Treasury targets corrupt Russian oligarchs for illicit finance

  • The US Treasury has unveiled new plans targeting corrupt Russian oligarchs and their activities.
  • Plans released on Friday highlighted the need to close regulatory loopholes related to shell companies.
  • The Treasury also wants to put an end to all-cash real estate purchases, which are often used to launder money.

The US Treasury Department on Friday unveiled a series of new measures aimed at digging up illicit finance, saying Russia’s invasion of Ukraine has prompted new efforts to close regulatory loopholes.

The Department’s National Strategy to Combat Terrorism and Other Illicit Financing, published every two years, outlined plans to increase transparency in the U.S. financial system and strengthen the fight against money laundering and terrorist financing.

In a report on the national strategy to combat terrorism and other illicit financing released on Friday, the Treasury presented plans to increase the transparency of the American financial system and strengthen the fight against money laundering and the financing of terrorism.

The Treasury took sweeping action last week, prohibiting U.S. persons from providing accounting, trust and business formation, or management consulting services to any person or organization located in Russia, making anyone engaged in such activity eligible for sanctions.

Speaking on Friday, Treasury financial crime chief Elizabeth Rosenberg said: “Illicit finance is a major threat to national security and nowhere is this more apparent than in Russia’s war on Ukraine, backed by decades of corruption by Russian elites.

“We need to close the gaps, work effectively with international partners, and leverage new technologies to address the risks posed by corruption, an increase in domestic violent extremism, and the abuse of virtual assets,” Rosenberg added. .

The Biden-Harris administration seeks to fight corruption, the report says, particularly against Russian elites referred to as the oligarchs and their proxies, who have sought or are seeking to anonymize and hide bank accounts, securities, real estate, gold and other assets.

The report said these people were trying to “evade financial sanctions so that they could continue to fund, support and benefit from President Vladimir Putin’s military aggression.”

Insider previously reported that sanctioned Russian oligarchs resorted to an underground payment system, a move experts called “desperate” and a payment system that was previously linked to terrorist financing.

The Treasury has also highlighted the need for tighter controls in the real estate sector, including additional scrutiny of all-cash transactions.

The Treasury identified a number of illicit finance risks to the US financial system in March, including fraud, drug trafficking and cybercrime – crimes that generate the most illicit proceeds.

Risks and gaps include: “The COVID-19 pandemic,


Ransomware

attacks, an epidemic of opioid overdoses, domestic violent extremism, corruption, the increased digitization of payments and financial services, and the enactment of significant new requirements within the U.S. framework.”

It also takes into account “Russia’s large-scale invasion of Ukraine and the unprecedented international sanctions and economic pressure campaign that took place in response.”

Treasury officials said corruption played a role in financing the invasion of Ukraine, hence the importance of implementing measures to counter Russian President Vladimir Putin and the corrupt Russian oligarchs who have links with the Kremlin.

A Treasury official said during a briefing with reporters, according to the Wall Street Journal: “Some of the most sophisticated money launderers and financial criminals in the world work on behalf of Russia. They take advantage of these loopholes to move and hide their money, including in the United States.”

Rosenberg also said Friday, “Strengthening safeguards against money laundering and terrorist financing here in the United States will keep the international financial system strong.”

Michael J. Birnbaum