[Joint House and Senate Hearing, 116 Congress]
[From the U.S. Government Publishing Office]



116th Congress }                            Printed for the use of the             
1st Session    }      Commission on Security and Cooperation in Europe                       

======================================================================

	         Curbing Corruption Through Corporate
	             Transparency and Collaboration:
	                 The British Model
	                     


[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]




                         May 29, 2019

                        Briefing of the
          Commission on Security and Cooperation in Europe
------------------------------------------------------------------------
                       Washington: 2019


             Commission on Security and Cooperation in Europe
                      234 Ford House Office Building
                           Washington, DC 20515
                              202-225-1901
                            [email protected]
                            http://www.csce.gov
                              @HelsinkiComm
                                                          
                                                          
  
                     Legislative Branch Commissioners
                     
     
              HOUSE				SENATE
ALCEE L.HASTINGS, Florida       	ROGER WICKER, Mississippi,
          Co-Chairman			  Chairman
JOE WILSON, South Carolina		BENJAMIN L. CARDIN. Maryland
ROBERT B. ADERHOLT, Alabama		JOHN BOOZMAN, Arkansas
EMANUEL CLEAVER II, Missouri		CORY GARDNER, Colorado
STEVE COHEN, Tennessee			MARCO RUBIO, Florida
BRIAN FITZPATRICK, Pennsylvania		JEANNE SHAHEEN, New Hampshire
RICHARD HUDSON, North Carolina		THOM TILLIS, North Carolina
GWEN MOORE, Wisconsin		        TOM UDALL, New Mexico
MARC VEASEY, Texas			SHELDON WHITEHOUSE, Rhode Island                   
          
                  Executive Branch Commissioners
               
               
                    DEPARTMENT OF STATE
                   DEPARTMENT OF DEFENSE
                  DEPARTMENT OF COMMERCE
                            [II]  
  
                
                                                                                              
    The Helsinki process, formally titled the Conference on Security 
and Cooperation in Europe, traces its origin to the signing of the 
Helsinki Final Act in Finland on August 1, 1975, by the leaders of 33 
European countries, the United States and Canada. As of January 1, 
1995, the Helsinki process was renamed the Organization for Security 
and Cooperation in Europe (OSCE). The membership of the OSCE has 
expanded to 56 participating States, reflecting the breakup of the 
Soviet Union, Czechoslovakia, and Yugoslavia.
    The OSCE Secretariat is in Vienna, Austria, where weekly meetings 
of the participating States' permanent representatives are held. In 
addition, specialized seminars and meetings are convened in various 
locations. Periodic consultations are held among Senior Officials, 
Ministers and Heads of State or Government.
    Although the OSCE continues to engage in standard setting in the 
fields of military security, economic and environmental cooperation, 
and human rights and humanitarian concerns, the Organization is 
primarily focused on initiatives designed to prevent, manage and 
resolve conflict within and among the participating States. The 
Organization deploys numerous missions and field activities located in 
Southeastern and Eastern Europe, the Caucasus, and Central Asia. The 
website of the OSCE is: .


    The Commission on Security and Cooperation in Europe, also known as 
the Helsinki Commission, is a U.S. Government agency created in 1976 to 
monitor and encourage compliance by the participating States with their 
OSCE commitments, with a particular emphasis on human rights.
    The Commission consists of nine members from the United States 
Senate, nine members from the House of Representatives, and one member 
each from the Departments of State, Defense and Commerce. The positions 
of Chair and Co-Chair rotate between the Senate and House every two 
years, when a new Congress convenes. A professional staff assists the 
Commissioners in their work.
    In fulfilling its mandate, the Commission gathers and disseminates 
relevant information to the U.S. Congress and the public by convening 
hearings, issuing reports that reflect the views of Members of the 
Commission and/or its staff, and providing details about the activities 
of the Helsinki process and developments in OSCE participating States.
    The Commission also contributes to the formulation and execution of 
U.S. policy regarding the OSCE, including through Member and staff 
participation on U.S. Delegations to OSCE meetings. Members of the 
Commission have regular contact with parliamentarians, government 
officials, representatives of non-governmental organizations, and 
private individuals from participating States. The website of the 
Commission is: .


Curbing Corruption Through Corporate Transparency and Collaboration: 
                         The British Model


                              May 29, 2019


                                  					Page
                              PARTICIPANTS

    Paul Massaro, Policy Advisor, Commission on Security and 
Cooperation in Europe......................................................1

    John Penrose, M.P., U.K. Prime Minister's Anti-Corruption Champion.....2

    Edward Kitt, Serious and Organized Crime Network Illicit Finance 
Policy Lead, British Embassy, Washington...................................6

    Mark Hays, Anti-Money Laundering Campaign Leader, Global Witness.......9

    Nate Sibley, Research Fellow, Kleptocracy Initiative, Hudson 
Institute.................................................................13


 
Curbing Corruption Through Corporate Transparency and Collaboration: 
                         The British Model


                              May 29, 2019




    The briefing was held at 9:00 a.m. in Room 2128, Rayburn House 
Office Building, Washington, DC, Paul Massaro, Policy Advisor, 
Commission on Security and Cooperation in Europe, presiding.
    Panelists present: Paul Massaro, Policy Advisor, Commission on 
Security and Cooperation in Europe; John Penrose, M.P., U.K. Prime 
Minister's Anti-Corruption Champion; Edward Kitt, Serious and Organized 
Crime Network Illicit Finance Policy Lead, British Embassy, Washington; 
Mark Hays, Anti-Money Laundering Campaign Leader, Global Witness; and 
Nate Sibley, Research Fellow, Kleptocracy Initiative, Hudson Institute.

