1.8 Increase Transparency of Legal Entities Formed in the U.S.

This is one of the Initiatives the United States Government committed to in their Open Government Partnership National Action Plan. The actual text of the initiative is in black. The text in green are recommendations compiled from across US civil society by OpenTheGovernment.org and presented to the US Administration on 1 December.

Legal entities can provide access to the international financial system for illicit actors and may frustrate financial investigations. To increase transparency over the next year, we will:

• Advocate for Legislation Requiring Meaningful Disclosure. As a critical element of a broader strategy to safeguard the international financial system from such abuse of legal entities, the Administration will advocate for legislation that will require the disclosure of meaningful beneficial ownership information for corporations at the time of company formation.

  • Name a point person in the White House to liaise with the outside community. The White House’s efforts to advocate for the bill will benefit from hearing about particular opportunities and challenges civil society organizations that support the effort have faced in trying to pass this legislation this year and in prior years.
  • Include concepts of “control” within any definition of “beneficial owner” and ensure that the definition is not based on percentage ownership alone. Many civil society organizations believe that it is critical to include concepts of “control” within any definition of “beneficial owner” and ensure that the definition is not based on percentage ownership alone.  Mind and management of a company, or someone who directs the daily activities of a company, is not what is meant by the term “beneficial owner.” 
  • Think beyond mere access to the international financial system as a rationale for advocating for this change.  It is also a critical tool in the fight against corruption, from hiding a dictator’s stolen funds to making campaign finance more transparent.  Incorporation transparency encourages ethical business practices both in the private sector and in corporate interaction with governments, making it more difficult to establish fraudulent bids by dummy companies in a competitive bidding process and disguising debarred contractors.  It is also vital in the global fight against tax evasion and avoidance.
  • Although we understand the following are not part of current bills, we strongly believe the final package should include the establishment of a comprehensive, universal unique corporate identification system that includes, at a minimum, parent company, headquarters, and facility, and that once the data is collected, it should be publicly available in a usable format.
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