Washington, DC – U.S. Senator Sheldon Whitehouse (D-RI), co-chair of the Senate Caucus on International Narcotics Control, and Senator Chuck Grassley (R-IA), former co-chair of the Caucus, announced the release of a Government Accountability Office (GAO)report on the utility of collecting and accessing beneficial ownership information for law enforcement or Inspectors General investigations into fraud and misconduct in government programs.
“America is engaged in a clash of civilizations, between rule of law and international corruption and kleptocracy. Senator Grassley and I worked for years to pass the Corporate Transparency Act to support law enforcement’s ability to go after fraudsters, cartels, and criminals, who routinely use shell companies to stash dirty money in plain sight,” said Whitehouse. “This timely GAO report details how company ownership reporting betters our government’s approach to cracking down on fraudsters stealing government money and benefits at the expense of honest small businesses and taxpayers.”
“For decades, criminals, cartels and foreign terrorists have used shell companies to steal taxpayer dollars, launder their ill-gotten gains and endanger American lives with lethal drugs and violent crime. Last Congress, Senator Whitehouse and I uncovered just one aspect of these systemic weaknesses in lax FAA registration,” said Grassley. “In order to fight this pervasive form of fraud, and support President Trump’s agenda of cutting waste, fraud and abuse, Inspectors General must know who the true owners of U.S. corporations are. FinCEN ought to swiftly implement GAO’s recommendations and provide Inspectors General access to the company registry of beneficial owners.”
The GAO report found that some private companies competing for government contracts or applying for federal benefits perpetrated fraud against the government through obscuring their ownership information. The report recommends that the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) work with U.S. Inspectors General to facilitate the use of beneficial ownership information to bolster fraud detection, anti-corruption, and illicit finance risk.
From stealing $93 million from Medicare to transferring sensitive military technology to foreign countries, the report describes how shell company schemes result in significant financial losses and threaten our national security and public safety. About 85 percent of Inspectors General reported that beneficial ownership information could help prevent and investigate fraud in the government.
Whitehouse and Grassley requested the report as part of their ongoing bipartisan work to improve government accountability and transparency, combat illicit finance, and bolster the U.S.’s anti-corruption efforts.
Whitehouse and Grassley were the original sponsors of the TITLE Act, the precursor to the Corporate Transparency Act (CTA). The CTA was designed to play an important role in protecting national security and public safety by providing law enforcement and national security officials with the names of the true owners (“beneficial ownership information”) of U.S. corporations and other legal entities. This information facilitates the government’s efforts to combat terrorist financing, money laundering, sanctions evasion, proliferation financing, tax evasion, and other forms of illicit finance carried out through shell and front companies.
In March, Whitehouse and Grassley wrote to Treasury Secretary Scott Bessent requesting an explanation for the Treasury Department’s announcement that it intends to suspend enforcement of the bipartisan CTA for domestic companies. Treasury has since published an interim final rule, which would narrow the scope of companies subject to beneficial ownership reporting by more than 99 percent.
The CTA was the culmination of more than a decade of painstaking bipartisan congressional deliberation. The measure passed as part of the FY2021 National Defense Authorization Act and was supported by a wide range of stakeholders, including national security experts, law enforcement, anti-corruption groups, human rights organizations, faith communities, financial institutions, real estate organizations, the U.S. Chamber of Commerce, labor unions, and the first Trump Administration.
Read the full report here
