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Capture Dictator, Mafia, Oligarch,

Drug Cartel, & Terrorist Money:

End Shell Companies

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Short Version

Dictators, mafia bosses, Russian oligarchs, terrorist organizations, drug cartels, human traffickers, and corrupt officials use shell companies to launder (hide) money.

Experts estimate corrupt people launder over $1 trillion each year and that $21 trillion of blood or dirty money hides in offshore accounts.

Many of these corrupt people at the top and their families vacation in luxury resorts, send their children to school in the West, and own yachts and lavish mansions worldwide.

Cracking down on dirty money would effectively fight corruption, mafias, drug cartels, terrorists, and those who sexually traffic women or trap people in slavery worldwide.  It would expose many bribes and conflicts of interest.

If the rich Western world (United States, Europe, Australia, etc.) ended its cooperation with crime lords and dictators, we could easily fund food, clean water, medicine, education, and win peace and prosperity worldwide.

Capture Dictator, Mafia, Oligarch, Drug Cartel, & Terrorist Money: End Shell Companies (Full Text)

Dictators, mafia bosses, Russian oligarchs, terrorist organizations, drug cartels, human traffickers, and corrupt officials use shell companies to launder (hide) money.

Experts estimate corrupt people launder over $1 trillion each year and that $21 trillion of blood or dirty money hides in offshore accounts.

Many of these corrupt people at the top and their families vacation in luxury resorts, send their children to school in the West, and own yachts and lavish mansions worldwide.

Cracking down on dirty money would effectively fight corruption, mafias, drug cartels, terrorists, and those who sexually traffic women or trap people in slavery worldwide.  It would expose many bribes and conflicts of interest.

By stealing resources that would otherwise help poor people, the anti-poverty group One argues money laundering worldwide likely causes 6.6 million deaths each year.

For example, oil-rich Equatorial Guinea has the highest per capita income in Africa yet half the people have no access to clean water.  They also have higher rates of infant mortality and shorter lives than many other African countries.

The son of Equatorial Guinea’s president owned a $120 million super-yacht, a fleet of luxury cars, including one car worth $2 million, and $15 million in luxury watches.  This is all money laundering that kept the people of his country dying.

If the rich Western world (United States, Europe, Australia, etc.) ended its cooperation with crime lords and dictators, we could easily fund food, clean water, medicine, education, and win peace and prosperity worldwide.

People suffering under dictators worldwide would fall in love with us and wars and terrorism would likely quickly end.

Consider Russia.  More than half of Russia’s wealth is stashed offshore.  Experts estimate Russian oligarchs hold between $1 and $1.3 trillion abroad.  Putin and his oligarchs live like kings, leaving average Russians very poor.

Putin is likely the richest man in the world, worth as much as $200 billion.  (His salary is equivalent to only $119,000.)  He owns a $1 billion palace on the coast of the Black Sea.

In Russia, 1/3 of people have no hot water, ¼ no indoor toilets, and 1/5 no running water. Almost 8% don’t have access to safe drinking water.

We can easily capture the money of Putin’s oligarchs because most offshore Russian wealth is actually in the US or Britain.  Smaller tax havens like many islands around the world just don’t have the investment opportunities to satisfy Russian oligarchs.

Putin faced massive protests in 2012.  Russians were sick of his jailing and killing political dissidents and opponents and control of TV.  But taking back their old land of Crimea in Ukraine made him popular again.

Now that glow has faded. Russian incomes have fallen for several years in a row.  Last year, Putin cut pensions and hiked taxes, but not for oligarchs.  Now Putin is trying to limit internet access.

 

Putin is afraid of one thing. He is afraid that one day the Russian middle class will finally rebel against his regime and rush into the streets demanding change.

It happened in Tunis, Cairo and other Middle Eastern and North African cities in the Arab Spring between 2010 and 2012.  It happened closer to home in 2013 when Ukrainians threw out their Russian puppet president Yanukovych.

The average Russian would love for the Western world to overthrow their dictators and use the money to improve their lives.

There are whole rich neighborhoods of empty mansions and luxury townhouses hiding laundered money in major cities like New York, Miami, Los Angeles, San Francisco, Vancouver, London, and Paris.  London alone has $35 billion of these empty mansions hiding Russian money.

In the US, shell companies bought nearly half of all homes worth at least $5 million.  Our Treasury Department says nearly 1/3 of its monitored purchases of luxury real estate involves a person our government tracks as suspicious.

Our State Department has restricted Russian oligarch Oleg Deripaska’s travel to the US for years but he owns a $42.5 million mansion in Manhattan and another luxury property near Washington D.C.’s Embassy Row.

