Saturday, November 2, 2013

NYT Op-Ed on Delaware, Wyoming & Nevada as Haven for Criminal Activity (11/2/13)

John A. Cassara, a former IRS CI agent, wrote this op-ed in the New York Times:  Delaware, Den of Thieves? (NYT 11/1/13), here.  He opens the piece with:
As a special agent for the Treasury Department, I investigated financial crimes like money laundering and terrorism financing. I trained foreign police forces to “follow the money” and track the flow of capital across borders. 
During these training sessions, I’d often hear this: “My agency has a financial crimes investigation. The money trail leads to the American state of Delaware. We can’t get any information and don’t know what to do. We are going to have to close our investigation. Can you help?" 
The question embarrassed me. There was nothing I could do. 
In the years I was assigned to Treasury’s Financial Crimes Enforcement Network, or Fincen, I observed many formal requests for assistance having to do with companies associated with Delaware, Nevada or Wyoming. These states have a tawdry image: they have become nearly synonymous with underground financing, tax evasion and other bad deeds facilitated by anonymous shell companies — or by companies lacking information on their “beneficial owners,” the person or entity that actually controls the company, not the (often meaningless) name under which the company is registered. 
Our State and Treasury Departments routinely identify countries that are havens for financial crimes. But, whether because of shortsightedness or hypocrisy, we overlook the financial crimes that are abetted in our own country by lax state laws. While the problem is concentrated in Delaware, there has been a “race to the bottom” by other states that have enacted corporate secrecy laws to try to attract incorporation fees.
And he concludes the piece:
While officials in Delaware, Wyoming and Nevada talk about their corporate “traditions,” I am unimpressed. Business incorporation fees have accounted for as much as a quarter of Delaware’s general revenues. It’s no surprise that officials in Dover and Wilmington want to protect their state’s status as a corporate registry, but if that means facilitating criminal activity, their stance is a form of willful blindness. America must require uniform corporate-registration practices if it is to persuade other nations to cooperate in the fight against financial crimes.
I hope readers will offer their comments.

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