Why Isn’t Jim Comey Crusading against This Tool Used to Hide Terrorist Secrets?

Several times over the course of Jim Comey’s crusade against strong encryption, I have noted that, if Comey wants to eliminate the tools “bad guys” use to commit crimes, you might as well eliminate the corporation. After all, the corporate structure helped a bunch of banksters do trillions of dollars of damage to the US economy and effectively steal the homes from millions with near-impunity.

It’d be crazy to eliminate the corporation because it’s a tool “bad guys” sometimes use, but that’s the kind of crazy we see in the encryption debate.

Yesterday, Ron Wyden pointed to a more narrow example of the way “bad guys” abuse corporate structures to — among other things — commit terrorism: the shell corporation.

In a letter to Treasury Secretary Jack Lew, he laid out several cases where American shell companies had been used to launder money for crime — including terrorism, broadly defined.

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He then asked for answers about several issues. Summarizing:

  • The White House IRS-registration for beneficial information on corporations probably won’t work. Does Treasury have a better plan? Would the Senate and House proposals to have states or Treasury create such a registry provide the ability to track who really owns a corporation?
  • FinCen has proposed a rule that would not only be easily evaded, but might weaken the existing FATCA standard. Has anyone review this?
  • Does FinCen actually think its rule would identify the natural person behind shell companies?
  • Would requiring financial institutions to report balances held by foreigners help information sharing?

They’re good questions but point, generally, to something more telling. We’re not doing what we need to to prevent our own financial system from being used as a tool for terrorism. Unlike encryption, shell companies don’t have many real benefits to society. Worse, it sounds like Treasury is making the problem worse, not better.

Of course, the really powerful crooks have reasons to want to retain the status quo. And so FBI Director Jim Comey has launched no crusade about this much more obvious tool of crime.

Marcy has been blogging full time since 2007. She’s known for her live-blogging of the Scooter Libby trial, her discovery of the number of times Khalid Sheikh Mohammed was waterboarded, and generally for her weedy analysis of document dumps.

Marcy Wheeler is an independent journalist writing about national security and civil liberties. She writes as emptywheel at her eponymous blog, publishes at outlets including the Guardian, Salon, and the Progressive, and appears frequently on television and radio. She is the author of Anatomy of Deceit, a primer on the CIA leak investigation, and liveblogged the Scooter Libby trial.

Marcy has a PhD from the University of Michigan, where she researched the “feuilleton,” a short conversational newspaper form that has proven important in times of heightened censorship. Before and after her time in academics, Marcy provided documentation consulting for corporations in the auto, tech, and energy industries. She lives with her spouse and dog in Grand Rapids, MI.

11 replies
  1. blueba says:

    “It’d be crazy to eliminate the corporation because it’s a tool “bad guys” sometimes use, but that’s the kind of crazy we see in the encryption debate.”

    So then along with the Anti China racism of – it’s always the Chinese who hack and they never design anything but steal every design for the West – gee Chinese hover boards have wheels obviously they stole the design from the West – emptywheel now supports corporatism – because getting rid of them or it – “It’d be just crazy.”

  2. earlofhuntingdon says:

    Hmm. How about also looking through and taxing companies that engage in reverse mergers, where a principal purpose is evading US taxes, and where a company’s principal operations, markets, and decision making remain in the US. By all means reincorporate or effect a reverse merger with a pliable company in Ireland or Bermuda. But the US should still impose the same taxes if the top managers don’t live and make decisions in and have significant company operations in Ireland or Bermuda – apart from a post office box, pliant accountants and maybe an annual golfing junket. And while we’re at it, let’s quadruple the staff and budget of those working on transfer pricing. All those IP subsidiaries in Holland, Puerto Rico, Bermuda, and the Caribbean are just post office boxes and law firm addresses. For all intents and purposes, the IP is still developed and managed in higher tax cost jurisdictions because that’s where the infrastructure is to develop the IP and where the relevant managers and their bosses live and work.

  3. Ian says:

    WHY WASHINGTON & THE FBI DOESN’T CRUSADE AGAINST FOREIGNER’s USING ‘SHELL CORPORATIONS”:
    As both Bloomberg and also The Economist have reported in 2016 the Defenders of Foreigners using “shell corporations” are that most formidable of opponents— the 50 States of the Republic of the United States of America.
    .
    While the Rest-of-the-World has been going about in 2015 & 2016 trying to organize the Tax Authorities rights to more closely inspect the internal affairs of various “shell corporations & others” at least 3(three) States (Nevada,South Dakota& Wyoming) have actively sought foreigners to come & “invest” in the legal persons(which is what Corporations are).
    .
    The States of Nevada & Texas have long insisted that they will NOT sign “an Information Sharing Agreement” with the (Federal) IRS with both States taking care NOT to have a personal or corporate Income Tax to “share information” about.
    .
    The largest single legal center [by $ value of assets] on the planet for Tax AVOIDANCE [which is legal] & thus not Tax EVASION (which is NOT & is very naughty) has,for several decades now been the State of Delaware,USA.Several studies have been published of routinely successful efforts to register “The Islamic Republic of Iran’s Nuclear Bomb Building Company” as a Delaware company or equally obvious–& illegal–transactions .
    .
    And if you think Washington & its chosen instruments (the FBI & the US Judiciary) fight with Apple & the USA’s “High Tech” industries is a major fight—you wait until Washington tells the States how to organize THEIR taxation plans.

    • P J Evans says:

      In the case of South Dakota, I would expect the businesses to be banking or finance; that state is very friendly to that sector.

    • martin says:

      quote”Yesterday, Ron Wyden pointed to a more narrow example of the way “bad guys” abuse corporate structures to — among other things — commit terrorism: the shell corporation.”unquote

      Haha. If any there was one entity who is a posterchild for using a “shell corporation” to commit “terrorism”..it’s the USG via the 16th Amendment and the IRS. Try to trace it beyond Puerto Rico Trust #22. That animal is as difficult to track as a Tasmanian Tiger.

      quote”And if you think Washington & its chosen instruments (the FBI & the US Judiciary) fight with Apple & the USA’s “High Tech” industries is a major fight—you wait until Washington tells the States how to organize THEIR taxation plans.”unquote

      Cool. Where can I buy tickets? I want a ringside seat. I’ve been waiting for this fight for a long time. I’m hoping the States AG’s will introduce this into evidence:

      http://govinfo.library.unt.edu/taxreformpanel/comments/_files/033005MitchellPaul.pdf
      :)

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