HomeUSAThe Pandora Papers Case. Congressmen introduced money laundering bill

The Pandora Papers Case. Congressmen introduced money laundering bill

A group of US congressmen from both sides filed on Wednesday a bill that places additional liability on lawyers and representatives of other professions, allowing criminals to hide assets and launder money. This is a blow to a key element of this practice, says one of the initiators of the project.

The draft, dubbed the ENABLERS Act, was introduced by Polish-born Democrat Tom Malinowski and Republican Maria Salazar, members of the newly formed parliamentary anti-kleptocracy group. The proposed law imposes a duty to verify the legitimacy of the origin of its clients’ funds, including lawyers, lobbyists, real estate agents, financial advisors, and other brokers who allow criminals and oligarchs to hide their assets in the United States. Until now, this obligation has only been imposed on banks.

– Modern dictatorships are based on access to the West. According to Malinowski, lawyers, lobbyists, accountants, real estate agents, consultants and other brokers are helping kleptocrats and human rights violators launder their money and reputation – and overly influence democracy – in exchange for dirty money.

Fight against kleptocracy

According to Paul Massaro, one of the initiators of the initiative and an adviser on the fight against corruption in the so-called If the Helsinki Commission of the Congress is adopted, it will be a significant step in the fight against kleptocracy.

– Until now, lawyers or agents helping to hide the assets of kleptocrats, for example, buying real estate through anonymous hive companies or creating anonymous trusts, had no obligations, even if they knew or guessed that they were involved in hiding money from crimes. “It’s enough that they didn’t ask any questions,” says Massaro.

“This is a huge hole in the anti-money laundering system,” he emphasizes.

Tax havens … in the US?

Direct impulses for filing the project have been published, among other things in the Washington Post, articles based on the Pandora Papers are leaking from law firms, allowing wealthy clients to hide assets in tax havens. The documents show that the US is playing a key role, and states such as South Dakota and Nevada have become as attractive destinations for anonymous money as “traditional” tax havens in the Caribbean. This is mainly done through anonymous trusts, legal constructs traditionally used to transfer property to heirs that are used by oligarchs to protect property from creditors, taxes, and civil lawsuits. If the project goes into effect, companies that create trusts will have to investigate their clients and report any suspicions.

According to Massaro, the draft was prepared before the publication of the Pandora Papers, although it created an opportune moment and opened a “political window” for reform. He adds that there has been a small breakthrough in the US approach to corruption and dirty money in the past year.

– For almost 30 years after the end of the Cold War, this practice was actually allowed. The important thing is that the money flowed into the country, and its origin was of secondary importance, “- says the expert.” Only recently did people in Washington realize that this money undermines our democracy, corrupts the system and poses a threat. especially in the context of Chinese money and competition with China, he added.

Last year, Congress passed the most revolutionary change, passing legislation requiring the real beneficiaries of hive companies to be disclosed. As part of this law, the Ministry of Finance is to develop detailed rules for the implementation of this law, which will come into force later this year. Trusts are unlikely to be included, although this is possible.

Congressmen grapple with suspicious interests

In September, Malinowski and other members of the parliamentary anti-kleptocracy group added six other anti-corruption bills that were included in the defense budget passed by the House of Representatives. They are still awaiting Senate approval. These projects involve, among other things, possible sanctions against 35 oligarchs close to Russian President Vladimir Putin, the renewal of the so-called Global Magnitsky Act, which prohibits the entry of oligarchs’ names into the United States, or the publication of reports on assets returned by the United States that were stolen by foreign politicians.

– There is no point in the delusion that it will be easy. In Washington, especially in the Treasury Department, there is still a lot of the old belief that money is money, and if it supports the economy, it doesn’t matter where it comes from. Not to mention the strength of the lobby of lawyers or all other professional groups affected by this project, says one of the authors of the new bill.

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