Long-needed Financial Secrecy Reforms Should be Accelerated to Identify Sanctioned Wealth
Washington, DC – The FACT Coalition welcomed the White House announcement of a “multilateral Transatlantic task force” to identify and freeze the assets of sanctioned Russian companies and oligarchs.
“To sanction kleptocrats and oligarchs effectively, you need to know what they own and how they own it,” said Ian Gary, executive director of the FACT Coalition. “To truly stand with the people of Ukraine, the U.S. must enact long-needed financial transparency and anti-money laundering reforms.”
The White House effort to “find and freeze” Russian oligarch assets is made more difficult by existing financial secrecy afforded by U.S. law and an under-funded Financial Crimes Enforcement Network at the Treasury Department that needs additional resources to counter national security threats.
“The secrecy currently afforded by the U.S. and other Western legal and financial systems contributed to President Putin’s empowerment,” said Gary. “A global offshore illicit finance system has been allowed to flourish for decades, threatening democracies and innocent lives. Gaps in the U.S. anti-money laundering regulations now jeopardize the long-term effectiveness of the world’s response to the unprovoked Russian invasion and must be closed as soon as possible.”
Anonymous shell entities in the U.S. are a favorite tool for kleptocrats and criminals to protect and hide their wealth in the U.S. Russian oligarchs have also used the $50 trillion U.S. real estate market and the $11 trillion dollar private investment market to hide and launder wealth.
“Thankfully, President Biden is pursuing financial secrecy reforms to permanently curb abuse by kleptocrats such as Putin, his cronies, and criminals all over the world,” said Gary. “The new U.S. strategy to counter global corruption laid out the seriousness of the threats and the whole-of-government approach needed to respond.”
The Treasury Department is implementing the Corporate Transparency Act, a law that would help end the use of anonymous shell companies by establishing a database of the true ownership of corporate and other entities. In addition, the Treasury Department took the first step in December to create a nationwide regulatory regime to end money laundering through the U.S. real estate sector. Finally, the Biden Administration has committed to extend anti-money laundering obligations to the private investment market.
Notes to Editor:
- Since its founding in 2011, the FACT Coalition, comprised of more than 100 state, national, and international organizations, has campaigned for the U.S. government to take combating financial secrecy seriously and to address the role the U.S. plays in facilitating corruption and illicit financial flows.
- FACT Coalition comments on implementing the Corporate Transparency Act.
- FACT Coalition recommendations to address secrecy from the U.S. real estate market.
- “Private Investment, Public Harms” – December 2021 report on money laundering in the private investment industry, including case studies involving Russian oligarchs. (FACT Coalition, Global Financial Integrity, Transparency International – U.S. Office)
- FACT analysis of White House Strategy on Countering Corruption.