As published on icij.org, Friday 15 July, 2022.
A major overhaul of America’s anti-money laundering laws is another step closer, after the United States House of Representatives passed a bill that would force middlemen like trust companies and lawyers to more closely scrutinise the source of money and assets flowing into the country’s financial system.
The bipartisan Establishing New Authorities for Businesses Laundering and Enabling Risks to Security (ENABLERS) Act was included in the annual defense bill, which passed the House on Thursday.
The bill amends the 52-year-old Bank Secrecy Act by requiring for the first time that trust companies, lawyers, art dealers and others investigate clients and report suspicious activity to the U.S. Department of Treasury.
Banks are already required to vet their clients and sources of wealth, but other American financial gatekeepers have been excluded from so-called due diligence rules – a loophole long criticized by financial crime experts and international watchdogs.
Scott Greytak, Director of Advocacy for Transparency International U.S., said the passage of the bill through the house was timely, and called on the U.S. Senate to follow suit.
“Cracking down on American enablers of global corruption is a national security priority of the highest order,” he said in a statement. The Enablers Act “is the single most important anticorruption measure the United States Congress can adopt right now to prevent corrupt Russian officials and future kleptocrats from hiding and growing their dirty money in the United States.”
Lawmakers first proposed the Enablers Act in October, inspired by the Pandora Papers investigation, a sweeping collaboration by the International Consortium of Investigative Journalists, the Washington Post and other media organizations. The investigation showed how the global elite conceal their wealth in tax havens that increasingly include the United States.
The House Armed Services Committee voted last month to include the Enablers Act in the National Defense Authorization Act, a broad national defense policy bill that is traditionally passed by Congress every year and that generally follows relatively speedier path to becoming law.
In 2020, shortly after ICIJ and BuzzFeed News’ FinCEN Files investigation, lawmakers employed a similar legislative tactic in Congress to pass the Corporate Transparency Act, which requires companies to report their owners to the federal government. That law increased transparency requirements for the owners of companies, but did little to reign in the many service providers within the United States, including attorneys and registered agents, who are often the entry point into America for vast foreign fortunes, and who are now the subject of the Enablers Act.