    Mr. Massaro. All right, let's get this show on the road. So 
welcome, on behalf of our bipartisan and bicameral leadership, to this 
briefing of the Helsinki Commission.
    The Helsinki Commission is mandated to monitor compliance with 
international norms and standards in Europe. This includes norms in the 
military affairs, economic and environmental affairs, and human rights. 
I cover that second category. I do a lot of work in anticorruption in 
economics. And I am so honored and pleased to have with us today 
Minister John Penrose, the prime minister's anticorruption champion, 
all the way from the United Kingdom.
    I'd like to make a quick administrative announcement that we'll be 
ending at 10:15. Even if we have remaining questions, even if there are 
other burning concerns, we are ending sharp at 10:15. So just the 
briefest of opening remarks.
    Globalized corruption is one of the greatest threats facing the 
United States today. Authoritarian kleptocrats exploit the global 
financial system to hide their ill-gotten gains on our shores and those 
of our allies, providing protection for their stolen assets and a 
vector of influence into our political systems. Once established, these 
kleptocrats set about hollowing out the rule of law and our 
institutions to better serve their preferences.
    Much remains to be done to close these loopholes that enable this 
malign activity, but Congress is taking action and the United Kingdom 
is taking action. We're very excited to hear about what the United 
Kingdom is doing today.
    So with that I'll very shortly introduce Minister Penrose. As 
discussed, Minister Penrose is the U.K. prime minister's anticorruption 
champion. He's in charge of coordinating the U.K. response to 
corruption and implementing the U.K. anticorruption strategy. He's in 
charge of leading the U.K.'s push to strengthen the international 
response to corruption, which is what he's doing here and what he'll be 
doing in Canada right after this. And he's in charge of engaging with 
external stakeholders. So I guess that's us, right?
    So with that, please, Minister Penrose, take us away.
    P.M. Penrose. Thank you very much.
    Am I okay to stand up? Can everybody hear me if I stand up? Okay, I 
will do that, and that way I present a moving target.
    Mr. Massaro. Sorry, actually, I hate to----
    P.M. Penrose. No?
    Mr. Massaro. Yes, I hate to--I hate to interrupt. I think it's just 
for C-SPAN, I think we've got to speak in the mic, right?
    P.M. Penrose. Got to speak in the mic?
    Mr. Massaro. Yes. So can you turn it on and maybe stand up? Would 
that work?
    P.M. Penrose. Let's try that.
    Mr. Massaro. Talk.
    P.M. Penrose. Does that work? Are you getting enough sound on that? 
Should I keep talking and seeing? Is that enough?
    Staff. That's fine.
    P.M. Penrose. All right. We got it. Right, marvelous. So I can't 
present a moving target because I have to stand roughly here, but 
beyond that we're all set.
    Look, first, thank you very much for inviting me here this morning. 
Paul put it beautifully in his introduction just now. We share a common 
threat. And I'm here because I believe that we can also share a common 
response to that threat if we get our acts together and if we work 
together in yet another example of, you know, one of the oldest 
alliances on the planet, trying to make this work together.
    And the reason why we share the threat is very simply that we both, 
both our countries, play host to two of the largest financial centers 
on the planet. So whether it's the city of London, whether it's New 
York, whether or not it's incorporated companies in the State of 
Delaware, both of our countries are right up there in terms of the 
leadership and the market share which both countries command.
    What does that mean? Well, it means that, as Paul rightly said, 
there's an enormous amount of money--billions, trillions of dollars--
every single day sloshing through the city of London, sloshing through 
New York. And it only takes a tiny fraction of 1 percent of all that 
money, every day, to be dirty, to be the proceeds of crime, to be put 
there by organized criminals of one kind or another, whether they are 
drug kingpins, whether they are gun runners, whether they are foreign 
state actors trying to undermine our countries' democracies--a tiny 
amount of that and it creates an enormous reputational risk for our 
countries. Because be under no illusion, ladies and gentlemen: There is 
a reputational risk because these people want to create it for us. They 
want to do it to us.
    An awful lot of the criticism that you will hear from populist 
political movements around the globe, but also from people who want to 
undermine our rules-based system, is to say you cannot trust these 
guys. You cannot trust these men and women in Washington, you can't 
trust them in Westminster, in London, because the entire system is 
corrupt. The entire system is stacked against ordinary people. And if 
we let them, they will say, and therefore you don't have to abide by 
their rules, because their rules are skewed. Their rules are trying to 
hold down regular folk in the interests of an elite, and therefore the 
entire system needs to be changed and brought crashing down.
    And if, like me, you care about a rules-based system because you 
care about democracy, and you care about a capitalist democracy in 
particular, then that rules-based system really matters. And the 
argument to say this does not fly and it undermines--it is stacked 
against the ordinary man and woman in the street--that argument is 
incredibly corrosive. It is powerful and it is dangerous for all of us 
in both our countries.
    And that's why I'm here, is because I believe that if we work 
together as two of the leading countries with two of the leading 
financial centers on the planet, then we can fight against this. And 
with any luck, we can win.
    So what can we do? How can we fight against this?
    Well, there are lots of different things that need to be done, 
everything from better and stronger responses from law enforcement 
officials through to better exchange of financial information and 
sharing of intelligence between both investigative agencies here in the 
States and in the U.K., but across the Atlantic as well.
    All of those things matter. But they aren't enough on their own, 
because if you talk to law enforcement inspectors and investigators, 
they will say we--that all works for us up to a point, but sooner or 
later these drug kingpins, these gun runners, these organized 
criminals, they've got smart lawyers. They've got smart accountants. 
And they move money all the way around the world. They bounce money 
from one jurisdiction to another to another. And they have nested 
companies and trusts and foundations right the way around the world.
    And when we try to follow the money, we're fine until we get to a 
secrecy jurisdiction. And when we get to a secrecy jurisdiction, or at 
least one that just doesn't have the information in a convenient or 
accessible fashion, then we hit a brick wall, they say, and it's 
incredibly frustrating. We can get no further, and that means that we 
cannot bring the people to justice who richly deserve it. And it isn't 
just a question of putting people behind bars, although that's great, 
of course; it's also a question of going after the assets which have 
been bought with the dirty money.
    In my country, if you go to parts of London--equally in this 
country I'm told anecdotally--you go to some American cities and you 
find people who are swanning around living incredibly bling lifestyles, 
living in multi-zillion-dollar apartments which they have bought with 
dirty money. Sooner or later, people who are trying to do the right 
thing--people who are trying to live honest lives, people who are 
trying to follow the rules-based system which we have all created in 
order to ensure order and a sensible capitalist economy--sooner or 
later they're going to turn around and they're going to say, Do you 
know what? We're following these rules and these guys aren't, and who's 
doing better? Who is the one driving the Ferrari? Who's the one living 
in the marvelous, multi-zillion-dollar duplex apartment? Well, it's not 
me. It's that kleptocrat over there. It's that organized criminal over 
there. It's that gang boss over there. And we are going to start to 
lose credibility and we're going to start to lose legitimacy.
    And so, therefore, yes, put these people behind bars, but also go 
after their money. Go after their assets. Hit them where it hurts, in 
the pocketbook, because that matters enormously. And it shows people 
that we care and it shows people that we are serious.
    How do we do it? Well, as I said, all sorts of things we can do 
with better enforcement, better sharing of data and information. But 
ultimately, the way to ensure that you can follow the money is to make 
sure that the audit trail works. And the way you can do that--and one 
of the reasons why I'm here and why I'm off to the open-government 
conference in Ottawa very shortly, later on today--is to talk about 
something called beneficial ownership registers.
    I was saying last night at a very good event, it's a lousy piece of 
branding. We have to find a sexier name for this thing. But ultimately, 
it may be lousy branding, but it does something very, very important 
indeed. It establishes that audit trail in whichever country the drug 
kingpins try to move their money to. And it says, look, we don't need 
to know everybody who owns every single share in every single company 
in every single country. That's a level of intrusion into privacy that 
we don't need to have. But what we do need to know is who controls 
shell companies. For whose benefit are shell companies being run? And 
that means you need to know who the main directors are and who the 
controlling economic actors are. Who owns the majority shares in it? 
Don't need to know everybody else, but you do need to know who controls 
the shares in these companies, because if you have a shell company and 
it's moving money around on behalf of drug kingpins and everybody else, 
you need to be able to follow that cash. Otherwise you will never get 
to those assets, you will never be able to sequester them, you will 
never be able to get them back, and you will never be able to show the 
man and the woman in the street that the system is on their side and 
not on the side of the kleptocrats and the organized criminals.
    So what the U.K. is doing--and we would love it, ladies and 
gentlemen--the reason why I'm here is we would love it if you guys in 
