[Congressional Record Volume 168, Number 158 (Thursday, September 29, 2022)]
[Senate]
[Pages S5903-S5905]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 6377. Mr. WHITEHOUSE (for himself and Mr. Wicker) submitted an
amendment intended to be proposed to amendment SA 5499 submitted by Mr.
Reed (for himself and Mr. Inhofe) and intended to be proposed to the
bill H.R. 7900, to authorize appropriations for fiscal year 2023 for
military activities of the Department of Defense, for military
construction, and for defense activities of the Department of Energy,
to prescribe military personnel strengths for such fiscal year, and for
other purposes; which was ordered to lie on the table; as follows:
At the appropriate place, insert the following:
SEC. ___. ANTI-MONEY LAUNDERING SAFEGUARDS REGARDING
GATEKEEPERS.
(a) Short Title.--This section may be cited as the
``Establishing New Authorities for Business Laundering and
Enabling Risks to Security Act of 2022'' or the ``ENABLERS
Act of 2022''.
(b) Findings.--Congress finds the following:
(1) Kleptocrats and other corrupt actors across the world
are increasingly relying on non-bank professional service
providers, including those operating in the United States, to
move, hide, and grow their ill-gotten gains.
(2) In 2003, the Financial Action Task Force (referred to
in this subsection as the ``FATF''), an intergovernmental
body formed by the United States and other major industrial
nations, determined that designated non-financial businesses
and professions should be subject to the same anti-money
laundering and counter-terrorist financing rules and
regulations as financial institutions, including the
requirement to know your customer or client and to perform
due diligence, as well as to file suspicious transaction
reports, referred to as suspicious activity reports or
``SARs'' in the United States.
(3) In 2016, an FATF evaluation of the United States rated
the United States as noncompliant with 4 of the 40
recommendations of the FATF regarding combating money
laundering and the financing of terrorism and proliferation.
Of the 4 noncompliant ratings described in the preceding
sentence, 3 of those ratings pertained to designated non-
financial businesses and professions, including lawyers,
accountants, and trust and company service providers, and the
fourth such rating pertained to transparency and the
beneficial ownership of legal entities. The United States
also received the lowest mark from the FATF for the
effectiveness of the United States in combating the misuse of
legal entities. The FATF evaluation listed, as a priority
action, applying appropriate anti-money laundering and
countering the financing of terrorism obligations ``to
lawyers, accountants, trust and company service providers
(other than trust companies which are already covered)'' to
improve the anti-money laundering and counter-terrorist
financing regime in the United States.
(4) In line with the procedures of the FATF, members of the
FATF are expected to address deficiencies in the regimes of
those members not later than 3 years after adopting their
mutual evaluation. In March 2020, the FATF published the
``3rd Enhanced Follow-up Report & Technical Compliance Re-
Rating'' with respect to the United States, which continued
to score the United States noncompliant with respect to the 4
recommendations described in paragraph (3).
(5) On January 1, 2021, the United States took steps to
address the non-compliant rating of the United States with
respect to the beneficial ownership of legal entities through
the enactment of the Corporate Transparency Act (title LXIV
of Public Law 116-283), but, as of the date of enactment of
this Act, Congress has yet to address the non-compliant
rating of the United States with respect to designated non-
financial businesses and professions.
(6) In October 2021, the ``Pandora Papers'', the largest
expose of global financial data in history, revealed to a
global audience how the United States plays host to a highly
specialized group of ``enablers'' that help the world's elite
move, hide, and grow their money.
(7) The Pandora Papers described how an adviser to the
former Prime Minister of Malaysia reportedly used affiliates
of a United States law firm to assemble and consult a network
of companies, despite the adviser fitting the ``textbook
definition'' of a high-risk client. The adviser went on to
use his companies to help steal $4,500,000,000 from
Malaysia's public investment fund in one of ``the world's
biggest-ever financial frauds'', known as 1MDB.
(8) Russian oligarchs have used gatekeepers to move their
money into the United States. For example, a gatekeeper
formed a company in Delaware that reportedly owns a
$15,000,000 mansion in Washington, D.C., that is linked to
one of Vladimir Putin's closest allies. Also reportedly
connected to the oligarch is a $14,000,000 townhouse in New
York City owned by a separate Delaware company.
(9) On May 8, 2022, the Office of Foreign Assets Control of
the Department of the Treasury (referred to in this
subsection as ``OFAC''), pursuant to Executive Order 14071
(87 Fed. Reg. 20999; relating to prohibiting new investment
in and certain services to the Russian Federation in response
to continued Russian Federation aggression), prohibited ``the
exportation, reexportation, sale, or supply, directly or
indirectly, from the United States, or by a United States
person, wherever located, of accounting, trust and corporate
formation, or management consulting services to any person
located in the Russian Federation.''.
