In the US, it takes more personal information to get a library card than to start a shell company. According to the US Treasury, approximately $300 billion is laundered in the United States each year, or roughly 2 percent of national GDP—though the true figure may be much greater. For too long, the US has served as the global nexus of democracy-weakening financial practices.
But change is on the horizon. Hudson’s Kleptocracy Initiative, led by Nate Sibley and Ben Judah, has been at the forefront of advising policymakers, US agencies, and European Parliament members on how to close the financial secrecy loopholes that allow authoritarian regimes to interfere with Western politics.
In their latest Foreign Policy article, Nate and Ben provide a roadmap on how Western nations can fight back against weaponized finance.
Specific ways to eliminate financial secrecy in the US, from Nate Sibley and Ben Judah’s article, The West Is Open for Dirty Business
1. Establish a Beneficial Ownership Registry: The U.S. government has no idea who owns and controls the companies being used to move money through and within its own borders, because it does not maintain a central corporate beneficial ownership registry.
2. Prevent Foreign Governments from Buying Politicians: Senior political officials should be barred from working as lobbyists for foreign powers, as well as accepting gifts, jobs, and donations from the same. Transparency standards should be codified that require senior officials to release a specified period of tax returns and place assets that could present a conflict of interest in a blind trust.
3. Protect Levers of US Influence: Adversarial authoritarian regimes should be placed on a congressionally-mandated blacklist. States on the blacklist, politically exposed persons, and their proxies would be banned from owning media and funding think tanks, political action groups, or lobbyists in the U.S. This would be buttressed by modernizing and combining the Lobbying Disclosure Act and Foreign Agents Registration Act.
4. Fight Rampant EB-5 Fraud: As Europe cracks down on “golden visas,” America must address rampant fraud and abuse within the EB-5 investor scheme. Shallow background checks on applicants means that the scheme has become an open invitation to kleptocrats and their dirty money.
5. Allow State Dept. to Expose Abusers: The State Department should be empowered by Congress to reveal the identities of individuals whose U.S. visa applications were rejected because of corruption or human rights abuses and impose visa bans on corrupt foreign officials credibly accused of extorting bribes from U.S. businesses operating overseas.
The Treasury Department’s policy adviser on terrorist financing joins the Kleptocracy Initiative for this event on how to strengthen US national security by combating illicit finance.
Ben Judah joins Oxford University’s Eurocast to explain why countries with low perceptions of corruption are often the countries abetting the most illicit financial flows.
Anonymous ownership, still legal in the US, is a key element in China’s Belt and Road Initiative by enabling state-linked Chinese companies to circumvent US sanctions. Nate Sibley looks at how a ban on anonymous companies would reduce Belt and Road corruption.