How To Capture Dirty Blood Money Worldwide

The US and Europe can capture most of this money by cracking down on shell companies with simple banking transparency laws.

All countries have some sort of registry of shareholders, but the information rarely includes the ultimate owners who benefit from the legal entities.  Some countries have no central registers and many countries collect incomplete, fragmented information.

The US is one of 8 G20 countries that allows nominee directors and shareholders to do business without even disclosing the ultimate owners who benefit.

In the US and Canada, states and provinces have different requirements.  Delaware doesn’t even collect information on shareholders or directors.

In many US states, you can set up an anonymous shell company with less identification than it takes to get a library card.

These insane rules allow even sanctioned oligarchs, dictators, and companies to hide.

With these rules, governments and banks fighting money laundering or terrorism must try to collect and analyze ultimate ownership information, despite mazes of constructed layers precisely designed to hide it.

At least 29 countries, including most of the European Union, already demand full disclosure of the ultimate owners who benefit.

Some cities like Berlin, Singapore, and Hong Kong ban foreigners from owning, leasing, or at least leaving a residential property empty.  Australia bans foreigners from buying in Sydney or Melbourne.

Copying these laws and cracking down on money laundering here in the US would help regular Americans by lowering the ridiculously high rent and property values in some of our largest cities.  The same is true of London, Paris, and other major cities worldwide.

People in corrupt countries often use luxury goods for bribes to get government contracts because nobody tracks them.  The largest luxury markets are in the US, Britain, France, Germany, Italy, Japan, and China.  Yet we do nothing to monitor them.

When China started tracking corruption in luxury goods in 2012, their sales plummeted.

We need to collect and make transparent information on ultimate owners who benefit from all legal entities:

  • Require central, public, machine-searchable databases for the real individuals who are the ultimate owners who benefit from all companies.
  • Require all partnerships, corporations, trusts (including trustee, settlor, and beneficiaries), foundations to register in these public databases.
  • The databases must list all shareholders, directors, and bank accounts. The bank account numbers can be private but accessible to government and financial officials.
  • Eliminate nominee shareholders and the many layers of legal entities that exist simply to hide the ultimate owners who benefit.
  • If we allow nominee shareholders, directors, lawyers, accountants, or other legal entities to represent the owners who ultimately benefit, we should force them to register, get licenses, and subject them to strict rules fighting money laundering.
  • All real estate agents and developers and companies dealing in luxury goods like jewelry, expensive cars, and yachts must participate.
  • All infrastructure, gas, oil, and mining companies or those that bid for public or state-owned projects must participate. (Infrastructure, mining, and public enterprises worldwide have high rates of corruption.)
  • All public officials must participate and declare their assets and political contributions, including any connections to companies or legal entities with beneficial ownership.
  • Forbid banks, financial institutions, lawyers, real estate agents or developers, or companies from making even one transaction without information on the ultimate owners who benefit.
  • Require all legal entities to provide and update information on the identities of the ultimate owners who benefit.
  • Verify all this information with independent, reliable sources, such as cross-checking the data against bank accounts and other government and tax databases and with random inspections.
  • Fine, penalize, or suspend financial institutions, lawyers, companies, or their directors and senior managers for failing to follow rules fighting money laundering.
  • Require banks to report all foreigners’ accounts to tax authorities in the owner’s home country.

Western governments can also crack down on tax havens by refusing to bank with the worst offenders.

Some of these worst offenders are Western countries like the Netherlands, Luxembourg, Switzerland, Ireland, British territories in the Caribbean like Bermuda and the Cayman Islands, or states like Delaware, New Jersey, and Nevada.

Dozens of banks in countries like Germany, Denmark, Sweden, and Finland have profited from dirty laundered Russian money, often moved through the Baltic nations like Cyprus or Azerbaijan.

Detectives believe Germany’s Deutsche Bank laundered as much as $80 billion of Russian money between 2010 and 2014. Between 2011 and 2018, it paid $14.5 billion in fines, often for Russian money laundering.

Deutsche Bank is under investigation for loaning President Trump over $2 billion over two decades when no other bank would loan money to him and for its part in yet another Russian money laundering scheme: $20 billion this time.

European Union officials have already forced companies like Apple, Starbucks, Fiat, and 35 other companies to pay back tens of billions in illegal tax avoidance and interest for money hidden in places like Luxembourg, Netherlands, Belgium, and Gibraltar. Apple alone had to pay $14.2 billion in back taxes and interest to Ireland.

We can force non-Western centers for money laundering like Dubai and even Cyprus to cooperate and crack down by sanctioning their banks or refusing to trade with them until they do.

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