the States would be part of this at some level. It would be 
transformational if the USA, with all its heft and its might and its 
global leadership, could be part of this.
    What we are trying to do in the U.K. is, we are trying to set up 
something which will effectively create a global norm to say let's all 
have some kind of a register about who owns and controls these 
companies. We're not asking for the moon. As I said, we don't need to 
know everybody who owns a piece of every company. We just need to know 
who the controlling minds and the controlling interests are.
    And if, at that point, that is available around the world, and 
certainly in major centers like the U.K. and in the USA, then we can 
start to make sure that that audit trail works and there will be no 
place to hide. We will be shining a spotlight into some of the murkiest 
corners of our planet's financial system, and they will not be able to 
go anywhere at all and hide their money anywhere. Sunlight is the best 
disinfectant, as the saying goes.
    And so that's what we're trying to do in the U.K. We would--we 
aren't perfect, incidentally. Nowhere on the planet is perfect yet. 
This is a fairly new political movement. It is something which has been 
developing over the last few years and has further to go. So the U.K., 
I'm not overclaiming for what we can do. We are perhaps in the vanguard 
here, but we are the tallest pygmy. That's all. There is an enormous 
amount more which we as a nation and we as a planet need to do in order 
to deal with what is effectively a global problem, as we all know.
    But we would love it if you guys could come with us and be part of 
this, because the people who will hate us if we do this will be the 
drug lords, will be the gun runners, will be the kleptocrats and the 
organized criminals. But the people who will love us, the people who 
will say this is a great thing--you are starting to drain the swamp, 
they will say--the people who will love all that will be the victims of 
corruption, the powerless, the people who are always on the receiving 
end of, be it grand corruption, be it petty corruption--it doesn't 
matter if someone is just asking for a small bribe, which may be 
utterly unaffordable for someone on a low wage, or someone who's the 
victim of a much larger institutionalized piece of dishonesty.
    But ultimately, they are the people who we will be serving. They 
are the people who will benefit from this kind of measure. And they are 
the people who won't just thank us in their thousands and thank us in 
their hundreds of thousands and thank us in their millions; the 
marvelous thing, ladies and gentlemen, is they will vote for us as 
well. And I don't care which side of the aisle you are on. That 
matters. It counts. And in any democracy, it is the route to having a 
political legacy which anybody can be proud of. So they may not quite 
erect statues in your name just yet, but it matters, and we can do well 
by doing good.
    So thank you very much for inviting me here. I hope we can persuade 
the USA and the U.K. to work together on this. This is something which 
is on the right side of history. It's on the right side of justice. And 
it is on the right side of everything which everybody who votes in the 
USA elections will surely, surely want.
    Thank you very much. [Applause.]
    Mr. Massaro. Well, thank you so very much, Minister Penrose, for 
those deeply meaningful remarks.
    I'd like now to invite up our panel. I'm very excited today to 
welcome this very distinguished panel. Their full bios are in the 
folders that you picked up at the entrance. So I'll give some short 
intros here.
    We'll first hear from Ed Kitt, to my right.
    [As an aside.] Move that if you like.
    Ed is the illicit finance lead at the British Embassy in Washington 
and the U.S. representative of the United Kingdom's new Serious and 
Organized Crime Network Initiative. He has held many different posts in 
the United Kingdom's National Crime Agency, and we're extremely 
grateful to have him with us here today.
    Mark Hays will then provide us his insights into the United 
Kingdom's policies. Mark is a senior advisor at Global Witness, a 
nonprofit that has done extraordinary work fighting globalized 
corruption around the world. Mark himself is an anti-money laundering 
guru who is an invaluable member of D.C.'s anticorruption community.
    And then, finally, we'll hear from Nate Sibley, a research fellow 
at Hudson Institute's Kleptocracy Initiative and himself a Brit, though 
not part of the U.K. Government. Nate has been published widely, and he 
and his organization have been a constant voice for curbing 
authoritarian capital.
    On a personal note, I'd like to mention that Nate was also one of 
the first conversations I had when I started this job in this city, and 
I will forever be grateful for his early insights.
    So, Ed, please, the floor is yours.
    Mr. Kitt. Thank you, Paul. I just want to start by saying good 
morning, everyone. I'd like to express our sincere thanks to the 
Helsinki Commission for hosting this important event today.
    Part of my segment of talking will very much touch on collaboration 
and dialog as crucial tools to tackling illicit finance and 
anticorruption issues. And it's really events like these that are 
useful in driving this issue forward, so thank you very much for 
hosting us.
    So I'm going to talk briefly and pick up on some of the comments 
made by the minister on beneficial ownership in the U.K. and what we've 
done so far. And then I'd like to talk a little bit more around the 
U.K.'s Joint Money Laundering Intelligence Task Force, or the JMLIT, 
which has been a really great initiative in the U.K. for enhancing 
engagement with public- and private-sector partners. The intelligence 
exchange which the JMLIT has facilitated has been replicated globally 
and it's a model that we're very proud of. So I'd like to talk a little 
bit further around that.
    The two issues of beneficial ownership and JMLIT are intertwined, 
and I will touch on why so. But it's fascinating, the interaction with 
law enforcement and the banking community as being pivotal to 
anticorruption. And both those issues facilitate such measures.
    So let me talk briefly about beneficial ownership in the U.K. The 
U.K. was the first G-20 country to adopt a public beneficial ownership 
register in January 2016. The U.K.'s beneficial ownership register has 
been absolutely fundamental--and I can't emphasize this point enough--
it's been fundamental in increasing collaboration between law 
enforcement and private-sector bodies. It's evident by reports from the 
Global Witness report that Mark will, I'm sure, touch on later. The 
suspicious-activity reporting has increased significantly by Companies 
House from 426 reports--I'm quoting directly from Mark's brilliant 
report--but 426 reports in 2016 to 2,264 reports in 2017. So that just 
shows the real increase in reporting that we're getting because of this 
system. Indeed, requests to Companies House, the centralized company 
that--or body that administers the register, has received--it went from 
11 requests per month to 125 requests per month from law enforcement. 
So we're seeing a marked increase in the engagement between law 
enforcement in their investigations and how they're looking to find out 
who is behind these companies that were previously anonymous shell 
companies responsible for laundering significant proceeds of crime.
    I would just say that, speaking purely in a U.K. context now, we 
have an open register in the U.K. And I'm not going to sit here before 
you this morning--and the minister alluded to this in his remarks--I'm 
not going to sit here and pretend that our register is the finished 
article. It's not. It's not perfect, but it's a significant step. It's 
a significant step in identifying the individuals behind companies who 
are laundering significant proceeds of criminality. We've still got a 
long ways to go in addressing issues such as data verification and 
compliance. But again, speaking in a purely U.K. context, the fact that 
it's a public register allows us to be open to levels of scrutiny, for 
people to have a look and see what data our register has, what we hold, 
and mark ways for improvement. And that's something that we're really 
proud of, to be able to have that register, an open register, and be 
able to be open to those levels of scrutiny.
    And what I would say--and I really want to emphasize this point--is 
that what we've done is a start. We're on a journey, a corporate 
transparency journey. The data-verification issues and compliance 
issues that we have, and which I'm sure Mark will touch on in his 
remarks, they are issues that we recognize. But I posit this theory, 
which is that the law enforcement have a selector. But I'm not for a 
moment excusing inaccurate data in our register, but it gives--
regardless of the accuracy of data, it gives law enforcement a start. 
It gives them a selector to work off, be that a name, be that an 
address. It gives them something, as opposed to nothing. And that's got 
to be worth something. So providing law enforcement with that initial 
piece of data, initial selector, that's something that our register 
works upon.
    There are a number of measures in place for us to address our data 
verification and compliance issues. It will be a legal requirement for 
businesses to report inaccuracies by January 2020. We're also looking 
to see how we can actually improve the system itself, the Companies 
House system itself, making it easier for people to search on different 
companies. And we're also embarking on a work stream that will allow us 
to screen the data on our beneficial ownership register against our 
sanctions list. So that cross match of data is going to be absolutely 
fundamental in advancing our capabilities around beneficial ownership. 
And it's, you know, really important to emphasize that we recognize the 
challenges we face and we're on a journey to address them.
    So that's sort of the remarks I wanted to make specifically around 
beneficial ownership, and I'm sure Nate and Mark will have more to add.
    What I did want to touch on, and what I know that Paul's very keen 
on looking at, is the Joint Money Laundering Intelligence Task Force, 
or the JMLIT, which is a U.K. model. It was developed in 2015 and it 
has evolved since then. But considerable progress has been made in 
bringing financial institutions together with law enforcement to share 
data and to advance investigations. And it's a theme throughout my 
segment, hopefully, but the genuine partnership and collaboration are 