(10) On June 30, 2022, OFAC blocked a trust holding more
than $1,000,000,000 linked to designated Russian oligarch
Suleiman Kerimov. These efforts revealed that Kerimov used a
complex series of legal structures and front persons to
obscure his interest in Heritage Trust, the funds of which
first entered the financial system of the United States
through 2 foreign, Kerimov-controlled entities before the
imposition of sanctions against him. The funds were
subsequently invested in large public and private companies
in the United States and managed by a series of investment
firms and facilitators in the United States.
(11) The Pandora Papers uncovered more than 200 United
States-based trusts across 15 States that held assets of more
than $1,000,000,000, ``including nearly 30 trusts that held
assets linked to people or companies accused of fraud,
bribery, or human rights abuses''. In particular, South
Dakota, Nevada, Delaware, Florida, Wyoming, and New Hampshire
have emerged as global hotspots for those seeking to hide
their assets and minimize their tax burdens.
(12) In 2016, an investigator with the nonprofit
organization Global Witness posed as an adviser to a corrupt
African official and set up meetings with 13 New York City
law firms to discuss how to move suspect funds into the
United States. Lawyers from all but 1 of the firms provided
advice to the faux adviser, including advice on how to
utilize anonymous companies to obscure the true owner of the
assets. Other suggestions included naming the lawyer as a
trustee of an offshore trust in order to open a bank account
and using the law firm's escrow account to receive payments.
(13) The autocratic Prime Minister of Iraqi Kurdistan,
reportedly known for torturing and killing journalists and
critics, allegedly purchased a retail store valued at more
than $18,000,000 in Miami, Florida, with the assistance of a
Pennsylvania-based law firm.
(14) Teodoro Obiang, the Vice President of Equatorial
Guinea and son of the country's authoritarian President,
embezzled millions of dollars from his home country, which
was then used to purchase luxury assets in the United States.
Obiang relied on the assistance of 2 lawyers in the United
States to move millions of dollars of suspect funds through
United States banks. The lawyers incorporated 5 shell
companies in California and opened bank accounts associated
with the companies for Obiang's personal use. The suspect
funds were first wired to the lawyers' attorney-client and
firm accounts, then transferred to the accounts of the shell
companies.
[[Page S5904]]
(15) A consulting company in the United States reportedly
made millions of dollars working for companies owned or
partly owned by Isabel dos Santos, the eldest child of a
former President of Angola. This included working with
Angola's state oil company when it was run by Isabel dos
Santos and helping to ``run a failing jewelry business
acquired with Angolan money''. In 2021, a Dutch tribunal
found that Isabel dos Santos and her husband obtained a
$500,000,000 stake in the oil company through ``grand
corruption''.
(16) In December 2021, the United States Government issued
a first-ever ``United States Strategy on Countering
Corruption'', which includes ``Curbing Illicit Finance'' as a
strategic pillar. An express line of effort to advance this
strategic pillar states that: ``Deficiencies in the U.S.
regulatory framework mean various professionals and service
providers--including lawyers, accountants, trust and company
service providers, incorporators, and others willing to be
hired as registered agents or who act as nominees to open and
move funds through bank accounts--are not required to
understand the nature or source of income of their clients or
prospective clients. . .While U.S. law enforcement has
increased its focus on such facilitators, it is both
difficult to prove `intent and knowledge' that a facilitator
was dealing with illicit funds or bad actors, or that they
should have known the same. Cognizant of such constraints,
the Administration will consider additional authorities to
cover key gatekeepers, working with the Congress as necessary
to secure additional authorities''.
(17) This section, and the amendments made by this section,
provide the authorities needed to require that professional
service providers that serve as key gatekeepers to the
financial system of the United States adopt anti-money
laundering procedures that can help detect and prevent the
laundering of corrupt and other criminal funds into the
United States. Absent such authorities, the United States
Government will be unable to adequately protect the financial
system of the United States, identify funds and assets that
are the proceeds of corruption and other crimes, support
foreign states in their efforts to combat corruption and
promote good governance, or maintain the role of the United
States as a leader in international bodies that are committed
to combating money laundering and corruption.
(c) Requirements for Gatekeepers.--
(1) In general.--Section 5312(a)(2) of title 31, United
States Code, as amended by section 6110(a) of the William M.
(Mac) Thornberry National Defense Authorization Act for
Fiscal Year 2021 (Public Law 116-283), is amended--
(A) by redesignating subparagraphs (Z) and (AA) as
subparagraphs (AA) and (BB), respectively; and
(B) by inserting after subparagraph (Y) the following:
``(Z) any person, excluding any governmental entity,
employee, or agent, that provides to a third party--
``(i) a service described in section 5337(a)(2);
``(ii) corporate or other legal entity arrangement,
association, or formation services;
``(iii) trust services;
``(iv) third party payment services; or
``(v) legal or accounting services that--
``(I) involve financial activities that facilitate a
service described in any of clauses (i) through (iv); and
``(II) are not provided in exchange for direct compensation
for civil or criminal defense matters;''.
