Summit Anti-Corruption Commitments Must Include U.S. Domestic Anti-Money Laundering Reforms

WASHINGTON - The Financial Accountability and Corporate Transparency (FACT) Coalition today reiterated the need for substantive U.S. leadership on key anti-corruption and financial transparency reforms after the opening speech by President Biden last night. Among the Summit's themes is the reaffirmation of still unfulfilled anti-corruption commitments from the previous Summit of the Americas in Lima, Peru.

"To fight global corruption, the Biden Administration must back up rhetorical leadership with needed U.S. reforms on an expedited timetable," said Ian Gary, Executive Director of the FACT Coalition. "The Corporate Transparency Act and other needed reforms present an opportunity to tackle U.S. financial secrecy and the worldwide corruption it enables, and the clock is ticking."

The Corporate Transparency Act (CTA) will effectively end the abuse of most anonymous U.S. shell companies by requiring entities to name their true, "beneficial" owner to a secure directory housed at the Financial Crimes Enforcement Network (FinCEN). Nevertheless, FinCEN, the agency tasked with implementing the law, has yet to publish a draft rule that outlines the protocols by which authorized users - including trusted foreign law enforcement partners - will have access to the directory. FACT has argued that a final rule should facilitate uncomplicated and fulsome access, as well as information sharing for both criminal and civil cases, including by foreign government partners in the Western Hemisphere. Access to the directory will be critical for U.S. partners to fight corruption and illicit financial flows in their own jurisdictions.

"The United States has a responsibility to take action because of its outsized role in facilitating money laundering in the Western Hemisphere," said Lakshmi Kumar, Policy Director at Global Financial Integrity.

Tackling illicit flows through U.S. markets that enable global corruption and criminal activity also requires bringing greater light to the $50 trillion U.S. real estate sector. "54 percent of all money laundered through U.S. real estate comes from Latin America. We need to see a permanent and nationwide regime to combat this issue and end the ability of corrupt and criminal actors from Latin America to use U.S. real estate to launder and hide their ill-gotten wealth," said Kumar.

This February, FACT submitted comments to FinCEN commending action to overcome a twenty-year "temporary" exemption on anti-money laundering reporting and bring the U.S. real estate sector under the purview of federal anti-money laundering safeguards. FACT's comment included guidance on how to craft an effective, permanent, and nationwide set of standards to combat illicit finance in real estate.

"This Summit should deliver strong shared commitments across the region to tackle corruption and illicit financial flows, which weaken economies and undermine democracy throughout the region," said Gary. "Outcomes from the Summit should include specific recommendations for beneficial ownership and steps to address real estate money laundering risks."

The threats posed by these unaddressed concerns are not limited to foreign countries; they also risk jeopardizing the stability of U.S. housing markets.

"By leaving itself vulnerable to foreign money laundering, the United States does more than obstruct the global anti-corruption agenda," said Jyotswaroop Bawa, Chief of Organizing and Campaigns at the California Reinvestment Coalition, a member of the FACT Coalition. "It has a direct cost on our communities right here in the States. Waves of dirty money push housing costs up across the board, squeezing the budgets of our local residents."