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September 23, 2017

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US Treasury calls on banks to aid fight against tax evasion

WASHINGTON -- A top U.S. Treasury official Thursday called on banks to find out who owns and benefits from their client companies, as an effort to crack down on tax evasion and money laundering grows.

David Cohen, Treasury under secretary for terrorism and financial intelligence, said terrorists and drug traffickers have been able to use front companies in the United States for their business, underscoring the need to expose the real owners of shell companies.

"All of our G-8 partners currently allow companies to be formed without ensuring that accurate beneficial ownership is available upon request to the competent regulatory and law enforcement authorities," Cohen said.

"It is time to put an end to the misuse of companies to evade taxes and advance criminal purposes," he said in an opinion article in the American Banker, a financial services trade publication.

"Companies formed in the United States appropriately enjoy an air of legitimacy that facilitates access to the global financial system," he said.

"The uncomfortable truth, however, is that some opaque U.S.-based companies have been used by drug cartels, international arms dealers, and corrupt officials to launder criminal proceeds."

Cohen called for a concerted effort from the U.S. and its partners around the world to make it more difficult for tax dodgers and criminals to hide behind shell companies.

At the Group of Eight summit last week in Northern Ireland, U.S. President Barack Obama and the leaders of the other seven major economies agreed to make it easier to exchange information between tax jurisdictions to fight tax evasion and money laundering.

Cohen said that means also tackling the problem on home soil.

"Law enforcement investigations are often stymied by the inability to obtain accurate beneficial ownership information on these companies," he said.

The Treasury official did not single out where such companies may be found in the country, but the eastern state of Delaware is widely accused of being a tax haven where incorporation is opaque and tax loopholes abound.

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