Regulation

Obama Administration Targets Money Laundering

The Obama administration is cracking down on money laundering and tax evasion tactics.

Following the leak of the Panama Papers that showed the prevalence of offshore money laundering, a new rule was adopted late last week that now requires that financial institutions remain more transparent about the companies they work with in order to crackdown on these activities.

This proposed legislation from the U.S. Treasury and Justice departments also indicates that the groups would coordinate with local law enforcement in order to track money laundering and corruption activity. It also plans to crack down on loopholes in a system that enables foreign citizens to evade U.S. taxes.

“Gaps remain in our laws that allow bad actors to deliberately use U.S. companies to hide money laundering, tax evasion and other illicit financial activities,” Treasury Secretary Jacob Lew wrote in a letter to House Speaker Paul Ryan (R-WI), according to The Wall Street Journal.

This rule was initially proposed in 2014 from the Treasury Department’s anti-money laundering unit, but it hasn’t been pushed forward until recently. That, of course, came after the news surfaced about the number of people who were using offshore accounts to hide money. This rule is also aimed at criminals and terrorists who may use offshore accounts and anonymous firms to store money under the radar.

What the rule entails is requiring financial institutions to keep stronger records of who owns money and who is interacting with those accounts. Banks will also have to verify the identities of people who own 25 percent of a company associated with an account.

“Nobody should be allowed to hide in the shadows from their legal obligations,” Deputy National Security Adviser Wally Adeyemo said in a media news conference. “[The] Panama Papers [information] makes clear that more needs to be done.”

Beyond this, the DOJ has called upon congress to implement laws to streamline the process to gain evidence in money laundering investigations. Besides that, the Obama administration has asked for Congress to tighten requirements about foreign-owned firms and how they report their financial activity.

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