With the release of the Pandora Papers, there is a renewed focus on the illicit movement of money and filling the holes in anti-money laundering rules. “The Washington Post and other news organizations exposed the involvement of political leaders, examined the growth of the industry within the United States and demonstrated how secrecy shields assets from governments, creditors and those abused or exploited by the wealthy and powerful.”
A bipartisan group of lawmakers introduced legislation that would require investment advisers, trust companies, lawyers, art dealers and others to investigate foreign clients seeking to move money and assets into the American financial system. The group got creative with the name of the bill: “Establishing New Authorities for Businesses Laundering and Enabling Risks to Security Act“. Which <surprise> acronyms into the ENABLERS Act.
The ENABLERS ACT would add new groups to the requirements of the Bank Secrecy Act and require rulemaking to implement the requirements. The new groups:
- “person engaged in the business of providing investment advice for compensation”
- Dealers in art, antiques, or collectibles
- Lawyers
- Trust companies
- Public accountants
- Public relations in such a manner as to provide another person anonymity
- Third-party payment services
The first category is the most important to me. Investment advisers have been lobbying to stay outside of the Bank Secrecy Act because of the custodian requirements. The client accounts are held at financial institutions that are subject to the Bank Secrecy Act. The success of that argument has been diminishing over the years.
Art dealers are a big one. There is already regulations moving into place to deal with that industry. It’s notorious as a way to move value around illicitly.
Lawyers are tough because of attorney-client privilege. I’m not sure how public accountants fit into the picture.
I wonder what PR firms did to anger the people who wrote this bill.
Of course it’s only a bill. A lot of things will have to happen to get this into law. Congress is not exactly a well-functioning organization right now.
Sources:
- “Establishing New Authorities for Businesses Laundering and Enabling Risks to Security Act” or the “ENABLERS Act” H.R. 5525
- Lawmakers call for crackdown on financial ‘enablers’ after Pandora Papers revelations
- Lawmakers, inspired by ‘Pandora Papers,’ to push new anti-corruption bill
- The ENABLERS Act Seeks to Impose BSA/AML Requirements on an Array of “Middlemen” Professionals
- Key findings from the Pandora Papers investigation