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Lawmakers call for crackdown on financial ‘enablers’ after Pandora Papers revelations

A bipartisan group of lawmakers plans to introduce legislation this week that for the first time would require trust companies, lawyers, art dealers and others to investigate foreign clients seeking to move money and assets into the American financial system.

APRIL 2022:

Pandora Papers | A global investigation

The gatekeepers who open America to shell companies and secret owners

Excerpts from the Full Story by Debbie Cenziper, Will Fitzgibbon, Emily Anderson Stern, Michael Korsh and Alice Crites

April 5, 2022

Few facilitators in the U.S. financial system operate with as little oversight as the thousands of registered agents who often serve as the only publicly known contact for companies with anonymous owners. Oligarchs, criminals and online scammers have reaped the benefits.

Their names and others turned up in an extensive examination by The Washington Post and the International Consortium of Investigative Journalists (ICIJ) of thousands of company records filed with the state of Wyoming, one of America’s most secretive tax havens.

Across the United States, registered agents provide routine corporate services, filing incorporation documents and annual reports. In many cases, they are the lone contact for anyone looking to sue companies or lodge a complaint.

Experts have warned for years that the sprawling industry — comprising attorneys, part-time participants and multistate specialty operations representing thousands of companies — is a weak point in the U.S. financial system. While banks must vet customers, registered agents aren’t uniformly required to verify their identities.

The matter has taken on fresh urgency since Russia invaded Ukraine, prompting governments to trace and freeze assets held by oligarchs close to Russian President Vladimir Putin. After the war began on Feb. 24, a coalition of experts called on Congress to pass the Enablers Act and other measures, pointing to revelations in the Pandora Papers that Russian billionaire Igor Makarov secretly held real estate and a 13-seat private jet through an LLC and trust in Wyoming. Makarov has previously said through his attorney that he has no personal relationship with Putin and that his trust was properly disclosed.

Last year, a federal law for the first time required LLCs and similar business entities to provide the names and birth dates of their owners to a new government database. But that registry is not accessible to the public, and transparency advocates argue that the sheer volume of information may leave federal authorities unable to identify many fraudulent entries and the owners behind them. Delaware alone recorded more than 180,000 new LLCs in 2020, records show.

The proposed Enablers Act would go further, requiring every registered agent not only to identify company owners but also to look for and report red flags.

In October, a bipartisan group of lawmakers proposed federal legislation that would require registered agents to scrutinize clients and report suspicious transactions. They drafted the measure, dubbed the Enablers Act, following publication of the Pandora Papers, a global investigation by the ICIJ, The Post and other media partners exposing how the global elite shield riches from taxing authorities, criminal probes and public accountability.

“Some of these states have failed to ensure that the United States of America is not the number one destination for dirty money in the world,” said Rep. Tom Malinowski (D-N.J.), a key sponsor of the legislation. “If they had been doing their jobs, we wouldn’t need to act in this area.”

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