really at the heart of the JMLIT, and that's what makes it so 
successful.
    So there are in excess of 30 financial institutions in the U.K. who 
are signed up to the JMLIT, and I guess it's easiest to think about it 
in two segments. So you've got the operations group and you've got the 
expert working group.
    I'll address the operations group first, which is involved in the 
sharing of tactical financial intelligence. So groups are divided into 
different areas. We have groups for organized immigration crime, 
bribery and corruption, trade-based money laundering, terrorist 
financing, future threats, and money laundering through markets. And 
these groups convene on a weekly basis. And how that structure looks in 
practice is banks sat round the table, and each week at the operations 
group an officer will come and bring their investigation, and the banks 
will either in the room or in slower time go away and search their data 
bases to see what selectors they have that could assist the 
investigations of the officer. That information is then provided back 
to the case officer via the National Crime Agency, the NCA.
    It's important to sort of recognize the legislation under which the 
JMLIT operates. It operates under a piece of legislation in the U.K. 
called the Crime and Courts Act, specifically Section 7 of the Crime 
and Courts Act, and the information provided is for intelligence 
purposes only. It cannot be used evidentially. So should useful data 
come back, the case officer would then have to either parallel that 
information or apply for more formal proceedings via a production 
order. But it's a gateway to be able to identify the extent of an 
illicit finance network, and it's really effective in seeing where 
funds are being moved through. So that's a really sort of key part of 
the JMLIT model.
    The second strand which I referred to operates more on a strategic 
level, and it comes under the expert working group. And this is, again, 
a similar format. The banks are sat round the table and also law 
enforcement agencies, the National Crime Agency predominantly, and 
strategic threats and trends identified, emerging threats and trends 
which are being seen by the banks, emerging threats and trends which 
are being seen by law enforcement. All these sort of emerging threats 
are discussed and often formulate into industry-wide alerts which go 
out to the banking sector and will allow them to look across their data 
bases and identify any patterns or trends which replicate what is being 
seen in that forum.
    I think I certainly speak for the U.K. when I say that one 
challenge we have is feedback to financial institutions on suspicious 
activity reports [SARs]. Often, financial institutions will submit 
suspicious activity reports and they don't hear any feedback as to 
actually what was the utility of that, how useful was that. The expert 
working group for the JMLIT really sort of assists that process because 
it allows the financial institutions to be able to get a sense of what 
law enforcement are seeing, what trends they're seeing and what will be 
most useful. So, again, it comes back to dialog being--dialog and 
collaboration being at the absolute center of how we operate in terms 
of addressing illicit finance issues and anticorruption issues.
    A couple of results. It's all very well sort of sitting here 
listing to you what the JMLIT does, but what does it deliver? I think 
that's probably what we all want to know. So it's generated 400 live 
tactical cases. It's generated in excess of 1,600 suspicious activity 
reports. Often, as I was mentioning, when an individual has an 
investigation and they bring it to the JMLIT, they will not necessarily 
be aware of the extent of the financial footprint of the people they're 
investigating. The JMLIT's identified 3,000 accounts that were 
previously unknown to law enforcement. So if that's not value add, then 
I'm not sure what is. And 97 arrests have been assisted by JMLIT 
inquiries. So it's not just a talking shop; it delivers. And the 
results are tangible. And finally, it's been--it's assisted in 
identifying and restraining in excess of 39 million. So the 
results are palpable.
    So what I'll conclude with is saying that public-private 
partnerships and international engagement are at the heart of how the 
U.K. wishes to proceed in tackling illicit finances and anticorruption 
issues. Both beneficial ownership cultivates a system of feedback and 
it cultivates a system of assisting law enforcement with our 
investigations. And equally, the JMLIT also assists in private-sector 
and law enforcement collaboration. And it's only from learning from 
each other, from the U.K. learning from the U.S. and vice versa--it's 
only from learning from each other that we can look to tackle the 
illicit finance flows that fuel organized crime groups and undermine 
both of our economies.
    Thank you. [Applause.]
    Mr. Massaro. Well, thank you so much, Ed. And I really appreciate 
the deep dive into JMLIT. You know, in sort of this high-tech age when 
we can't stop talking about blockchain and AI and big data and stuff 
like that, it's nice to think that, you know, in the U.K., which has 
got kind of the banks and the agents just sort of sitting in the same 
room, face to face, talking about the issues they're seeing, which is 
just this incredibly simple yet highly effective and highly efficient 
response to the issues we're seeing today.
    So, with that, turning back to corporate transparency, let me hand 
it off to Mark Hays of Global Witness.
    Mr. Hays. Sure. Thank you, Paul. And I wanted to thank the members 
and the staff of the Helsinki Commission for convening this briefing 
today. I'm very glad to have the chance to join Minister Penrose, Mr. 
Kitt, my colleague Nate Sibley to share some thoughts on these critical 
issues.
    For those who don't know me and Global Witness, my name is Mark 
Hays and I direct our anti-money laundering advocacy efforts, which 
have focused primarily on a range of financial transparency measures to 
be adopted in the U.K., the EU, and the U.S., given these countries' 
outsized role in shaping and influence global--shaping and influencing 
global finance, including illicit finance.
    And Global Witness, we are an international investigative advocacy 
organization, and for 25 years we've sought to expose and break the 
links between corruption, natural resources, and conflict. And we use 
the findings from our investigations to advocate for transparency and 
accountability measures that seek to hold corrupt actors accountable, 
and also provide tools for governments and civil society to ensure such 
resources are managed equitably and sustainably for future generations.
    Now, our investigations have exposed grand corruption cases in 
dozens of countries around the world, from Myanmar to Cambodia, Angola 
to Nigeria, Eastern Europe and Eurasia, and more. These investigations 
have demonstrated that corruption is far from a challenge that 
countries outside of Europe and the U.S. face alone. Indeed, rather, it 
shows corruption as a global phenomenon involving players and that 
works throughout the Global North and the Global South, which means the 
scope of our response must be global as well.
    Our anti-money laundering campaign work was established on the 
basis that in nearly all of our investigations across a wide range of 
sectors the role that the global financial system played in 
facilitating those cases was quite evident. And our work is really 
focused on three pillars of inquiry: one, looking at the role that 
financial institutions themselves play in enabling this kind of 
activity, wittingly or unwittingly; the role that financial 
intermediaries play in doing the same; and the role that anonymous 
companies or other opaque corporate structures play in facilitating the 
movement of suspicious proceeds with ease, speed, and secrecy.
    I will assume that a number of folks here already have heard from 
our colleagues about the importance of dealing with anonymous companies 
and not explain that, but I should say simply that we're not alone in 
considering this a problem. In nearly all of our cases, legal entities 
whose ownership is hidden have played a role in our cases. This is 
borne out in the larger world. But I'm happy to speak more to that if 
people would like more data.
    My comments today are largely going to focus on the U.K.'s role in 
establishing the world's first open public registry of beneficial 
ownership data for corporate entities, and that's for really one simple 
reason. The U.S. and the U.K. both have areas where they have 
demonstrated leadership on anti-money laundering policies and 
protocols, as well as areas where they have or are falling short. But 
since we're here in the U.S., it's important understanding the U.S. 
context. The U.S. has gotten high marks in a variety of areas dealing 
with anti-money laundering but has been criticized in two separate 
evaluations, in 2006 and 2016, for failing to address critical gaps in 
our infrastructure, including beneficial ownership reporting. And this 
gap takes on an outside significance not only because of our role in 
combating anti-money laundering, but because we are actually one of the 
largest incorporators of legal entities in the world. By one count, 
according to the World Bank, we create 10 times more legal entities 
than all 41 tax-haven jurisdictions combined. So simply put, if the 
U.S. wants to continue to show this leadership we need to match the 
U.K.'s efforts in establishing some modicum of disclosure for 
beneficial ownership transparency for companies. If we don't, not only 
will we be failing to live up to this leadership test, but we will put 
ourselves at greater risk for becoming a haven for bad actors and their 
ill-gotten gains.
    And so, in our view, the best lesson we could take from today is to 
explore some of the lessons learned from the U.K.'s experience on this 
journey of corporate transparency that my colleagues have alluded to--
in terms of the value of the data, some pitfalls to avoid in terms of 
setting up registers; and what it actually means to do this in the real 
world, what is the experience of the companies attempting to comply 
with these new rules and regulations. And as Mr. Kitt alluded to, the 
U.K.'s register is public and open. And that means not only can 
register users access individual data records, but one can take the 
aggregate data itself and conduct greater analysis. And this is one of 
the fundamental promises of open data, that a variety of stakeholders 
can conduct data analysis that drive both innovation and impact.
