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US ranked as the first country to hide money illegally

The United States is the number one destination for hiding money illegally, according to a new report from a tax advocacy group.

This year marks the first time the United States has ranked first on the FACT Coalition’s Financial Secrecy Index, the Washington-based organization said Tuesday. The United States ranked above traditional tax havens Singapore, Switzerland and Luxembourg, which round out the top four nations. The Cayman Islands, which many Americans associate with offshore bank accounts, ranks 14th on the group’s list.

“America often says ‘We’re #1’ but that’s something we don’t want to be #1 at,” said Ian Gary, executive director of FACT Coalition.

The findings come as the United States cracks down on the wealth of Russian oligarchs after Russia invaded Ukraine. The United States has imposed financial sanctions on some oligarchs, including billionaires Alisher Usmanov and Igor Shuvalov, but this task has been made more difficult by the fact that much of this wealth is hidden in a complex network of assets. real estate, private investment accounts and anonymous. shell companies, Quartz reported.

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

The FACT coalition examined the financial rules of around 100 countries, including laws that make it easier for criminals to hide and launder money. Experts say the main reason the United States topped the list is the Treasury Department’s lack of funding to enforce a new anti-money laundering law.

In December 2020, Congress passed the Corporate Transparency Act, which requires anyone who forms a shell company in the United States to list the name of an owner. Under the law, the Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, is responsible for enforcing the rules.

But experts said FinCEN needs additional funds, staff and technology to take on this new task and investigate who is illegally hiding money. Biden administration officials are asking Congress to send $210 million to FinCEN as part of the US government’s proposed budget for 2023, which represents an increase of about 30% over its current funding.

Stricter laws needed

FACT has concluded that almost all developed countries should adopt stricter financial laws, especially regarding the ownership of shell companies. Failure to do so allows terror groups to covertly fund their operations and oligarchs to evade taxes, coalition officials said.

It’s unclear how much money is illegally hidden within US borders, according to anti-money laundering experts. But the US Treasury Department previously pegged the figure at around 2% of national GDP, which today stands at $480 billion.

US officials have long been aware of money laundering activities in the United States. More recently, Treasury Secretary Janet Yellen said in December that “the best place to hide and launder ill-gotten gains is actually the United States.”

It takes less effort to set up a front company in the United States than to get a library card, said Lakshmi Kumar, a terrorist financing expert at Washington think tank Global Financial Integrity. This is because an applicant must verify their identity to use the library, but a shell company does not, he said.

Christopher J. Brooks

Khristopher J. Brooks is a reporter for TUSEN MoneyWatch and covers business, consumer and financial stories ranging from economic inequality and housing issues to bankruptcies and sports affairs.

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