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It's past time to outlaw anonymous shell companies.
From our forthcoming year-long research report on how authoritarians spend money interfering in democracy, here are six cases of the attack vector being a shell co.:
Moscow to Moldova, Latvia, Cyprus, Paris, London & Delaware.
From our forthcoming year-long research report on how authoritarians spend money interfering in democracy, here are six cases of the attack vector being a shell co.:
Moscow to Moldova, Latvia, Cyprus, Paris, London & Delaware.
1. VEB offshoot in Cyprus sends €2 million to the fundraising association of Marine Le Pen's National Front. https://www.mediapart.fr/journal/france/291114/la-russie-au-secours-du-fn-deux-millions-d-euros-aussi-pour-jean-marie-le-pen?onglet=full
2. Moldova's ruling pro-Russian Socialist Party is allegedly funded by Russia through opaque corporate structures since at least 2016. https://www.rise.md/english/russian-linked-offshore-helps-fund-socialist-campaigns/
3. Large donor to pro-Russian party in Latvia is funded through Magnitsky and Azerbaijani laundromats. https://www.occrp.org/en/daily/9427-latvia-s-biggest-party-linked-to-laundromat
4. Kremlin-connected Ukrainian oligarch Dmytro Firtash funds British shell companies that donate to a handful of Conservative Party politicians. https://www.wsj.com/articles/ukrainian-billionaire-wanted-by-u-s-builds-ties-in-britain-1417517476
5. Northern Ireland political party channels possible foreign money to the pro-Brexit campaign in 2016. https://www.opendemocracy.net/en/dark-money-investigations/revealed-dirty-secrets-of-dup-s-dark-money-brexit-donor/
6. Lev Parnas and Igor Fruman use a Delaware anonymous shell company to hide foreign contributions to U.S. politicians. https://s.wsj.net/public/resources/documents/U.S.v.LevParnasetalIndictment.pdf
These aren't just cases of international corruption. That activity would be bad enough, but this is "malign finance," which involves foreign governments and their proxies covertly funding political actors, with the foreign power's objective being to inflict harm on that country.
This isn't conventional wisdom. If you ask around D.C., "what's the worst loophole for covert foreign money?", most will say it's U.S. subsidiaries of foreign parent companies. But in our research, we find that shell companies are used as geopolitical weapons 7 times more often.
That's why beneficial ownership is the single most pressing and simple reform we can undertake to confront the most urgent national security threat of our time: malign foreign interference in democracies.
We've developed targeted solutions to the seven most commonly exploited financial loopholes, vetted through consultations with over 80 current and former executive branch officials, Congressional staffers from both parties, constitutional law scholars, and civil society experts.
But beneficial ownership is one of the few issues for which no further policy development is needed, because the work has already been done with bills like the Corporate Transparency Act in the House and the AML Act in the Senate.
To learn more about our global case survey – the most comprehensive empirical study of malign finance – and the other seven legal loopholes, plus our recommended administrative priorities, stay tuned next month and follow @JoshRudes and @SecureDemocracy. <END>
