light on the dangerous relationship between Delaware shell companies and national security. One article last fall linked shell firms created with Delaware corporate registrations to the Iranian military. And The New York Times has reported on the association of Delaware shells with arms trafficking.
According to the Tax Justice Network, there are more than 4 million corporations in Delaware, or five per Delaware resident, with Al Jazeera quoting a figure of 6,500 registered companies on one street alone. It’s anyone’s guess how that number may have increased since some of these articles were printed. But the situation is serious: Just a simple Web transaction can provide criminals the access to international banking facilities and trading anywhere in the world.
Legislation in the form of the “Incorporation Transparency And Law Enforcement Assistance Act” is still waiting to go before the Senate. It will require each beneficial owner of a corporation, as well as any other legal entity involved with the organization, to be identified by name and address.
The presence of this bill is due, in part, to the continuing pressure exerted by international organizations, such as the Tax Justice Network and theFinancial Action Task Force (FATF), and to attorneys like Fred Abrams, who aids prosecutors and law enforcement in other countries with cases againstDelaware registered companies. In one particular Polish example, prosecutors are chasing funds suspected of being used for trade-based money laundering in clear violation of Poland’s, and international, anti-money-laundering laws.
Perhaps it is time for the U.S. to set the moral example and clean up corporate registration. After all, this is one major example of why countries like China and others do not regard U.S. protestations on cybersecurity and transparency very seriously. Surely, the Senate in a bipartisan effort should make this bill an urgent priority. More than eight years have passed since 9/11.
Source
Try a leisurely two-hour drive from the White House and the Capitol, in the great state of Delaware.
Delaware holds the No. 1 spot in the recent Financial Secrecy Index (FSI) rankings of secretive jurisdictions compiled by the internationally respected Tax Justice Network, an independent organization promoting justice in tax issues. This undesirable accolade for Delaware was earned for its policies permitting cheap and easy company formation and the hiding of details about corporate ownership, all of which adds up to non-disclosure of the most important corporate information.
Several other U.S. states -- Nevada, Oregon, and Wyoming -- have also received international criticism for lax company registration laws, but it is only inDelaware that an applicant can delay providing company member names, and if timed right, for as long as a year before the state steps in, allowing plenty of time for deals to be completed and illicit funds laundered out of the U.S. Once a company has served its purpose in this way, it can simply shut up shop, and little can be done to trace the perpetrators, invariably resulting in the frustration of international law enforcement.
This short-term corporate environment is perfect for organized cybercrime operations. We only have to look at the examples of the RBN, McColo, and other cybercriminals that were able to mislead reporters, researchers, and investigators for considerable time by hiding behind what are essentially “Mickey Mouse”corporate shields in Delaware.
As Spamhaus points out in its recent analysis of “snowshoe spam,” mass spamming is usually enabled by an endless array of anonymousDelaware and Wyoming shell companies operating from UPS mailboxes and purchasing lots of IP space.
The variety of illicit uses for loopholes such as these, which allow the formation of shell companies, has been regularly commented upon and documented for many years. TheFinancial Crimes Enforcement Network issued a report, "The Role of Domestic Shell Companies in Financial Crime and Money Laundering: Limited Liability Companies,” in November 2006, naming Delaware as at risk.
Other coverage of gaps in state company regulations and abuse by criminals -- and not just foreign criminals, it has to be said -- has been extensive. News network Al Jazeera printed an article on this subject back in June 2009, indicating that most foreign banks see the U.S. as the worst offender in terms of offering tax safe havens, ironically when the U.S. is trying to crack down on such activity.
More recent articles have shed light on the dangerous relationship between Delaware shell companies and national security. One article last fall linked shell firms created with Delaware corporate registrations to the Iranian military. And The New York Times has reported on the association of Delaware shells with arms trafficking.
According to the Tax Justice Network, there are more than 4 million corporations in Delaware, or five per Delaware resident, with Al Jazeera quoting a figure of 6,500 registered companies on one street alone. It’s anyone’s guess how that number may have increased since some of these articles were printed. But the situation is serious: Just a simple Web transaction can provide criminals the access to international banking facilities and trading anywhere in the world.
Legislation in the form of the “Incorporation Transparency And Law Enforcement Assistance Act” is still waiting to go before the Senate. It will require each beneficial owner of a corporation, as well as any other legal entity involved with the organization, to be identified by name and address.
The presence of this bill is due, in part, to the continuing pressure exerted by international organizations, such as the Tax Justice Network and theFinancial Action Task Force (FATF), and to attorneys like Fred Abrams, who aids prosecutors and law enforcement in other countries with cases againstDelaware registered companies. In one particular Polish example, prosecutors are chasing funds suspected of being used for trade-based money laundering in clear violation of Poland’s, and international, anti-money-laundering laws.
Perhaps it is time for the U.S. to set the moral example and clean up corporate registration. After all, this is one major example of why countries like China and others do not regard U.S. protestations on cybersecurity and transparency very seriously. Surely, the Senate in a bipartisan effort should make this bill an urgent priority. More than eight years have passed since 9/11.
Source
