Treasury Targets Russia, Oligarchs as Part of Plan to Combat Illicit Finance

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Continuing efforts to close regulatory loopholes related to shell companies and all-cash real-estate purchases are an important measure in combating corrupt Russian oligarchs, officials say

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“Illicit finance is a major national-security threat and nowhere is that more apparent than in Russia’s war against Ukraine, supported by decades of corruption by Russian elites,” said US Treasury Assistant Secretary Elizabeth Rosenberg.

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Among its priorities for addressing that threat, the Treasury said Wednesday, is implementing regulations that limit the ability of illicit actors such as corrupt Russian oligarchs to covertly access the financial system through shell companies and all-cash real-estate purchases.

The report released Friday responds to a number of illicit-finance risks to the US financial system identified by the Treasury in March. The Treasury at the time named fraud, drug trafficking and cybercrime as the crimes that generate the largest amount of illegal proceeds. It also identified emerging risks, including the abuse of cryptocurrencies and rising domestic extremism.

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The Biden administration tied its work on illlicit finance to larger national-security goals even before the Ukraine invasion. It has said that fighting corruption should be a core national-security priority, and more recently pointed to Russia’s invasion of Ukraine as one example of how corruption destabilizes nations and poses a threat to US interests.

The administration has imposed far-reaching economic measures against Russia, and has stepped up sanctions against individuals and companies it alleges are involved in corruption. On May 8, it announced new measures banning Americans from providing accounting and management-consulting services to Russian companies. That step was in line with the strategies released Wednesday, the Treasury said.

For more than a year, the Treasury has been implementing a corporate-transparency law, an effort the agency said was its top priority in countering the various illicit-finance threats it has identified. The Anti-Money Laundering Act, passed in early 2021, calls for 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 greater anti-money-laundering controls in the real-estate sector, including additional scrutiny of all-cash transactions.

Treasury officials on Wednesday said the measures were an important step in countering Russian President Vladimir Putin and corrupt Russian oligarchs with ties to the Kremlin. Corruption tied to the Russian government has played a role in funding the Ukraine invasion, they said.

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

The Treasury on Wednesday said 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 the transactions they process on behalf of customers.

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

Write to Dylan Tokar at [email protected]

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Credit: www.wsj.com /

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