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**MARCH 21, 2022**
Kuttner on TAP
Smoking Out Oligarchs, Russian and Other
****
A Trump-era law, the Corporate Transparency Act, can help.
One of the few progressive pieces of legislation to become law during
the Trump presidency was called the Corporate Transparency Act. The law
,
sponsored by Democrats Carolyn Maloney and Maxine Waters in the House
and Sherrod Brown in the Senate, requires the beneficial owners of all
financial assets to disclose their true identity to regulatory agencies
and the IRS.
The bill was originally introduced in 2009, by Rep. Maloney in the House
and Carl Levin, then chair of the Permanent Subcommittee on
Investigations, in the Senate. But there was little interest from the
Obama Treasury, despite their international commitments to press for
disclosure of beneficial ownership.
Eventually, the Obama Treasury issued rules requiring banks to "know
your customer" (the customer due diligence rule), which opened the door
to legislation. The Trump Treasury was surprisingly cooperative, since
the big banks wanted disclosure burdens to be on customers rather than
on banks.
It is a charming irony that the president who signed this bill was
infamous, both as a real estate operator and as a political operative,
for his use of shell companies. The bill was finally enacted on January
1, 2021, and signed into law by Trump, as part of a must-pass annual
defense bill.
At the time the law was enacted, its main purpose was to go after
terrorists, drug traffickers, other money launderers, criminals, and tax
evaders. But in the era of economic sanctions against Russia, and new
appreciation of how oligarchs conceal their identity, the law has new
value in smoking out hidden ownership of property on multiple fronts.
Oligarchs and kleptocrats are notorious for hiding wealth in high-end
real estate, in London, New York, Miami, and other super-luxe
destinations. Many apartments in grotesquely opulent condo buildings are
largely unoccupied. Indeed, oligarch wealth-concealing is driving much
of the boom of high-end condos now pockmarking Manhattan.
Rules carrying out this law were supposed to be in place by January
2022. Unfortunately, the rulemaking process is still ongoing, with half
of the draft rule issued last summer and the full final rule still to be
issued, hopefully later this year. So it will be a while before
government agencies have this database.
The Russia sanctions ought to get Treasury to focus. The small-business
lobby, via the National Federation of Independent Businesses and
American Bar Association, has pressed to weaken the details of the
rules.
One loophole in this otherwise exemplary law is that it requires
beneficial owners of assets to be disclosed to the IRS, the Treasury,
and appropriate financial regulatory agencies. But in the case of
registries of deeds, the information is public. In various financial
scandals, the true owners, speculators, and flippers of real estate were
able to hide behind straws, trusts, and other kinds of shells. The
identity of the beneficial owner should be public record.
****
~ ROBERT KUTTNER
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**Robert Kuttner's latest book is**
The Stakes: 2020 and the Survival of American Democracy
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