Anonymous firms fuel counterfeit, pirated goods trade

Phil Taylor, 10-May-2019

Companies with opaque ownership are making enforcement actions against the illicit trade in fake goods challenging, says a new report.

The Financial Accountability and Corporate Transparency (FACT) Coalition report calls for policymakers to enact legislation to end the incorporation of anonymous shell companies to make it harder for criminals to launder their profits and escape detection.

“The US Congress must pass legislation to end the abuse of anonymous shell companies by requiring the collection of ‘beneficial ownership’ information – the natural person who controls the entity and has an entitlement to the funds – at the point of corporate formation,” says FACT.

Bidders for federal contracts, sub-contracts, and grants should also disclose their beneficial ownership information at the time of their bids, it adds. Anonymous companies have helped criminals across the US sell several billion dollars in fake and counterfeited luxury handbags and apparel accessories in recent years, it says.

Victims of the trade include Burberry, Louis Vuitton, Gucci, Fendi, Coach, and Chanel, as well as sportswear and gear from the NFL, NBA, and MLB including Nike, Adidas, and Under Armour, among many others.

Meanwhile, anonymous companies were used to import and sell to American consumers, through internet pharmacies, counterfeit medicines from India and China worth hundreds of millions of dollars. They were also involved in selling knock-off parts to the Pentagon that have cost the US military tens of millions of dollars.

The author of the report, former chair of the OECD Task Force on Countering Illicit Trade David Luna, said: “Incorporation transparency is critical to effectively fight illicit trade, organized crime, and terrorism in the US.”

Enacting new legislation requiring beneficial ownership transparency would empower law enforcement “to investigate illicit traffickers who imperil our vital economic and national security interests, and corrupt our institutions with their dirty money.”