The Fraud Examiner

A Battle of Wills: Closing Ultimate Beneficial Ownership Loopholes

Martin Kenney, CFE      
Managing Partner
Martin Kenney & Co., Solicitors

Editor’s note: The opinions expressed here are those of the authors and don’t necessarily reflect the opinion of the ACFE.  

One of the most topical subjects since the release of the Panama and Paradise Papers has been how to deal with offshore companies and the issue of their Ultimate Beneficial Owners (UBOs).

Unsurprisingly, given the sensitive nature of the subject, many politicians across the world, as well as global NGOs, have been pressing for a means to close what they perceive to be loopholes. These “loopholes” have enabled crooks to evade taxes and launder criminal money. However, as journalist Max de Haldevang reports in an article for Quartz, the American Bar Association (ABA) has been actively lobbying against draft legislation in Congress that aspires to see these loopholes closed.

I have commented on the subject previously, pointing out that the U.S. — via its own offshore service providers in states such as Delaware, Nevada and elsewhere — is complicit in some of the criminal activities this new draft legislation is seeking to address.

When news of the Panama Papers broke three years ago, there were very few named by the investigation. This was simply because they had no need for offshore companies elsewhere, such as Panama, as they had all the secrecy they needed much closer to home in the U.S.

For many years I have been investigating wrongdoing by U.S. nationals and those who use their offshore services, which has led me to focus on Delaware and Nevada. I have obtained court orders that should have provided me with the details of UBOs owning and operating these offshore entities, only to find myself frustrated at every turn by the lack of any UBO information, let alone anything approaching verified data.

Is legislation the answer?

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