Treasury targets Russia and oligarchs in anti-illicit finance plan

The US Treasury Department outlined steps it plans to take to address illicit finance risks, saying Russia’s invasion of Ukraine underscored the need to close regulatory loopholes and step up fight against corruption.

The National Illicit Finance Strategy, released on Friday, is the latest iteration of a report the Treasury produces every two years. But this year’s strategy could be among the most significant it has produced, Treasury officials said, given Russia’s aggression against its neighbor.

“Illicit finance is a major threat to national security and nowhere is this more apparent than in Russia’s war on Ukraine, fueled by decades of corruption by Russian elites,” the deputy secretary said. to the United States Treasury, Elizabeth Rosenberg.

Among its priorities to deal with this threat, the Treasury said on Wednesday the implementation of regulations that limit the ability of illicit actors such as corrupt Russian oligarchs to secretly access the financial system through front companies and purchases. all-cash real estate.

The report released on Friday addresses a number of illicit finance risks to the US financial system identified by the Treasury in March. The Treasury at the time identified fraud, drug trafficking and cybercrime as the crimes generating the greatest number of illicit proceeds. He also identified emerging risks, including the misuse of cryptocurrencies and the rise of domestic extremism.

The Biden administration tied its work on illicit finance to broader national security goals even before the invasion of Ukraine. He said fighting corruption should be a top national security priority and more recently cited Russia’s invasion of Ukraine as an example of how corruption destabilizes nations and is a threat to American interests.

The administration has imposed sweeping economic measures against Russia and increased sanctions against individuals and companies it believes are involved in corruption. On May 8, he announced new measures banning Americans from providing accounting and management consulting services to Russian companies. The step was consistent with strategies released Wednesday, the Treasury said.

For more than a year, the Treasury has been implementing a Corporate Transparency Act, an effort the agency said was its top priority to combat the various illicit finance threats it identified. The anti-money laundering law, passed in early 2021, calls on the Treasury to create a corporate ownership registry that lawmakers hope will limit the use of anonymous shell companies.

The agency is also pushing for stronger anti-money laundering controls in the real estate sector, including additional screening of all-cash transactions.

Treasury officials said Wednesday the moves were an important step in tackling Russian President Vladimir Putin and corrupt Russian oligarchs with ties to the Kremlin. Corruption linked to the Russian government played a role in financing the invasion of Ukraine, they said.

“Some of the world’s most sophisticated money launderers and financial criminals work on behalf of Russia,” a senior Treasury official said during a briefing with reporters. “They take advantage of these loopholes to move around and hide their money, including in the United States.”

The Treasury said on Wednesday it would also focus on updating regulations that require financial institutions such as banks and money-services businesses to apply anti-money laundering controls to transactions they process at the customers name.

It will also work to improve the effectiveness of law enforcement efforts to combat illicit finance, support technological innovation, and continue to examine the risks posed by cryptocurrencies and other new products and financial services, the Treasury said.

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Appeared in the print edition of May 14, 2022 under the title “Treasury Tackles Illicit Finance”.


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