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

The U.S. Treasury Division outlined actions it plans to take to handle illicit-finance dangers, saying Russia’s invasion of Ukraine had underscored the necessity to shut regulatory loopholes and step up the struggle in opposition to corruption.

The nationwide technique for combating illicit finance, launched Friday, is the newest iteration of a report the Treasury produces each two years. However this yr’s technique is perhaps among the many most necessary it has produced, Treasury officers mentioned, given Russia’s aggression in opposition to its neighbor.

“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,” mentioned U.S. Treasury Assistant Secretary Elizabeth Rosenberg.

Amongst its priorities for addressing that menace, the Treasury mentioned Wednesday, is implementing laws that restrict the power of illicit actors comparable to corrupt Russian oligarchs to covertly entry the monetary system by means of shell firms and all-cash real-estate purchases.

The report launched Friday responds to plenty of illicit-finance dangers to the U.S. monetary system recognized by the Treasury in March. The Treasury on the time named fraud, drug trafficking and cybercrime because the crimes that generate the biggest quantity of illicit proceeds. It additionally recognized rising dangers, together with the abuse of cryptocurrencies and rising domestic extremism.

The Biden administration tied its work on illicit finance to bigger national-security targets even earlier than the Ukraine invasion. It has mentioned that fighting corruption should be a core national-security priority, and extra just lately pointed to Russia’s invasion of Ukraine as one instance of how corruption destabilizes nations and poses a menace to U.S. pursuits.

The administration has imposed far-reaching financial measures in opposition to Russia, and has stepped up sanctions in opposition to people and firms it alleges are concerned in corruption. On Could 8, it introduced new measures banning Americans from providing accounting and management-consulting services to Russian firms. That step was according to the methods launched Wednesday, the Treasury mentioned.

For greater than a yr, the Treasury has been implementing a corporate-transparency law, an effort the company mentioned was its prime precedence in countering the assorted illicit-finance threats it has recognized. The Anti-Cash Laundering Act, handed in early 2021, requires the Treasury to create a corporate-ownership registry that lawmakers hope will restrict using nameless shell firms.

The company can be pushing for higher anti-money-laundering controls within the real-estate sector, together with additional scrutiny of all-cash transactions.

Treasury officers on Wednesday mentioned the measures have been an necessary step in countering Russian President

Vladimir Putin

and corrupt Russian oligarchs with ties to the Kremlin. Corruption tied to the Russian authorities has performed a job in funding the Ukraine invasion, they mentioned.

“Some of the most sophisticated money launderers and financial criminals in the world work on behalf of Russia,” a senior Treasury official mentioned throughout 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 mentioned it might additionally concentrate on updating laws that require monetary establishments comparable to banks and money-services companies to use anti-money-laundering controls to the transactions they course of on behalf of shoppers.

It additionally will work to enhance the effectiveness of law-enforcement efforts to counter illicit financing, help technological innovation and proceed to scrutinize the dangers posed by cryptocurrencies and different new monetary services, the Treasury mentioned.

Extra From Danger & Compliance Journal

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Appeared within the Could 14, 2022, print version as ‘Treasury Tackles Illicit Finance.’

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