    So, 2 years after the onset of the registry, Global Witness decided 
to put that promise to the test. So we worked with a key collaborator, 
an organization called DataKind, and explored 10 million corporate 
records from Companies House. It was the largest-ever data analysis of 
that register. We used cloud computing to analyze and combine the data 
with other datasets and ran scripts to identify mistakes and suspicious 
filings. And we published our initial results in July 2018 and repeated 
that analysis in an abbreviated fashion earlier this year.
    That report, entitled ``The Companies We Keep,'' is available 
online. \1\ Be happy to share that with folks attending here today. I 
want to hit a few highlights. And I think if--there's just a few 
lessons to take away from that analysis, as I attempt not to lose you 
in a bunch of numbers and figures. The few takeaways that we found are 
really compelling in terms of how manageable and reasonable this 
process actually could or can be for companies in the U.S.
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\1\  https://www.globalwitness.org/en/campaigns/corruption-and-money-
laundering/anonymous-company-owners/companies-we-keep/
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    So the first point is that 2 or 3 years on it appears that, with 
some notable exceptions, compliance appears to be easily managed by the 
large majority of companies complying with the new U.K. register. The 
majority of companies report little difficulty in complying with the 
U.K. register's reporting requirements. And the data suggests and gives 
life to something understood by many but rarely quantified, that the 
overwhelming majority of U.K. companies have ownership structures that 
involve very few people, which means it appears that most businesses 
know who their owners are.
    Second, there is demand for this data. Mr. Kitt alluded to this in 
terms of the increase in law enforcement requests for information and 
reporting on suspicious activity reports. But the use of the U.K.'s 
existing company register, when coupled with beneficial ownership 
reporting, has increased dramatically. Use by law enforcement has been 
a key part of this demand, but the data suggest that other actors, 
including the private sector, appear to have been part of this 
increase. Which suggests that there are other use cases for beneficial 
ownership data beyond law enforcement, that businesses might actually 
benefit from this disclosure.
    Third, it appears that disclosure may help, at least in part, with 
deterrence. Even though as Mr. Kitt alluded to there are important 
improvements to make in terms of validating the data in the register 
and verifying it, already the reporting requirements alone appear to 
have had some measurable impact on the degree to which certain U.K. 
legal entities may or may not be being used exploiting secrecy for 
nefarious purposes.
    And then, last, disclosure appears to help drive data quality. So 
public disclosure of the data, while not in consideration at the moment 
in the U.S., nonetheless provides some critical insights into the 
quality and value of the beneficial ownership data itself. And just 
that alone has allowed NGOs like Global Witness, dialoguing with U.K. 
agencies like Companies House and others, to drive important 
improvements in the register's collection, management, and analysis of 
that data in just three short years, even in spite of modest resources 
on our end and on the government's end.
    So I'll touch on a few really interesting data points that give a 
little bit of meat on the bones to what I just described. First, in the 
area of compliance, there are--there are nearly 4.9 million legal 
entities that have filed a PSC [Person of Significant Control] report 
or statement since the onset of the register. Of those, a smaller 
subset--around 3.3 to 3.5 million--have actually reported they have an 
owner. The U.K. reporting requirements have thresholds where if you 
have ownership stakes that are less than a certain threshold or don't 
qualify certain criteria, you do not have to report an owner. And there 
are issues with that, but that is--that is the way this is sort of 
structured.
    Given the number of reporting entities, the average number of 
company owners reported for companies in the U.K. was 1.16. That is the 
average number. So again, most companies are reporting a small number 
of owners.
    It gets deeper. The mode, or most common number of owners, was one.
    And last, the distribution of ownership is also quite telling. Of 
the several million companies reporting their owners to the register, 
99 percent of them declared that they had six owners or less, with well 
over half of that number reporting two owners or fewer.
    So the number of companies reporting ownership structures with more 
than six owners under the current reporting regime is so few we are 
unable to chart it on a graph. And in the U.S. context, this is 
critical because one of the key policy points is a discussion around 
whether or not providing a few small pieces of information about 
yourself, your company, and your identity will be onerous for most 
companies. Here we have the first public register online that exists 
dealing with a large dataset of companies that operate under similar 
conditions to the U.S.; it appears that most of those companies do not 
have a problem complying with those requirements.
    So in terms of demand, Mr. Kitt has already spoken and discussed 
some of the really promising data around law enforcement access. I want 
to touch on overall access. The U.K. company register was accessed more 
than 2 billion times in 2017, and that's a huge increase from when 
paywalls which restricted access were in place several years back--6 
million requests a few years before the register came online. There are 
an average of half-a-million searches a month for beneficial ownership 
information alone in April 2018, and overall that data base was 
accessed 5 million times in 2017. So we're not Companies House. They 
can probably tell you more about who's using that and why. But again, 
this suggests that when you make this data available, easily 
accessible, the value expands beyond law enforcement to helping promote 
a higher standard of doing business in many sectors.
    Beneficial ownership disclosure deterring suspicious activity, this 
is probably one of the most interesting findings we found. In the U.K. 
there are legal entities entitled Scottish limited partnerships [SLPs]. 
They are a relatively recent legal creation, and for a number of 
reasons quickly became a legal entity that was known for, 
unfortunately, providing a degree of secrecy that in some cases 
facilitated nefarious activities. Folks may have heard about the 
various, quote, ``laundromat scandals'' coming out of Europe where 
billions of dollars are being moved through the European financial 
system via, in some cases, U.K.-based entities. There was a dramatic 
and concerning increase in incorporation of SLPs over the past decade 
until SLPs were required to disclose their owners in 2017. And shortly 
after that disclosure level, we saw incorporation levels of SLPs 
plummet by 80 percent in the last quarter of 2017 from their peak in 
2015. And our most recent analysis confirms that these levels have 
remained historically low.
    Now, does that in and of itself suggest that overnight criminals 
can no longer launder money? That's not the case. But what it does 
suggest is even a modicum of sunlight has changed the cost-benefit 
ratio for those actors, encouraging to go elsewhere. And while at the 
end of the day we want to detect and catch these criminals, at the very 
least both here in the U.S. and in the U.K. we want to make sure that 
our systems are not complicit in facilitating those problems.
    So there's a lot more to disclose here and I sense that my time is 
drawing short. I just want to speak to disclosure and then looking 
ahead.
    I mentioned disclosure as helping drive data quality. There are a 
couple interesting facts there. There were over 50,000 reports from the 
public regarding likely mistakes in the register and discrepancies 
between July 2017 and 2018. Again, if one of the major concerns about 
implementing these registers is cost, there are plenty of people in the 
government and in the NGO sector and law firms who can tell you that 
the cost is both reasonable and has a massive benefit or a return on 
investment, as it were. But take this data point as one element of 
proof that suggests that if a register is constructed correctly the 
data form in itself will enable low-cost reporting to improve the 
quality itself. And that's true in a public context; it may also be 
true in a limited fashion in a private context, because in the U.S. you 
will have agencies dealing with this data. The better that data is 
structured, the easier it will be to manage it.
    But additionally, as I mentioned, our analysis, done at a very low 
cost--just a few staff, a couple of smart computer geeks--found a 
number of discrepancies in the data quality that were easily fixable 
simply by changing the user interface of the register itself. So, for 
example, there were owners reporting incorrect or nonexistent 
nationalities like Cornish or ``Bridddish'' with three Ds. [Laughter.] 
There were owners reporting their ages of 2 years old or 899. Changing 
the date ranges and changing the fields can make that easily done. So 
this is an example of how structured data, appropriately organized, can 
help make improvements quickly and cheaply.
    So I'll say two things and then wrap up and let my colleague Nate 
share his broader thoughts. There are areas of improvement for the 
register. Mr. Kidd mentioned verification. That's an incredibly 
important aspects of the register. Companies House needs both the 
mandate and the resolve and the resources to increase compliance and 
enforcement. That involves enhanced capacity and resources.
    There are a number of what I would describe as loopholes in the 
register's reporting that allow circular ownership structures, allow 
companies to claim owners in so-called secrecy jurisdictions. Some of 
this will help when some of the U.K.'s overseas territories begin 
establishing their own public registers. But until then, the onus is 
both on the agencies of the U.K. Government and us to ensure that we 
have all the tools we need to enforce the compliance of the register.
    So there remains a great deal to be done. And in the U.K. policy 
arena, Global Witness has not shied away from criticizing the U.K. 
