Botching anti-money-laundering move, Biden weakens national security


From the horrors of Afghanistan’s withdrawal, to the collapse of the Iran nuclear deal, to slow-moving support for Ukraine — the Biden administration is broadcasting American decline to a global audience.

With failures of such historic magnitude, the absurd rollout of a technocratic anti-money-laundering law seems trivial.

But for America’s most dangerous adversaries, it signals open season for exploiting the American financial system — with frightening implications for national security and the safety of all Americans.

The measure was to deal with widespread abuses by American shell companies. All of these are contemporary exit vehicles for financial crime and corruption, enabling many bad actors to transfer illicit funds across borders and through our economy with almost complete anonymity.

Russian elites use them to evade sanctions and hide stolen wealth. Iran used one to keep ownership of a Fifth Avenue skyscraper a secret for two decades, claiming rent payments from American tenants, of course.

Above all, shell companies are a linchpin for China’s increasingly aggressive efforts to infiltrate America and undermine our national security — from buying up farmland near sensitive locations to flooding our streets with fentanyl, high-tech As far as stealing military secrets.

Chinese President Xi Jinping speaks with National People’s Congress Chairman Li Zhanshu during the opening session of the National People’s Congress on March 5, 2023.
AFP via Getty Images

The last major update to America’s old fiscal defense was in 2001 The USA Patriot ActBut it did not directly address the shell-company threat.

So after two decades of hand-wringing in Washington, and after our British, European and Ukrainian allies implemented their own solutions, even the 116th Congress felt compelled to act.

It passed the Bipartisan Corporate Transparency Act in January 2021 as part of the National Defense Authorization Act. It requires owners of shell companies registered in the United States to disclose their true identities on paperwork instead of naming crooked lawyers or other associates as frontmen.

This information will be securely stored in a Treasury Department-managed registry, accessible only to law enforcement agencies and US banks for purposes of combating illicit finance.

We know this model works because it’s already working in other countries — in fact, not just in the UK, until the United Kingdom’s world-leading registry. of law enforcement, but rather the US. Its counterpart also arrives almost every day.

After Congress overrode President Donald Trump’s NDAA veto (one of his last acts in office), the task of implementing this critical national-security measure fell to the incoming Biden administration.

So far, so good: President Joe Biden repeatedly pledged to take tough executive action against shell companies during his campaign as part of his laudable plan to combat corrupt authoritarian rule.

But fast forward to February 2023, and not only was Biden’s Treasury Department a year late in providing its plans for the plan — it watered it down to the point of futility.

Under the final rules from Biden’s bureaucrats, state, local and tribal law enforcement — who are on the front lines of the fight against fentanyl — will face a mountain of paperwork to access information that could save American lives. Time can be critical for

Fentanyl is having a negative impact on many communities.

U.S. banks, which are legally required to identify and report suspicious transactions by cartels, terrorists and spies, have also been severely limited in their access.

As if that weren’t enough, trusted allies like the United Kingdom that readily share their registers with our law enforcement agents will also be blocked.

Congressional Republicans worked hard to ensure that the final legislation addressed concerns about privacy, undue business burdens and protected access by foreign partners.

But the bureaucratic hurdles thrown up by Biden’s coffers go far beyond the reasonable safeguards set forth by Congress. And they certainly don’t square with Biden’s previous boast about getting tough on illicit finance.

Joe Biden
Biden has pledged to take executive action against shell companies during his campaign.
AP/Patrick Semansky

It appears that the Treasury Department has either muddled the process or bowed to the demands of corporate lobbyists who instinctively oppose the new rules because they care more about personal profits than America’s long-term prosperity and security.

Fortunately, it wasn’t too late for Treasury officials to get it right. They could amend their plans to reflect Congress’ intent for a more robust anti-money laundering system that helps law enforcement and the private sector work together to keep Americans safe.

Failure to do so would leave the United States out of step with allies engaged in strengthening their financial defenses.

And that means America will become an even more attractive place for cartels to sell fentanyl, for Iran and Russia to evade the sanctions we’ve imposed on them, and for China to keep stealing our trade and military secrets.

Nate Sibley is a research fellow at the Hudson Institute’s Kleptocracy Initiative.

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