Human Rights Violations and Illicit Finance – The Inexorable Tie

Let’s talk statistics. On an average year, anywhere between 300 billion to 2 trillion U.S. dollars are laundered globally. To put it into perspective, this sum rivals the economic output of Brazil, the world’s eighth largest economy. As numbers grow, the United States’ position on money laundering and financial transparency policies continues to falter, further increasing the money criminals have access to and the abuse that society faces. Money laundering in the United States accounts for 2% of the U.S. GDP, making it critical to act now. I chose to join FACT to be a part of a mission to enact change and bring these issues to the forefront to achieve economic and political justice. 

This past year, I had the opportunity to conduct research on non-bank commercial service providers through undercover investigations of domestic and international lawyers, accountants, notaries, and other commercial service providers to help set up either bank accounts or companies under aliases sanctioned under Global Magnitsky provisions. While conducting research, I came across several non-bank commercial service providers that were willing to conduct business with my alias and required little to no documentation of the owner of the business, where our funds were coming from, shareholder information, company name and date of birth verification. In some cases, I had people request a wire transfer of a couple thousand dollars later stating that they would take care of the rest. 

It is important to recognize the setback that money laundering provides not only for the U.S. population but also for their global partners and their citizens. Current U.S. policy lacks adequate regulations dictating who is able to gain access to the U.S. financial system through non-bank commercial service providers, such as accountants, lawyers, investment advisers, and corporate and trust formation agents. This facilitates the laundering of money, for example, Deripaska’s purchase of U.S. real estate through an anonymous U.S. entity or Kerimov’s use of a Delaware trust to park $1 billion in assets in the U.S. system.

Since the U.S. does not have adequate regulations and legislation surrounding these financial activities, many international criminals and sanctioned individuals have jumped at the opportunity to keep their illegitimate funds in the U.S. This, in turn, has serious national security implications as well as threatens the safety of individuals internationally. Without updating U.S. anti-money laundering law and implementing long-overdue policy changes to advance U.S. financial transparency, we are enabling criminal institutions and illegitimate individuals to continue to lurk and launder their reputations and funds through the legitimate U.S. economy. 

A 2014 study found that the U.S. is the easiest place to open an anonymous company, further perpetuating modern slavery and hiding human trafficking networks. Allowing drug and human traffickers to launder their money with ease enables corporate criminals to continue their human rights abuses. The people most affected by criminals that are stealing government funds in positions of power include indigenous populations, economic and racial minorities, and children. 

Financial fraud is an endemic problem in our economy. These illicit transactions help to fund the lives of people that are abusing their governments and citizens in their home countries. Every day that we wait to enact institutional change is another day that an Angolan child in a hospital will go without medication and another day that we inadvertently help the instigators of the Russian war in Ukraine. 

In an effort to influence our policies to reflect the core values of democracy, justice, and individual responsibility, I joined the FACT Coalition as Policy Fellow this fall. While at FACT, I will be helping with essential policy regarding beneficial ownership, country-by-country reporting and anti-money laundering. As the leading pillar of financial accountability and corporate transparency, I am honored to join FACT in its efforts to further the fight against money laundering and put an end to economic injustice.