US lawmakers call for crackdown on financial ‘enablers’ after Pandora Papers revelations
If passed, the law would give the Treasury Department until December 2023 to create anti-money-laundering rules for the gatekeeper industries.
A bipartisan group of lawmakers plans to introduce legislation this week that for the first time would require trust companies, lawyers, art dealers and others to investigate foreign clients seeking to move money and assets into the American financial system.
The bill’s sponsors cited the findings of the Pandora Papers investigation, the result of a sweeping international collaboration published this week that exposed how the global elite conceal their wealth in tax havens that increasingly include the United States.
Stories by The Washington Post and the International Consortium of Investigative Journalists (ICIJ) showed that little-known trust companies in Sioux Falls, S.D., established nearly 30 trusts holding assets connected to people or companies accused of corruption, human rights abuses or other wrongdoing in some of the world’s poorest communities.
The proposed law, known as the Enablers Act, would amend the 51-year-old Bank Secrecy Act, by requiring the Treasury Department to create basic due-diligence rules for American gatekeepers who facilitate the flow of foreign assets into the United States.
Banks are already required to investigate their clients and sources of wealth, but trust companies, lawyers, investment advisers, accountants, art dealers, public relations firms and other professionals have been excluded from due-diligence rules — a loophole regularly criticized by financial crime experts and international watchdogs.
The proposed legislation, experts say, represents the most significant change of anti-money-laundering rules since 9/11.
“If we make banks report dirty money but allow law, real estate, and accounting firms to look the other way, that creates a loophole that crooks and kleptocrats can sail a yacht through,” Rep. Tom Malinowsk, co-sponsor of the proposed bill and co-chair of the Congressional Caucus against Foreign Corruption and Kleptocracy, said on Wednesday. “Our bill closes that loophole and encourages the administration to move in the same direction.”
Malinowski called on the White House to support the legislation, co-sponsored by Reps. Steve Cohen, co-chair of the bipartisan Commission on Security and Cooperation in Europe; Joe Wilson, ranking member of the commission; and Maria Elvira Salazar, a member of the caucus.
“All around the world, countries are being looted and the most vulnerable people victimized by their elites,” Cohen said. “These kleptocrats then launder that money to the West, where they enjoy the high life — spending the money on luxury cars, penthouses, jets and opulent parties. Some also spend it on intervening in our democracy … working to undermine the rule of law. In order to fight corruption, we must curb the enablers.”
If passed, the law would give the Treasury Department until December 2023 to create anti-money-laundering rules for the gatekeeper industries. A new national security task force would oversee the effort.