Government when we believe their efforts, however well-intentioned, 
have fallen short of what's needed to combat the harm posed by illicit 
finance with vigor and scale, given the scope of this problem. However, 
as I said, context matters. And in the U.K. the conversation has moved 
well beyond making the case for beneficial ownership registers and is 
now grappling with how to make them work and how to propagate those 
learnings to establish a global norm. Beneficial ownership transparency 
will not alone solve money laundering, but a stronger, more effective 
AML regime cannot be built without it.
    In contrast, in the U.S., despite overwhelming support from a wide 
and diverse set of stakeholders, efforts to advance beneficial 
ownership transparency has failed to advance in Congress for nearly a 
decade. So we remain cautiously optimistic that 2019 will be the year 
when such legislation does advance. That will be even more true if 
leaders in Congress recognize today and capitalize on the leadership 
that the U.K. has shown in this space and can seek out their 
partnership to join them in this effort.
    Thank you. [Applause.]
    Mr. Massaro. Well, thank you very much, Mark, for those fantastic 
data points and the incredible work of your organization, really mining 
this data and getting those conclusions out of it.
    So let's move on to our final speaker, Nate Sibley of Hudson 
Institute's Kleptocracy Initiative.
    Thank you.
    Mr. Sibley. Hello. Well, first, thanks, Paul, for inviting me here 
today. It's a big honor to speak in Congress for the first time, but 
it's also great to be able to acknowledge the leadership the Helsinki 
Commission has shown on the issue that I work on, which is 
transnational corruption and kleptocracy. And Paul has been very much a 
leading voice on that in Congress, so thank you so much for that. And 
they've held many hearings and briefings on this in the past, so if 
you're interested it's worth going back and looking at some of those, I 
would say.
    And second, just to clarify, yes, I am British, but I live and work 
here in Washington, D.C. and I'm not affiliated with the other Brits on 
the panel. I work at Hudson Institute, which is a think tank here in 
D.C., and I work on a project called the Kleptocracy Initiative. And 
what we look at is the way that authoritarian regimes abuse the global 
financial system and particularly the U.S. financial system to export 
crime and corruption around the world, and how they sort of use that 
process in furtherance of their geopolitical aims, and also to 
undermine sort of U.S. national security and that of our democratic 
allies, obviously first and foremost including the U.K.
    So I just wanted to start on a slightly different tack. I know the 
primary focus today is on the public-private partnerships, the JMLIT 
and the corporate beneficial ownership data. But there's another really 
great facet to anticorruption work in the U.K., which is the scale and 
the scope of the anti-money laundering regime. So maybe I'm just going 
to spend a brief second on this.
    So in the U.S. we have the Bank Secrecy Act, which is the 
legislation that governs anti-money laundering systems in the U.S., and 
it applies very specifically to financial institutions as the name 
suggests. In the U.K. and indeed now across the EU, in recognition of 
the fact that the financial sector is not the only sector at risk of 
money laundering problems, they have expanded the AML--the anti-money 
laundering regime--to include not only banks, but also lawyers, 
accountants, realtors. Real estate is, obviously, one of the favored 
places you want your dirty money to end up because it's very discreet 
and it's high value. So I think if you--I know predominantly these 
are--you're all staffers in here. I know lots of your bosses are 
interested in working this area. I think that's an area that you could 
well look into more if you're interested in doing something really 
different.
    And so I just wanted to follow particularly what Ed was saying on 
the public-private partnership arrangements. So I'm going to talk 
primarily--rather strangely, again, because I'm British, but I live and 
work here--so I'm going to talk about what's going on in the U.S. and 
why it's so important perhaps even above and beyond the U.K. to take 
action on these issues.
    So first, with the JMLIT public-private partnership, there is 
already an equivalent of the JMLIT in the U.S. It's called FinCEN 
Exchange, so it's administered by the Treasury's Financial Crimes 
Enforcement Network, which is the U.S.'s financial intelligence unit. 
The difference is it's--it was introduced, I imagine, in response and 
appreciation of the U.K.'s system about a year or two after it, I 
think. However, I'll be perfectly honest, I've had no personal 
interaction with this group, but from what I hear anecdotally it meets 
far, far, far less than the U.K. JMLIT does, and I've even heard it 
described offline as a--by someone working in the financial sector as a 
sort of glorified mailing list.
    So I think, like, the framework is there, and I think it's a really 
good idea. I mean, it was a crucial idea, as Ed was outlining. And this 
is something that would be really easy to build on and beef up in the 
U.S. context, and it's something that you get a lot of feedback from 
financial institutions all the time: We're sending all these SARs. You 
know, the Treasury receives 55,000 suspicious activity reports a day, 
and the banks aren't really sure always what's useful, what could they 
improve on. So I think that's an absolutely critical area. And I think 
the lesson to draw from the U.K. experience was everything Ed was 
saying, frankly, like, about the outcomes they've had from that. 
There's clearly a force multiplier to working closer with the people 
who are the first line of defense when it comes to anti-money 
laundering, the banks.
    This has come up, actually, in legislation that's in the House 
Financial Services Committee at the moment called the COUNTER Act. It 
would--all it really does, though, is to sort of formalize FinCEN 
Exchange. And it has a few other provisions, as well, not related to 
Exchange that would improve public-private partnerships. For example, 
establishing sort of innovation labs within FinCEN. Because one of the 
problems that banks have at the moment is they run a risk when they 
introduce new anti-money laundering systems that if it doesn't work and 
they accidentally let through, you know, a billion dollars that's being 
laundered through from Russia, the Treasury will come down hard on them 
and say, well, this was a failure; we're going to fine you. And so what 
the Treasury's being very good about at the moment is saying we'll give 
you a little bit of leeway if you're experimenting in good faith with 
good system. We will, you know, we'll work with you on that.
    And I think that--I don't support particular legislation. So, 
Hudson Institute, we never support specific legislation. But I think 
the ideas in this act are really like the first step in the right 
direction.
    And just one final point on the JMLIT. It works--[inaudible]. I'm 
aware that the--and it's not my area of expertise, so please don't ask 
me in the questions--but the sort of privacy and data laws are a bit 
stricter about what you can share between institutions, between law 
enforcement in the U.S. So that is an issue that would have to be 
worked around or legislated forward, but I think the benefits that Ed 
was talking about just so clearly outweigh the--you know, the results 
of doing nothing more than exists at the moment. So those are my 
thoughts on the public-private partnership.
    Moving on to the sort of bigger issue that's very much live on the 
Hill at the moment, is the sort of--is the corporate beneficial 
ownership issue. This is, obviously, like, a huge conversation. I 
know--recognize many familiar faces I've spoken to in briefings and 
things about this of ours. So there is also a legislative vehicle for 
that. It's called the Corporate--well, I know that many offices are 
working on this issue with potential legislation. At the House 
Financial Services Committee there's a bill at the moment called--
introduced by Representative Carolyn Maloney called the Corporate 
Transparency Act, and what that would do would create a private 
beneficial ownership register. So not a public one like they have in 
the U.K., but one that was accessible only to law enforcement, under 
very strict and controlled circumstances, it has to be said. I was 
surprised at how strict they were when I--[laughs]--when I learned 
about them.
    And it would also--I mean, the further complication you have in the 
U.S. is the Federal system. In the U.K. it's pretty easy; if Parliament 
wants to introduce a corporate beneficial ownership register, it just 
tells the relevant department to create one. But in the U.S., of 
course, you incorporate, you know, companies at the State level, so 
that adds a--so who should run the register, you know, these questions 
have been threshed out. I think there's a general agreement, you know, 
it would--it makes sense to locate it at FinCEN, at the financial 
intelligence unit. If this information is being gathered for use--for 
national security purposes, for law enforcement purposes, it makes 
sense to send that information straight to where it will be most 
helpful.
    And there's a--you know, as Mark alluded to, there's a growing and 
absolutely huge coalition behind this now outside of Congress: all the 
big banks, national security community, many think--my own think tank--
my project has supported this. We don't take institutional positions as 
a think tank, but my project has supported this for, you know--ever 
since we started as probably our major policy recommendation. 
Obviously, the entire law enforcement community is behind it, faith 
groups, all sorts. And I'll allude a bit more to why in a second.
    But also, importantly, the administration has also signaled its 
interest in advancing this as well. Steven Mnuchin has indicated as 
such in this room. The Treasury, the DOJ, the FBI all testified--I 
think it was last week in the Senate they all spoke of the overwhelming 
need for their investigators to have access to corporate beneficial 
ownership information in order to keep Americans safe.
    And so I think there is a real movement. Now there's a real moment 
where this could happen in the U.S. I'm very personally hopeful that it 
will.
    But as we're looking at the comparisons with the U.K. today I think 
we need to bear in mind there's sometimes a bit of a tendency in the 
U.S. to--and other stuff to work through it as well, that we sort of 
