Today’s Top Stories from GFI: EU Parliament Votes For Public Registries of Company Ownership

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MEPs vote to pierce secrecy of trusts in anti-money laundering bill
EU Observer, March 11, 2014

By Nikolaj Nielsen

A draft bill designed to crack down on money laundering and fraud was backed by a vast majority of MEPs in Strasbourg on Tuesday (11 March).

With only 30 MEPs opposed, the anti-money laundering bill requires companies, trusts and foundations to list the names of people who own them in inter-connected public registers set up in each member state.

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GFI Lauds EU Parliament Vote Endorsing Crackdown on Anonymous Shell Companies
GFI Press Release, March 11, 2014

European Vote Increases Pressure on White House & Congress to Move

WASHINGTON, DC – Global Financial Integrity (GFI) praised the full european parliament for voting today to crack down on anonymous shell companies, a major conduit for laundering the proceeds of crime, corruption, and tax evasion.

Following similar votes by two committees of the EU Parliament last month, the full legislative body voted today in favor of requiring public registries of beneficial ownership information for companies incorporated in the EU, as part of its revisions to the EU’s Anti-Money Laundering Directive (AMLD).

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Own up, owners
The Economist, March 12, 2014

Recent revelations that Ukrainians linked to the Yanukovych regime appear to have used foreign, anonymous shell companies to buy prime Ukrainian properties and to siphon money out of the country could not have come at a better time for those who argue that shells and other secretive vehicles are getaway cars for money launderers. The campaigners were already on the front foot, thanks to Britain’s decision to become the first G8 country to commit to introducing a publicly accessible register of companies’ beneficial (ie real as opposed to proxy) owners. On March 11th their smiles grew wider as the european parliament also backed public registers, and not only for corporations.

The parliamentary vote was on proposed amendments to the European Union’s money-laundering directive. Lawmakers voted 643 to 30—a margin no doubt made wider by the news from Eastern Europe—to back open registers for companies, trusts, foundations and practically any other corporate vehicle or legal arrangement that is deemed to be open to abuse.

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GFI in the News

New Philippines Customs Chief Cracks Down on Corruption
The Wall Street Journal, March 10, 2014

By Trefor Moss

To fix the Bureau of Customs, President Benigno S. Aquino III needed a numbers guy, someone who could make sense of the thousands of shipments and billions of pesos passing daily through the Philippines’ ports.

He turned to John P. Sevilla.

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Why Malaysia Will Say Almost Nothing About the Missing Flight
Bloomberg News, February 12, 2014

By Joshua Kurlantzick

With an international team of investigators still seemingly baffled about what happened to Malaysia Airlines Flight MH370, which disappeared over the weekend, relatives of the passengers and diplomats from countries touched by the mishap have vented their frustration with the Malaysian government.

For days, it seems, Malaysian officials and the state-owned carrier have released almost no information about the flight or working theories of why it vanished. Malaysia Airlines did not even inform relatives for 15 hours that the plane had disappeared, sending the distraught families to a hotel in Beijing to wait, and Kuala Lumpur’s envoys still have mostly kept the relatives in the dark days later.

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Money Laundering

Money laundering huge in Hong Kong and Macau: crime survey
South China Morning Post, March 5, 2014

By Toh Han Shih

Money laundering is more prevalent in hong kong and Macau than in most parts of the world, with rates far above the global average, according to an economic crime survey by PwC.

A poll by the accounting firm found 37 per cent of companies in hong kong and Macau, mainly banks and casinos, had experienced money laundering in the past two years. That compared with a global average of 11 per cent, the Asia-Pacific average of 11 per cent, Singapore’s 5 per cent and mainland China’s 4 per cent.

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Wealthy Chinese are smuggling their riches out of the country with a state-backed bank card
Quartz, March 12, 2014

By Lily Kuo

It’s estimated that as much as $600 billion is smuggled out of china a year, through art, gambling, fake trade—and now bank cards. According to a report by Reuters, UnionPay cards aren’t just making everyday purchases easier—they’re a convenient way to circumvent China’s strict capital controls.

Here’s how it works: a wealthy Chinese citizen travels to neighboring Macau, the preeminent gambling hub of Asia, and pays the clerk of a jewelry or another store yuan via their UnionPay card. (UnionPay cards function like debit cards and are part of China’s state-backed payment card system.) They receive cash back, in Hong Kong dollars, as well as a receipt that masks the transaction as a retail purchase. Another way is to buy expensive jewelry from the store and sell it right back for cash. One jewelry outlet in a Macau casino told Reuters that customers could use their cards to buy up to 10 million yuan ($1.5 million) of gold bullion and sell it back for cash.

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Former Credit Suisse Banker Pleads Guilty
The Wall Street Journal, March 12, 2014

By Andrew Grossman

A former Credit Suisse Group banker pleaded guilty Wednesday to helping Americans hide money in Switzerland and agreed to cooperate with the U.S. government as it investigates banks and their employees for aiding tax evasion.

Andreas Bachmann admitted to one count of conspiring to defraud the U.S., which carries a potential penalty of five years in prison. Prosecutors agreed to recommend a reduced sentence in return for his cooperation.

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Uzbek president’s daughter faces Swiss money-laundering investigation
AFP, March 12, 2014

Swiss prosecutors say they have been investigating the eldest daughter of the Uzbek president, Islam Karimov, on suspicion of money laundering since late last year.

“The Office of the Attorney General of Switzerland is investigating Gulnara Karimova … on suspicion of money laundering,” the office said in a statement, adding that an investigation into four people in her entourage had been broadened to include her personally last autumn.

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Tax Evasion and Tax Avoidance

One Direction urge fans to lobby George Osborne about corporate tax avoidance
The Independent, March 11, 2014

By Adam Sherwin

George Osborne can expect a bombardment from One Direction fans after the boyband urged its army of followers to lobby the Chancellor to maintain the UK’s international aid budget and crack down on corporate tax avoidance.

In an unlikely entry into the political sphere, Harry Styles and his band are offering free concert tickets to fans who join Global Citizen, an international network promoting social activism as a means to end extreme poverty.

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Global Financial Integrity (GFI) promotes national and multilateral policies, safeguards, and agreements aimed at curtailing the cross-border flow of illegal money. In putting forward solutions, facilitating strategic partnerships, and conducting groundbreaking research, GFI is leading the way in efforts to curtail illicit financial flows and enhance global development and security.

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