“Just the FACTs” is a round-up of news stories and information regarding efforts to combat corrupt financial practices, including offshore tax haven abuses, corporate secrecy, and money laundering through the financial system.
Send feedback or items for future newsletters to Thomas Georges at tgeorges@thefactcoalition.org
Here is the State of Play
Heeding Calls from FACT and Other Experts, Treasury Releases Long-Awaited Final Anti-Money Laundering Regulations
On Wednesday, FACT welcomed a pair of final U.S. Treasury regulations introducing new anti-money laundering (AML) safeguards for certain residential real estate transactions and investment advisers. An initial review of both rules points to a strong set of reforms that close major loopholes long-decried by FACT members and other AML experts as easy avenues for financial criminals to hide ill-gotten gains in U.S. markets.
The illicit finance risks associated with the U.S. real estate and private investment sectors have been widely recognized for years, and addressing those risks is a core priority of the U.S. government’s 2021 Strategy on Countering Corruption. Treasury’s most recent National Anti-Money Laundering Risk Assessment lists real estate and private investment markets as major blindspots in the nation’s AML framework.
While these final rules represent a major step forward, Treasury still has important work ahead to close remaining gaps, particularly relating to commercial real estate transactions. Action to address money laundering through commercial real estate is expected next year.
In a statement, FACT policy director Zorka Milin noted that “While there is more work to be done, these new rules show that the government is serious about cracking down on criminal abuse of U.S. markets and building a safer, fairer economy for all.”
Latest From FACT
FACT’s latest policy brief outlines what makes environmental crimes distinct from other crimes commonly associated with money laundering risks, and details specific strategies to address the unique challenges they pose.
This policy brief expands FACT’s growing portfolio of work on the intersection of environmental crimes and U.S. financial secrecy, which was formally launched in October 2023.
Senate Budget Bill Includes Crucial New Funding for Nation’s Financial Crime Fighters
The Senate Appropriations Committee’s proposed spending bill for FY2025 would expand funding for the nation’s financial intelligence unit, the Financial Crimes Enforcement Network (FinCEN), by more than $25 million, effectively meeting the president’s discretionary budget request for the bureau.
These additional new funds are critical to the achievement of a number of high profile anti-money laundering objectives, including the ongoing implementation of the nation’s beneficial ownership registry under the Corporate Transparency Act, as well as the implementation of newly-finalized regulations for unfinanced real estate transactions and investment advisers.
FACT in the News
New US Rules Try to Make it Harder for Criminals to Launder Money by Paying Cash for Homes
FACT executive director Ian Gary was quoted in coverage of Treasury’s new anti-money laundering regulations for residential real estate transactions by the Associated Press’ Fatima Hussein.
“After years of advocacy by lawmakers, anti-money laundering experts and civil society, the era of unmitigated financial secrecy and impunity for financial criminals in the U.S. seems to finally be over,” said Gary.
FACT’s recently-submitted petition, backed by investors with more than $2.3 trillion in assets under management, was covered in an extensive write-up by Thomson Reuters’ Soyoung Ho. Ho’s coverage included quotes from the petition, as well as from FACT executive director Ian Gary and policy director Zorka Milin.
“As headquarters to the most major multinational corporations, and as a market for thousands more, the U.S. has an opportunity to lead a sea-change in global tax transparency,” said Milin. “Decisive action by the SEC to require public tax disclosures will not only help to protect investors, but also promote a fairer, more robust global market where success is based on innovation, not tax dodging and accounting gimmicks.”
New US Treasury Plan Targets Criminal Groups Profiting from the Destruction of the Amazon
FACT program director for environmental crime and illicit finance Julia Yansura was quoted in coverage of the recently-announced Amazon Initiative by ICIJ’s Brenda Medina. The Amazon Initiative – which will comprise new information sharing, training, and joint enforcement efforts coordinated between the U.S. and five South American partner countries – promises progress on several of the key recommendations from FACT’s latest report, Dirty Money and the Destruction of the Amazon.
“These crimes are transnational, and therefore require transnational cooperation to investigate and prosecute,” said Yansura. “To truly curb natural crime, law enforcement must follow the money that fuels environmental destruction. We hope the U.S. plays a constructive role in that effort.”
Australia Senate Panel Urges Passage of Tax-Reporting Rules
FACT policy director Zorka Milin was quoted in coverage of Australia’s new public country-by-country reporting (CbCR) legislation by Bloomberg Law’s Michael Rapoport. Following the legislation’s introduction in both houses of Parliament, the CbCR measure received approval from the Australian Senate’s Economics Legislation Committee following a public inquiry.
The expected passage of Australia’s CbCR legislation “should inform similar efforts in jurisdictions around the globe,” including the U.S., said Milin, adding that U.S. regulators should “avoid falling behind the global pack on public tax reporting.”
From Our Allies
Read the new report and policy brief from Puerto Rican non-profit Espacios Abiertos on the potential impacts of the OECD’s 15 percent global corporate minimum tax on Puerto Rico’s revenue collection efforts.
With current domestic effective tax rates for multinationals and foreign corporations averaging only about 2.43 percent, the report concludes that there is substantial incentive for Puerto Rico – a territory of the United States that is largely treated as an independent jurisdiction for tax purposes – to enact legislation that would capture upcoming top-up taxes that would otherwise be collected by other nations, potentially raising as much as $3.8 billion in additional annual revenues.
Recent and Upcoming Event
Watch: Africa Centre for Energy Policy – Future of Energy Conference 2024
On Wednesday, August 28, FACT executive director Ian Gary presented at the 2024 Future of Energy Conference in Accra, Ghana on the need for concerted action to tackle illicit financial flows as an important element of ensuring Africa’s sustainable energy future.
Specifically, Gary highlighted how certain initiatives in the U.S. – including growing momentum for public country-by-country reporting to curb multinational corporate tax evasion, as well as various new regulatory tools to prevent illicit financial inflows into the American economy – can help foster domestic revenue mobilization on the continent.
September 12: The Tax Cuts and Jobs Act of 2017: Lessons Learned and the Debate Ahead
On September 12 from 10:00am-12:00pm, the Urban-Brookings Tax Policy Center and the Hutchins Center on Fiscal and Monetary Policy will bring together authors of five papers recently published in the Journal of Economic Perspectives to discuss the impact of the 2017 Tax Cuts and Jobs Act on individuals, domestic businesses, multinational corporations, and investors in and residents of Opportunity Zones, as well as the tax debate looming in 2025.
Speakers will include UCLA Tax Law and Policy professor and former Treasury official Kimberly Clausing, who will present her recent paper, “U.S. International Corporate Taxation after the Tax Cuts and Jobs Act”.
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