The U.S. is now the best country for illegally hiding money, report finds

The U.S. is the top destination for stashing money illegally, according to a new report from a pro-tax advocacy group. 

This year marks the first time the U.S. placed No. 1 on FACT Coalition’s Financial Secrecy Index, said the D.C.-based organization Tuesday. The U.S. ranked above traditional tax havens Singapore, Switzerland and Luxembourg, which rounded out the top four nations. The Cayman Islands, which many Americans associate with offshore bank accounts, ranks No. 14 on the group’s list. 

“The U.S. often says ‘We’re No. 1’ but this is one thing we don’t want to be No.1 in,” said Ian Gary, FACT Coalition’s executive director. 

The findings come as the U.S. cracks down on Russian oligarch wealth following Russia’s invasion of Ukraine. The U.S. has imposed economic sanctions on some Russian oligarchs, including billionaires Alisher Usmanov and Igor Shuvalov. The sanctions were unable to reach all of the oligarchs’ wealth, however, because some of it is hidden inside an intricate web of real estate assets, private investment accounts and anonymous shell companies, Quartz reported

The Department of Justice has created a new KleptoCapture task force aimed specifically at finding the hidden Russian wealth.

The FACT coalition examined financial rules from about 100 countries, taking a specific look at laws that make it easier for criminals to hide and launder money. Each nation was then given a score out of 100. While the U.S. scored a 67 — lower than other nations — it still topped the list because of its impact on the global economy. 

The main reason the U.S. jumped to the top of FACT’s list is due to a lack of funding for the Treasury Department to enforce a new anti-money laundering law, experts said Tuesday. 

In December 2020, Congress passed the Corporate Transparency Act, which requires anyone who starts a shell company in the U.S. to list an owner’s name. Under the act, the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, is in charge of enforcing the rules. 

Here’s what it means to be an oligarch


But experts said FinCEN is going to need additional staff, funding and tech infrastructure to take on this new task and investigate who’s illegally stashing money. Biden administration officials are asking Congress to send $210.3 million to FinCEN under the proposed 2023 U.S. budget, which marks a roughly 30% increase from its current funding. 

Stricter laws needed

FACT’s report concluded that nearly every developed nation should pass stricter financial laws, particularly around the ownership of shell companies. Not doing so allows terrorism groups to secretly fund their operations and oligarchs to evade taxation, coalition officials said.

It’s unclear how much money is illegally stashed within U.S. borders, experts in anti-money laundering say. The U.S. Treasury Department typically estimates the figure to be 2% of the nation’s GDP, which today would amount to $480 billion. 

But even before the Russia-Ukraine war, U.S. officials were aware of the growing problem of money laundering within the U.S. In December, Treasury Secretary Janet Yellen said “the best place to hide and launder ill-gotten gains is actually the United States.”

It takes less effort to set up a shell corporation in the U.S. than it does to get a library card, said Lakshmi Kumar, a terrorist-financing expert at Washington think tank Global Financial Integrity. That’s because an applicant must verify their identification to use the library, but that’s not the case for a shell corporation, Kumar said.

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