start from scratch on this big idea. The U.K. has really done a lot of 
the legwork, the hard work of gathering the evidence of the benefits 
and the drawbacks of a corporate beneficial ownership register for us, 
right? Like, all--you know, the minister and Ed and Mark all described 
the--you know, the great benefits law enforcement has reaped from this. 
But also, like, whether there's room for improvement, some of the 
problems that you can encounter when you're setting one of these up--
like, just stuff like the data entry fields, which you wouldn't 
necessarily think of.
    So I do encourage if you're looking at this and you're a staffer, 
then please do reach out to them, reach out to me, or whatever, and 
there's a wealth of information already out there about how this can 
work, the benefits it can give.
    But I think even more so than the U.K. there is a an overwhelming 
case. The U.S. has specific strengths and vulnerabilities, which means 
that it's just so much more important for it to be the next country to 
introduce a beneficial ownership register.
    So first, I think just domestically--I mean, well, it's great if 
you're a money launderer if you can get your stolen renminbi, rials, 
whatever they are, if you want to get out of that into a safe, stable 
currency and so on, which, you know, observes the rule of law. Now, 
it's wonderful if you can get that into pounds; it's even better, to my 
mind, if you can get it into dollars, which is the global currency, 
right? So when you add that to the U.S.'s rule of law, you've got the 
world currency, the most stable economy in the world, you guys are 
becoming a magnet for dirty money.
    And as the EU and the U.K. and other partners--Canada, for example, 
is now taking action on this--as they begin to tighten up their own 
systems, the bad guys are going to start looking for other places to 
launder their money into. And I think if I was a bad guy the U.S. would 
now be moving very, very swiftly up to the top of my list. I think the 
only reason it's not perhaps at the top of the list at the moment is 
the sheer aggression of U.S. law enforcement in pursuing criminals 
around the world. They're the only country which has--the only agencies 
which have the reach and the determination to hunt bad actors through 
the global financial system. But imagine how much more powerful they'd 
be if they did have access to this information.
    And so there's a couple of specific issues in the U.S. which the 
U.K. doesn't have, which I'm thinking particularly of the opioid crisis 
and sort of human trafficking that goes on down by the border. You 
know, that's all very well to try and stop those specific activities, 
but people don't do--criminals don't do those for fun; they do them for 
profit. And so one of the most important things we can do to 
disincentivize that is to remove the proceeds--their ability to launder 
the proceeds of crime from those activities. And that's why I think 
domestically speaking, at least, the need for a beneficial ownership 
register is so great.
    But my--that's not my sort of specific area. What I look at is the 
sort of international aspect of this. And my great concern is that at 
the moment this is absolutely--this issue is, like, killing many 
aspects of the U.S.'s economic statecraft overseas. So if we take, for 
example, first, there's a--you know, over the past couple of years 
we've seen absolute blizzards of sanctions coming out of the Hill and 
coming out of the administration. The inability to track and--like, who 
controls assets, frankly, like, makes a mockery of the U.S. sanctions 
regime. How can you expect the Treasury to sort of, you know, enforce 
sanctions when it can't--it doesn't know who owns what within its own 
territory? It's a no-brainer as far as improving--you know, making a 
sort of more powerful sanctions regime.
    I mean, the most egregious example of sanctions evasion, to my 
mind, took place right here on U.S. soil. It was sanctioned U.S.--
Iranian entities were able to maintain control of a--of a skyscraper in 
the--in the heart of Manhattan, a huge skyscraper, using an anonymous 
U.S. shell company. They went undetected for 20 years before U.S. law 
enforcement was able to seize--discover this and seize the building off 
of them.
    I'm also interested at the moment in how the administration's 
attempts to take on China's sort of economic malpractices is being 
undermined by this. China is the sort of global hub for illicit trade. 
Counterfeit goods, you know, the opioids that are killing Americans, 
this stuff just floods out of China. And the profits for all this 
illicit trade are all too often laundered through anonymous shell 
companies. And you guessed it by now; it's getting to be a pretty tired 
script, right? And I think if--and naturally, that goes up to a higher 
level as well. Some of the big State-owned Chinese companies that were 
sort of--I won't name names because they're pretty powerful people--
[laughs]--but you know, the Trump administration is trying to take on 
some of these people. We don't know who owns them. They conceal their 
ownership. And the reason they do that is to hide the fact that they're 
being controlled from Beijing by the CCP--by the Chinese Communist 
Party. They're being used as tools of economic warfare against us. And 
we--you know, if we were--it would put a real twig in their spokes if 
we were to suddenly say, hang on a minute, you can't actually even do 
business in the West unless you tell us who actually is owning you and 
controlling you.
    So I think that sort of leads on to the final sort of point I just 
wanted to make, because I know you all have questions and stuff. Just 
really quickly--I think all the talk of law enforcement is really 
important. That's, obviously, the primary, absolute, and overwhelming 
need to introduce this register. But the other really important thing 
that it would do, it would also empower your diplomats. At the moment, 
whether it's the State Department or the Treasury, international 
meetings relating to economic stuff--anti-money laundering policy, 
sanctions policy--this issue of beneficial ownership is bogging them 
down and it keeps getting turned back at them, and it's distracting 
from what should be the great project of American economic statecraft 
at the moment, which is rolling back malign economic influence of 
strategic rivals like China, like Iran, like Russia, like Venezuela, 
regimes that use--see no distinction between politics and economics, 
and use the global financial system to advance their political aims at 
the expense of the U.S.
    One of the most important things is one of the things that's been 
least talked about, which is the morning after the U.S. creates a 
beneficial ownership register there will probably be no immediate--you 
know, you're not going to see hundreds of people led off to jail or 
something like that. In the U.K. it's taken time for prosecutions and 
things that have--you know, arise from the information they get from 
this thing to churn through, right? What you will see is the U.S.'s 
diplomats, its anti-money laundering policy officials empowered to 
suddenly take the fight to the U.S.'s strategic rivals I was 
mentioning. At the moment they've got us on the back foot. They are 
using our economies to launder money, to project their interests, 
project their influence, to--and above all to shape--reshape either--
well, in the case of somebody like Russia, to completely undermine 
global norms and destroy them just to hurt us. In the case of somebody 
like China, to--more to remold those global norms and values so that 
they're amenable to their way of doing things. It's not a way of doing 
things with which we agree in the West. It doesn't involve the rule of 
law, it's very personalized, and it's a conduit for corruption. As 
anyone who's read about the way in which the Belt and Road project 
investment--development investment project, as they say it is, has 
spread across Eurasia, it has done so on the back of corrupt deals and 
bribes and so on. So I think this, you know, above all else, this will 
just--the day after this is passed, this will put America on a moral 
and operational platform, frankly, to just like reinvigorate the 
capitalism that made you great and that should continue to--for this to 
be an American century, frankly.
    So thanks. I'll probably hand it back over because we're running 
out of time. [Laughs.]
    Mr. Massaro. No, thank you, Nate. And the way you're approaching 
that from the sort of foreign policy perspective, how this weakens U.S. 
foreign policy and jeopardizes national security, I mean, that 
perspective is so, so valuable. And I agree that it gets short shrift, 
especially from the sanctions perspective, at a time when sanctions are 
being used again and again and again. The number one thing we could do 
to strengthen U.S. sanctions is to get something like this in place. I 
mean, hands down, you know? So thank you very much, Nate.
    And with that, let's move on to the Q&A. As I had mentioned at the 
beginning, we're going to have to end at 10:15 today, so I'm going to 
abstain from taking moderator's prerogative. If you could raise your 
hand, I'll call on you, and then we got a--you actually need to come up 
to the witness table, take a seat in the hot seat, turn the mic on, and 
ask a question. But do we have any questions from the audience? Don't 
be shy about it. Okay, please.
    Questioner. Hi. My name's Costanza [sp]. And I----
    Mr. Massaro. Can you turn the mic on? Yes, thanks. And yes, name 
and affiliation, please. Thank you.
    Questioner. It's not working. I'll just project.
    Hi. My name's Costanza [sp] and I work in Representative Elijah 
Cummings' office.
    And my question is about how can we on the Hill kind of help get 
this process moving forward to implement or pass legislation about 
transparency. And what kind of hurdles do you see currently in 
Congress?
    Mr. Massaro. I would say it's a Mark or Nate question. Perhaps Mark 
would like to take that?
    Mr. Hays. Sure, I'll give it a try. Thank you for your question, 
Costanza [sp].
    I think probably offhand I would say the first thing is to ask your 
Members of Congress to speak to their colleagues, particularly on the 
House Financial Services. One of the unique aspects of this issue is 
that, you know, anonymous shell companies appear in nearly any scenario 
in which illicit activity generates money. Nate has alluded to this. My 
colleagues have alluded to it. But whether you're concerned about human 
rights, wage theft, human trafficking, contract fraud, Medicare fraud, 
