A group of lawmakers is proposing legislation aimed at cracking down on what they call financial “enablers” that help shield the movement of wealth by foreign clients into the United States.
The group released proposed legislation, called the Enablers Act, following the weekend release of the Pandora Papers, an in-depth investigation that examined how world leaders and the rich use offshore accounts to move their wealth.
The lawmakers’ proposal would require the Treasury Department to establish due diligence laws for “middlemen” entities that can be involved in the flow of wealth, such as art and antique dealers, attorneys conducting financial activities and those involved in creating limited liability companies and shareholders. The proposal would amend the existing Bank Secrecy Act.
The legislation — crafted by Reps. Tom Malinowski (D-N.J.), Maria Elvira Salazar (R-Fla.), Steve Cohen (D-Tenn.) and Joe Wilson (R-S.C.) — would also establish a Treasury task force that would implement the rules.
Under the proposed legislation, the Treasury Department would have until the end of 2023 to create the due diligence laws.
According to The Washington Post, the regulations are significant because banks have already been required to look into possible suspicious transactions made by their clients, but this legislation would extend into covering entities that experts believe were protected under the Bank Secrecy Act’s loophole.
“If we make banks report dirty money but allow law, real estate, and accounting firms to look the other way, that creates a loophole that crooks and kleptocrats can sail a yacht through,” Malinowski said in a statement. “Our bill closes that loophole and encourages the administration to move in the same direction.”
The Pandora Papers investigation was conducted by more than 600 journalists and involved news outlets such as The Washington Post, Le Monde, The Guardian and others in partnership with the International Consortium of Investigative Journalists. The findings were released last weekend.
One example in the probe was a report from The Guardian that King Abdullah II of Jordan maintained $100 million in different residential properties through the use of offshore dealings. In an another example, an offshore investment firm was used by Czech Prime Minister Andrej Babiš to buy a chateau in the south of France, which was bought for $22 million.