Morgenthau on form

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Robert Morgenthau, New York District Attorney of enormous repute, gave evidence to the hearing of the Senate last week on the Bill requiring that the beneficial ownership of all US corporations be available to all regulatory authorities.

Amongst the classic comments he made are:

In so many areas of financial crime we see transparency as a simple solution to a host of problems. Systems promoting opacity and secrecy are the best friend of the money launderer, the child pornographer, the tax cheat, the fraudster, the corrupt politician, and indeed, the financier of networks of terror. The beauty of the bill we are discussing today is the simple solution it brings to a host of problems: Transparency. If there is one lesson we have learned in investigating financial crimes, it is that the best and easiest solution for many areas of criminal conduct is to encourage and require transparency in financial arrangements.


My goal in presenting this testimony is to provide the law enforcement perspective on the issue of beneficial ownership registration; to wit, that anonymous shell companies present current and ongoing problems to the law enforcement community


There is an aspect of this issue not readily apparent to those who do not investigate and prosecute crime for a living. Critics have charged that the law will not work because criminals will continue to use false names to hide their identities. This criticism misses the point. By requiring the inclusion of beneficial ownership information, all people seeking the benefits of corporate status from the states will be expected and required to provide accurate and truthful information. When a criminal uses a false name, or a straw man, or incorporates in the name of a family member — there are two significant results from the law enforcement perspective.
‚Ä¢ First, it provides evidence of what the criminal law refers to as “consciousness of guilt.” To put it another way — why would someone use false information? Would an innocent person do that? The answer is usually “no,” and this type of evidence is tremendously important in establishing a suspect’s criminal intent. Simply by requiring information regarding beneficial ownership, criminals would be forced to lie. And a lie goes a long way to establishing criminal intent.
• Second, and equally importantly, it will give law enforcement a criminal charge to bring against criminals who use false information to incorporate, and also against the agents who intentionally assist such criminals. If an incorporation agent sets up 100 shell companies for an identity theft ring that plans to steal and launder money, the incorporation agent may or may not be guilty as an accomplice to identity theft, larceny, and money laundering. But, the agent is certainly guilty of filing false incorporation documents with the state. The ability to punish the enablers and middle men will go far in cleaning up corruption.

I do like that. But this is also true, and why the US (and UK) must act:

I am hard-pressed to find a difference between his use of a Delaware corporation to open a Florida bank account and the use by a U.S. taxpayer of a Lichtenstein corporation to open a Swiss bank account. At the end of the day, both systems provide a security blanket of anonymity for those who seek it.

Go read the rest. I don’t agree with all of it, but the message is clear: the time has come for change. Let’s deliver it.

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