WASHINGTON — The Biden administration is stepping up efforts to prevent dirty money from flowing through the US financial system with a slew of new rules aimed at increasing business transparency and regulating professions exploited for money laundering of money.
As the second anniversary of Russia’s invasion of Ukraine approaches and the war in Gaza enters its fifth month, the US also faces renewed pressure to close loopholes that allow illicit funds to flow from the US to Russia, Iran and the hands of Hamas militant figureheads are flowing.
Brian Nelson, the Treasury Department’s assistant secretary for terrorism and financial intelligence, will be in Paris next week to outline the latest U.S. efforts at meetings of the Financial Action Task Force, a Group of Seven initiative involving 39 countries and which sets international standards on how to combat money laundering and illicit financing. He previewed U.S. strategy in his remarks Thursday to the Atlantic Council, a nonpartisan think tank.
“We are undertaking a concerted effort to address the systemic deficiencies in the United States’ framework to combat money laundering and the financing of terrorism,” Nelson said.
The international community expects the US to improve corporate transparency rules to maintain its status as a safe haven for investments.
A 2016 task force assessment on the effectiveness of measures to combat money laundering and terrorist financing identified four categories in which the U.S. is “out of compliance” – including owning real estate, regulating certain non-compliant -banking professions and others – that could threaten the US. ‘ stands as a place for safe investments.
In recent months, the Ministry of Finance has announced a series of rules intended to make the financial system more transparent.
“We have identified numerous cases involving criminals and U.S. adversaries seeking to operate anonymously and leverage opaque corporate structures,” Nelson said.
“A recurring risk we focus on is the misuse of corporate structures to launder or hide money. Anonymous companies are a favorite tool for bad actors looking to hide their activities and their funds,” Nelson said.
This year, the Treasury Department began building out a new database that collects information about “beneficial ownership” of companies, as part of a new government effort to unmask shell company owners. Critics of the rule say it is too burdensome on small businesses, violates protections of privacy and freedom of expression and infringes on states’ powers to govern corporations.
Also in place is a rule requiring real estate professionals to report information to the agency about unfinanced sales of residential real estate to entities, trusts and shell companies, and new recordkeeping rules for U.S. investment advisers requiring them to developing anti-money laundering programs and filing reports to the government when suspicious activity is detected by customers.
Addressing the holes in the U.S. anti-money laundering regime “will help prevent bad actors from operating in the United States and protect Americans from harm,” Nelson said. “The Treasury Department’s efforts will therefore help us promote prosperity and security at home, while leading by example globally.”