Two congressional Democrats sent a letter to Treasury Secretary Janet Yellen on Monday requesting the department bolster anti-money laundering reporting obligations for private equity and hedge fund advisers in an effort to "prevent foreign kleptocrats from moving dirty money through the U.S. and global financial systems."
In the letter, Sen. Sheldon Whitehouse, D-R.I., and Rep. Tom Malinowski, D-N.J., urged Treasury's Financial Crimes Enforcement Network, or FinCEN, to promulgate a rule proposed in 2015 to expand anti-money laundering obligations and suspicious activity reporting obligations to private equity and hedge fund advisers.
"Middle-class Americans are frustrated by perceptions of corruption at home, while authoritarian oligarchies are weaponizing corruption around the world," the lawmakers wrote in their letter. "While these foreign and domestic trends have fueled passionate political discourse in recent years, a legacy of the Biden administration should be achieving actual results by institutionalizing anti-corruption reforms throughout U.S. and international financial, diplomatic, and legal systems."
The lawmakers said the Biden administration should build on recent congressional efforts to combat money laundering. Late in the last congressional session, Congress passed the 2021 National Defense Authorization Act, which included the Corporate Transparency Act, a bill that cracks down on the registration of anonymously owned shell companies in the U.S. That bill creates a national registry of beneficial ownership information for certain companies — mostly foreign-owned shell companies — according to a February blog post by lawyers at Morgan, Lewis & Bockius.
The lawmakers urged Treasury to implement the recently mandated beneficial ownership registry in ways that limit exemptions and broaden reporting requirements.
"With beneficial ownership reform on its way, the top policy priority in the fight against dirty money should now become the expansion of (anti-money laundering) obligations to cover financial facilitators and professional service providers that can enable corruption — reports indicate that more than $13 trillion are invested in U.S.-based private equity and hedge funds subject to very little ownership or money-laundering vetting," the lawmakers wrote.
A Treasury representative could not immediately be reached for comment.
