US states of Wyoming and Nevada said to be looking to fix money-hiding regulatory loopholes

Lawmakers in two western US states are planning to consider legislation early in 2017 to “tighten rules that have allowed foreigners to incorporate in their states and hide assets”, according to a US media report.

The report, carried by newspapers in the McClatchy media group, comes in the wake of  numerous media reports last year that found a number of US states, including Wyoming and Nevada but also Delaware and South Dakota, were enabling  those looking to hide money from their home country’s tax authorities to do so with ease.  According to these reports, non-US individuals looking to hide money in such places have been able to do so without much difficulty by creating identity-hiding shell companies.

In January of last year, Bloomberg reported that “moving money out of offshore tax havens and into the US” was fast becoming “a big business”,  as “everyone from London lawyers to Swiss trust companies” got “in on the act”– prompting some to begin calling the US “the new Switzerland”.

So popular has the use of these state “havens” become that a ranking of the world’s “10 Most Popular Tax Havens”, as measured by their use by clients of the law firm at the centre of last year’s Panama Papers document leak, showed Nevada in eighth place, below British Anguilla and ahead of Hong  Kong.

McClatchy journalists had been among those who worked on the Panama Papers project, under the umbrella of the non-profit, Washington-based International Consortium of Investigative Journalists (ICIJ).

Legislative changes proposed

According to the most recent McClatchy report, which was published on 30 December, Wyoming lawmakers are “soon” due to consider a bill that would “change who qualifies as a communications contact for companies incorporating there”;  while in Nevada, legislation has already been proposed that “would revise [the] existing law and authorise the secretary of state to conduct periodic, special or other examination of the records”.

The report noted that the Panama Papers’ law firm, Mossack Fonseca, had been found by the ICIJ researchers to have  incorporated a total of 1,024 companies in Nevada, including some shell companies that had been tied to a Brazilian government corruption scandal.

“Wyoming had a smaller number of companies created by Mossack Fonseca, but the state had scant information about the true owners or ways to reach them,” the McClatchy report noted.

It quoted a Wyoming government spokesperson as saying that work aimed at changing the legislation governing the way companies are set up in the state had already been under way “before the release of the Panama Papers” in April.

“Secretary [of State Ed] Murray ran on a platform of fighting fraud, and this bill works to address the same,” the spokesperson said.

To read the McClatchy report, as it appeared on the Miami Herald’s website, click here

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