Bipartisan bills takes aim at illicit funds, but trade bodies kick back

A bipartisan bill that would beef up money laundering and transfer of funds raised through illicit activities has been introduced in the US Senate, but is being opposed by trade organisations that say it will place a "disproportionate burden" on US businesses.

The Establishing New Authorities for Businesses Laundering and Enabling Risks to Security (ENABLERS) Act tabled by Senators Sheldon Whitehouse (D-RI) and Roger Wicker (R-MS) aims to impede the activities of "kleptocrats and criminals".

If passed it promises to strengthen federal due diligence and transparency requirements to include US professionals – such as investment advisors, attorneys, and accountants – who the bill says are "often exploited to hide illicit money or carry out financial crimes."

Similar provisions have been passed by the House of Representatives in its version of the National Defense Authorisation Act (NDAA). ENABLERS is under consideration for inclusion in the Senate's version of the defense bill.

"The US should be doing everything within reason to root out this corruption and keep foreign bad actors from exploiting our financial system," said Sen Wicker in a statement on the bill.

"This legislation would put that abuse in the crosshairs by requiring greater transparency in certain industries to help protect our country."

ENABLERS has also been welcomed by the Financial Accountability and Corporate Transparency (FACT) Coalition, set up to promote policies that combat the harmful impacts of corrupt financial practices.

"One year ago today, the Pandora Papers – the largest leak of financial documents and data in history – shone a light on the abuse of secrecy jurisdictions to hide illicit funds by criminals and corrupt regimes around the world," said FACT executive director Gary.

"Unfortunately, the revelations provided by the Pandora Papers also included a newfound understanding of our nation's role as perhaps the single most important supplier of financial secrecy in this vast network of illicit finance," he added.

"If enacted, the ENABLERS Act would represent a sea change in American law to directly address the complicity of US professional service providers in the stashing of dirty money within our borders."

According to a report by the investigative organisation Sentry, the US is among a remaining 10 per cent of countries that have not yet implemented the necessary transparency and due diligence solutions included in the ENABLERS Act.

Meanwhile, the US Department of the Treasury has acknowledged that America is currently one of the best places in the world to "hide and launder ill-gotten gains," according to the Senators.

Opponents of the legislation include dozens of industry organisations representing a broad swathe of smaller businesses – including the AICC independent packaging association, Small Business & Entrepreneurship Council, American Council of Engineering Companies and Construction Industry Round Table – who have written their concerns in a letter to Senate Majority Leader Charles Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY).

They claim the Act "would require a broad pool of covered businesses, foundations, and charities to collect and report beneficial ownership information, report any suspicious transactions, and establish and enforce anti-money laundering policies."

The broad language of the bill means that it would cover the legitimate owners, board members, and senior executives of most businesses and charities, who would be subjected to deep scrutiny and reporting requirements that would not ultimately tackle the problem of illicit finance.

"This legislation would dramatically expand the recently-enacted Corporate Transparency Act's (CTA) reporting requirements, despite the fact that those requirements have yet to be put in place and are unlikely to result in any meaningful law enforcement successes," they claim in the letter.

"Neither the ENABLERS Act nor the [CTA] are likely to improve our law enforcement efforts as, at their heart, they both rely on criminals to self-report their crimes. That is obviously unlikely."