it's a very long list, unfortunately. What that means is if your member 
or another member have a legislative priority that focuses on some 
aspect of illicit activity, chances are there's going to be some 
thematic overlay between that and this issue. And I think by having 
your members communicate that relevance and having us help you make 
that case, I think the leadership of the House Financial Services, 
who's already doing good work on this and is making progress, will see 
that this issue is priority beyond the scope of their interest and is 
actually one that touches a wide range of interests for Members of 
Congress.
    In terms of barriers, I guess I would say that's probably a good 
question to put back to some of your members because a lot of this has 
to do with the internal political process and how decisions get made 
and priorities are set within committees. I guess I would say we've now 
built the case externally from a stakeholder perspective. There are 
Members of Congress who are making the case internally, along with 
their staff. In some cases our biggest enemies are time and confusion. 
This is a complex issue and it takes time to sort through the issues. 
Once you see the picture it's pretty reasonable and self-evident, but 
it takes time to get there. So making sure your members and your 
colleagues have the time to work through the materials provided by our 
organization, by the FACT Coalition of which we're a member who's led a 
lot of this work, and coalition of others by the Hudson Institute, 
working through that and really understanding the basics will go a long 
way toward making sure that members can--once this is presented to 
them, the opportunity to vote on it, they understand the relevance and 
can move forward on it.
    Mr. Massaro. Thanks very much.
    Could we get another question? Please. I guess maybe if you just 
want to turn on one of those mics on the stand and speak into it. Oh, 
it's working! [Laughs.]
    Questioner. Yes? Okay. My question is--Capitol Intel.
    One of the most successful corporate transparency and 
anticorruption devices is the U.S. Security [sic; Securities and] 
Exchange Commission use of media as a trigger for investigations. One 
of the biggest problems we find is prosecutors--DOJs, those guys--will 
not do their jobs until they're forced to that. So any public mention 
of a corruption, ill-gotten gains should automatically open an 
investigation by law enforcement of that. Mr. Penrose, you know, U.K. 
bribery is really problematic, as almost everything's illegal.
    And the second question is, for Mr. Penrose, with Brexit, either if 
it happens or not, all your overseas territories, are they now becoming 
highly regulated by the EU and other authorities?
    Thank you.
    Mr. Massaro. Can we get your name and affiliation real quick? I'm 
sorry.
    Questioner. Yes. I'm Peter Semler. I'm the chief executive editor 
of Capitol Intelligence Group. We're, like, worldwide experts on CPA 
enforcement and also U.K. bribery and places like Libya.
    Thanks.
    Mr. Massaro. Great. Thank you.
    P.M. Penrose. I'll try and address those quickly to allow other 
people to answer questions--ask questions as well.
    You are right, absolutely, sir, that even when you have the most 
independent, the most committed, the most professional investigative 
agencies, they have to prioritize. They have to put things at the top 
of the pile or further down. And sometimes public opinion on what is 
egregious and wrong can get them to reprioritize and to add extra focus 
to something, yes, absolutely. Also, sometimes press reporting can get 
more people to come forward as witnesses or as examples, and that can 
help a previously stalled investigation move forward. So you are 
absolutely right about the effect of public shame, public outrage. That 
matters.
    It helps--it's easier to do that with an open register, but you 
know, we've got to start wherever we can. So closed registers, you can 
get quite a long way with that. The advantage of the open register, we 
found, for Britain at least--this may not apply in the U.S.--is that it 
is easier to get the public square engaged, not just through press but 
more generally. If you have an outraged middle class, digitally 
equipped, anywhere in the world that can see that the leaders of 
whichever developing nation it is have stolen half that nation's GDP 
and have invested it in real estate in London or in Manhattan, that's a 
very, very powerful political force, and it doesn't have to be a 
democracy to be shaken to its roots if that stuff becomes public.
    You also asked about Brexit and the British Overseas Territories. I 
was mentioning earlier on that, you know, Britain does not have a 
monopoly on virtue here. We have further to go. We are in the process 
of getting our overseas territories--it's mainly a series of islands in 
warm seas dotted around the world--we're in the process of getting 
those different territories to introduce their own registers as well. 
They're starting from further back. Some of them are still recovering 
from hurricane damage from a couple of years ago, and many of them 
don't have financial sectors worth the name either, but some of them 
do. So, yes, we acknowledge that as one of the areas where we have to 
make progress. We have already made some, but it's an area we have 
further to go.
    Mr. Massaro. Thanks.
    And I think we have time for maybe one or two more questions. Other 
questions from the audience?
    [Pause.]
    Okay. I'll ask a question, then. Thanks.
    So, Minister Penrose, I guess to the point of kind of the 
commission's major interest in this--and that is how authoritarian 
regimes are operating and pushing their influence through the global 
financial system--I think maybe one of the most visceral and 
frightening examples of this has been the attempted assassination of 
Sergei Skripal and sort of the fallout around that on U.K. soil. I 
mean, this was a terrorist act on the soil of the United Kingdom by 
Russia, you know? [Laughs.]
    So I'm just interested in your perspective on how this has played 
out in the sphere of anti-illicit finance, anticorruption, and what the 
United Kingdom is doing in response to this egregious act.
    P.M. Penrose. Thank you, Paul. And this is something which brought 
it home to the U.K. and I think it probably brought it home to other 
countries around the world as well, because until this moment most of 
the public debate, at least in the U.K., had been mainly around 
organized crime. That's a very serious problem. I'm not trying to 
minimize it. It's broad-based and there's a whole range of different 
activities. As Nate rightly said, criminals don't do crime for fun; 
they do it for money. And that was the major focus of attention.
    With the advent of the attempted poisoning of the Skripals and 
eventually also, you know, clear evidence that it was Russian State 
actors behind it, that broadened the concern very greatly. And it was, 
incidentally, incredibly impressive, and I think Britain is enormously 
grateful to the international coalition around the world, including the 
USA, where diplomatically everybody said this is wrong and we will not 
put up with this, and there was coordinated diplomatic action right the 
way around the world from people who care about our rules-based 
international system to say this is--you know, this is something which 
deserves public censure, and there were consequences that flowed.
    And I think it brought it home not just to us, but to many other 
countries around the world, therefore, that we aren't just dealing with 
the organized criminals--although there may be an intersection between 
them and some sort of state actors--but we're also dealing with people 
who want to undermine our way of life and our society. And if you 
consider that the USA and the U.K. are, you know--if any two countries 
are behind the current global rules-based system, it's our two 
countries. We helped set this up over the last two global wars.
    And you know, we need to make sure that this thing carries on and 
is not undermined by people who want to pretend that it is somehow 
invalid and lacking in legitimacy. It is absolutely essential, 
absolutely critical that we do not allow that to happen, because make 
no mistake, an awful lot of the populist rhetoric right the way through 
the developed world--Western Europe has it in spades in all the 
different countries in Western Europe, happens in North America too--
the populist rhetoric about saying this system is corrupt, it is 
slanted, it is rigged against the people it purports to serve, that is 
the thing which will ultimately do for us if we let it.
    And so, yes, the effect of foreign state actors is crucial. But as 
I said, you know, it doesn't--whatever the USA decides it wants to do 
in terms of, you know, not a public register, a private register open 
to investigators, okay. But the crucial thing here is just remember, 
ladies and gentlemen, first, it's really cheap to set one of these 
things up. You can do one of these things, set it up and maintain it 
for less money than it costs you to build a few kilometers of road. 
It's that easy. And just think of the benefits that you can get.
    If you can make it available to your financial sector, then their 
know-your-customer requirements dramatically become cheaper, faster, 
easier, and more accurate. If you wanted to go further--you don't have 
to, but if you did want to go further and make it available to some of 
your corporate facilitators--so your lawyers, your accountants, your 
realtors as well--then their know-your-customer stuff, they will thank 
you in spades for that because their know-your-customer requirements 
suddenly become dramatically easier, simpler, faster, and cheaper as 
well. The amount of red-tape reduction you can get from having one 
place that tells people authoritatively what the answer is as to 
whether or not I should do business with this supplier or that 
customer, whether or not I should accept their account or not, I can 
get to that answer fast, reliably, and cheaply, is enormously powerful. 
It's economically sensible, as well as you rightly point out, Paul--
politically, too.
    Mr. Massaro. Well, thank you very much, Minister Penrose. And 
thanks so much to the whole panel. If you're talking price tag I think 
you know your audience here, so that's great.
    Thank you all so much for coming. And hope you learned something. 
See you around.
    P.M. Penrose. Thank you. [Applause.]
    [Whereupon, at 10:15 a.m., the briefing ended.]

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