Their statement referenced the Pandora Papers, a still-unfolding expose led by the International Consortium of Investigative Journalists, that has deepened concerns about a growing parallel world of hidden transactions and assets.
The project, which plumbs a trove of millions of leaked documents, has raised questions about the business dealings of everyone from the king of Jordan to the billionaire friends and an alleged mistress of Russian leader Vladimir Putin. Among its more surprising findings is that South Dakota has become a major haven for people seeking to hide money from tax collectors, creditors and others.
The ENABLERS Act encapsulates a key idea that analysts say is, to a large degree, already standard in most other countries. The main provision is this: Lawyers, investment advisers, art dealers, realtors, accountants, public relations firms and others would be required to engage in some form of “due diligence” to ensure their clients aren’t paying with or trying to move around money of suspicious origin.
Such “due diligence” rules already apply to banks. They require that the entities targeted by the legislation look into whether money from clients is, among other things, the proceeds of a crime. The goal is to make would-be money-launderers and others, not to mention those helping them, face more tripwires in the process.
The ENABLERS Act has bipartisan support on Capitol Hill, but it is likely to face significant pushback from the various industries that could be affected by it, as is typical for any group facing additional federal regulation. Some industry groups contacted by POLITICO on Tuesday did not offer comment or declined to do so, saying they needed to see the exact wording of the bill.
Despite the potential resistance, lawmakers say it’s worth getting the conversation going.
“If you’re against money laundering, if you’re against foreign dictators using the United States to hide the money they steal from their people, then you have to apply these rules to everybody, not just the banks the bad guys use to launder money,” said Malinowski, the leading Democrat on the bill.
Malinowski’s Republican co-lead on the bill is expected to be Rep. Maria Salazar of Florida. Her interest in anti-corruption efforts stems in part from being the daughter of Cuban exiles and watching the malign actions of autocrats in the Western Hemisphere, a senior congressional aide said.
Most other countries already require entities beyond banks to have in place safeguards like those in the bill, according to Josh Rudolph, a corruption expert with the Alliance for Securing Democracy at the German Marshall Fund.
With such legislation, the United States could join the ranks of countries that require law firms, accountants and other entities to “have compliance officers, trainings, audits, and controls reasonably designed to spot potential money laundering by identifying customers, scrutinizing transactions, keeping records, and reporting suspicious activity to the government,” Rudolph argued in a recent analysis.
Overall, anti-corruption campaigners have been happy with the growing interest in their work from Congress and the Biden administration. They point to several recent pieces of legislation nearing full passage as evidence of the support.
Those items made it into the version of the National Defense Authorization Act approved by the House. In their statement on Tuesday, Curtis and Malinowski urged the Senate to ensure the items were included in its version of the NDAA.
Among other things, the measures: require the administration to evaluate 35 people linked to Putin for potential sanctions; counter efforts by other countries to abuse tools offered by Interpol; require reporting on how other countries are battling corruption; make it easier to publicize the names of allegedly corrupt officials facing U.S. visa bans; regularly publicize how much money stolen from other countries is recovered by U.S. law enforcement; and reauthorize the Global Magnitsky Act, a law that allows for economic sanctions on individual corrupt actors and human rights abusers.
The Biden administration is pursuing several anti-corruption efforts. That includes writing the rules for a law, passed under the Trump administration, that effectively bans the practice of registering shell companies anonymously. Such shell companies appear to be a major driver of the malfeasance exposed by the Pandora Papers.
Biden has pledged to make fighting corruption a major part of the agenda for the upcoming Summit for Democracy, a gathering of world leaders whose first session is expected to be held in December. One goal of the summit is to push other countries to take meaningful steps to combat corruption in the year that follows.
“President Biden is committed to addressing issues such as reducing offshore financial secrecy, making tax laws fairer and tightening loopholes to make it more difficult for leaders who steal from their people to hide their assets throughout the international financial system,” a senior administration official told POLITICO, adding that the Pandora Papers “makes it even more important for these issues to be on the international agenda.”
Anti-corruption campaigners note that while it’s helpful for other governments to step up and coordinate on such measures, the United States on its own can have a major impact. That’s in part because of the importance of the U.S. dollar and because many financial transactions are routed through American institutions.
“Our financial rules matter to the global financial architecture,” said Gary Kalman, director of the U.S. office of Transparency International.