Treasury Secretary Janet Yellen announced a commitment by the United States and more than twenty foreign governments to enhance beneficial ownership transparency. [edited for brevity]
At the first Summit for Democracy in 2021, I described corruption as a “common adversary” for democracies everywhere. Since then, we have all witnessed the dangers and damage that this adversary has inflicted across the globe.
Corruption has fueled the rise of kleptocratic regimes that are divorced from the interests of their own citizens. Corruption allowed Vladimir Putin and Russian oligarchs to squander their nation’s wealth to fund their illegal war against Ukrainian civilians. Last month, Corruption has also fueled political dysfunction in countries like Lebanon. It has subjected nations to cycles of deteriorating economic conditions.
We know that corruption’s effects spill across borders. We have seen corrupt foreign officials bury stolen funds in U.S.-based shell companies; kleptocrats launder kickbacks through anonymous purchases of foreign real estate; and elites move corrupt proceeds through complicit or unwitting financial gatekeepers like attorneys or wealth managers.
I’d like to focus today on what we are doing both at home and with partners across the world to tackle corruption.
Over the last few years, the Treasury Department has been hard at work building key infrastructure to fortify our financial system—and those investments will soon begin to pay off.
By this time next year, it will be more difficult for corrupt and criminal actors to hide their identities and wealth behind anonymous shell companies in the United States. Starting January 1, 2024, many companies formed or operating in the United States will be required to report information about their beneficial owners—that is, the real people who own or control a company.
Unmasking shell corporations is the single most significant thing we can do to make our financial system inhospitable to corrupt actors.
Treasury has a lot of work to do to realize this promise – including by advancing additional rulemakings that need to be calibrated carefully. The database must be highly useful to all of its stakeholders. It must also ensure that firms—some of them very small businesses—understand their obligations.
We’re putting a particular focus on excluding corrupt actors from investing in, profiting from, and laundering money through investment firms as well as through purchases of U.S. real estate.
By one estimate, illicit actors laundered at least $2.3 billion through U.S. real estate between 2015 and 2020. And the real number is almost certainly much higher. Treasury is working to remove that anonymity – and capture information about residential and commercial transactions not covered by our Bank Secrecy Act or beneficial ownership regimes.
Without a strong and unified global approach, corrupt actors will continue to exploit financial loopholes and lightly regulated jurisdictions. We’re particularly focused on raising international standards for anti-money laundering at forums like the Financial Action Task Force, or FATF.
In October, the FATF agreed to undertake three major projects to enhance global anti-corruption efforts.
I am also pleased to launch today a commitment by the United States and more than twenty foreign governments and authorities participating in this summit to enhance beneficial ownership transparency.
I want to specifically highlight the Financial Transparency and Integrity Cohort, which was launched at the first Summit. This cohort has brought together a broad range of stakeholders to consult and coordinate on anti-corruption issues.
I’m confident that we can work to build a level playing field. This is our responsibility as democracies: to forge a world in which free institutions can thrive and in which those who play by the rules have the best chances of success. [full text ]
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