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Treasury Targets Russia 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 combat 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 may be among the many most essential it has produced, Treasury officers mentioned, given Russia’s aggression in opposition to its neighbor.

“Illicit finance is a significant national-security risk and nowhere is that extra obvious than in Russia’s struggle in opposition to Ukraine, supported by a long time of corruption by Russian elites,” mentioned U.S. Treasury Assistant Secretary Elizabeth Rosenberg.

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

The report launched Friday responds to quite a few 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 home 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 preventing corruption must be a core national-security precedence, and extra just lately pointed to Russia’s invasion of Ukraine as one instance of how corruption destabilizes nations and poses a risk 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 corporations it alleges are concerned in corruption. On Could 8, it introduced new measures banning People from offering accounting and management-consulting companies to Russian corporations. That step was consistent with the methods launched Wednesday, the Treasury mentioned.

For greater than a yr, the Treasury has been implementing a corporate-transparency regulation, an effort the company mentioned was its high precedence in countering the varied 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 corporations.

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

Treasury officers on Wednesday mentioned the measures have been an essential 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 task in funding the Ukraine invasion, they mentioned.

“A few of the most subtle cash launderers and monetary criminals on this planet work on behalf of Russia,” a senior Treasury official mentioned throughout a briefing with reporters. “They benefit from these gaps to maneuver and conceal their cash, together with in the US.”

The Treasury on Wednesday mentioned it will additionally give attention to updating rules that require monetary establishments corresponding to banks and money-services companies to use anti-money-laundering controls to the transactions they course of on behalf of consumers.

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

Extra From Threat & Compliance Journal

Write to Dylan Tokar at [email protected]

Copyright ©2022 Dow Jones & Firm, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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

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