The state of Wyoming was amongst the locations revealed in the data leak of the Panama Papers, that involved the large offshore law firm, Mossack Fonseca. The leak included 11.5 million confidential files and pointed to millionaires and others that may be hiding their money in Wyoming based shell companies.
Wyoming has previously been categorized as a “tax haven”. The state’s low and limited amount of taxes make it attractive to those wanting to start a business. Also, Wyoming does not discriminate between foreigners and Americans who open business. Anonymity, or privacy, is a big selling point.
A press release from the Secretary of State’s Office says an audit was performed after the Panama Papers were leaked and of the 214,488 entities mentioned, twenty-four are registered as LLCs in the state of Wyoming. Secretary of State Ed Murray says his office initially investigated the matter and has now turned it over to law enforcement.
In a prepared statement, Secretary Murray says that the state has tried to make such companies legitimate but his office will consider some additional options.
“My office will continue to do everything it can under those laws as well as other initiatives I’m pursuing to combat any illicit activities, while maintaining Wyoming’s competitive business friendly environment.”
Mark Hays is a senior advisor at Global Witness, an NGO watchdog. He says a business owner does not need anonymity for limited liability, and people often mistake one for the other. He also says anonymity wasn’t an intended feature when states were first setting up these processes. It was assumed that you would know the owner, that it would be the person down the street. But things have changed in the last few decades.
“Particular states and particular players like some of the law firms [in the Panama Papers] have taken advantage of essentially that loophole, or gap, in disclosure, and used it to really aggressively position companies based in the U.S. and elsewhere as vehicles to move illicit finances or illicit money.”
Hays says a simple solution to the problem would be to have states require businesses to disclose the basic information of the true owners when the business is formed.
In the press release, Secretary Murray says he opposes a one-size fits all law that would get rid of privacy protections, but adds that he plans to work with the legislature to balance the pursuit of implementing pro-business laws, while also taking the fight against fraud very seriously.