(2) Requirements for gatekeepers.--Subchapter II of chapter
53 of title 31, United States Code, is amended by adding at
the end the following:
``Sec. 5337. Requirements for gatekeepers
``(a) In General.--
``(1) In general.--The Secretary of the Treasury (referred
to in this section as the `Secretary') shall, not later than
4 years after the date of enactment of this section, issue
regulations to--
``(A) determine what persons fall within the class of
persons acting as described in section 5312(a)(2)(Z); and
``(B) prescribe appropriate requirements under this
subchapter for the persons described in subparagraph (A).
``(2) Identification of persons.--When determining what
persons fall within the class of persons acting as described
in section 5312(a)(2)(Z), the Secretary of the Treasury shall
consider, on a risk basis--
``(A) any person involved in the provision of services to a
third party regarding--
``(i) the formation or registration of a corporation,
limited liability company, trust, foundation, limited
liability partnership, partnership, or other similar entity;
``(ii) the acquisition or disposition of an interest in a
corporation, limited liability company, trust, foundation,
limited liability partnership, partnership, or other similar
entity;
``(iii) the provision of a registered office, an address or
accommodation, correspondence, or an administrative address
for a corporation, limited liability company, trust,
foundation, limited liability partnership, partnership, or
other similar entity;
``(iv) managing, advising, or consulting with respect to
money or other assets;
``(v) the processing of payments;
``(vi) the provision of cash vault services;
``(vii) the wiring of money;
``(viii) the exchange of foreign currency;
``(ix) the exchange of any digital currency, digital asset,
or other value that substitutes for currency; or
``(x) the sourcing, pooling, organization, or management of
capital in association with the formation, operation, or
management of, or investment in, a corporation, limited
liability company, trust, foundation, limited liability
partnership, partnership, or other similar entity;
``(B) any person that, in connection with filing any
return, directly or indirectly, on behalf of a foreign
individual, trust, or fiduciary with respect to direct or
indirect United States investment, transaction, trade or
business, or similar activities--
``(i) obtains or uses a preparer tax identification number;
or
``(ii) would be required to use or obtain a preparer tax
identification number, if that person were compensated for
services rendered;
``(C) any person providing a service to a third party by
acting as, or arranging for another person to act as, a
registered agent, trustee, director, secretary, nominee
shareholder, partner of a company, partner of a partnership,
or similar position with respect to a corporation, limited
liability company, trust, foundation, limited liability
partnership, or other similar activity; and
``(D) any service provider described in subparagraph (A),
(B), or (C), wherever organized or doing business, that--
``(i) is owned or controlled by a person described in any
such subparagraph;
``(ii) acts as an agent of a person described in any such
subparagraph; or
``(iii) is an instrumentality of a person described in any
such subparagraph.
``(3) Sense of congress.--It is the sense of Congress that,
when issuing regulations under this subsection, the Secretary
shall design those regulations to--
``(A) minimize the burden of those regulations and maximize
the intended outcomes of those regulations, as determined by
the Secretary; and
``(B) avoid applying additional requirements for persons
that may fall within the class of persons described in
section 5312(a)(2)(Z) but that are already, as determined by
the Secretary, appropriately regulated under this subchapter.
``(b) Enforcement.--
``(1) Random audits.--Not later than 1 year after the date
on which the Secretary issues the regulations required under
subsection (a), and on an ongoing basis thereafter, the
Secretary shall conduct random audits of persons that fall
within the class of persons described in section
5312(a)(2)(Z), including persons described in subsection
(a)(2), in a manner that the Secretary determines
appropriate, to assess compliance with the requirements of
this section.
``(2) Reports.--The Secretary shall, not later than 180
days after the conclusion of any calendar year that begins
after the date that is 1 year after the date on which the
Secretary issues regulations pursuant to subsection (a),
submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives a report that--
``(A) describes the results of any random audits conducted
pursuant to paragraph (1) during such calendar year; and
``(B) includes recommendations for improving the
effectiveness of the requirements imposed under this section
on persons described in section 5312(a)(2)(Z), including
persons described in subsection (a)(2).''.
(3) Conforming amendment.--The table of sections for
subchapter II of chapter 53 of title 31, United States Code,
is amended by inserting after the item relating to section
5336 the following:
``5337. Requirements for gatekeepers.''.
(4) Use of technology to increase efficiency and accuracy
of information.--The Secretary of the Treasury shall
promote--
(A) the integrity of information collected under this
section and the amendments made by this section; and
(B) if applicable, the timely and efficient collection of
information by persons described in section 5312(a)(2)(Z) of
title 31, United States Code, as so redesignated by this
subsection, including persons described in subsection (a)(2)
of section 5337 of that title, as added by this subsection,
by exploring the use of technologies to--
(i) effectuate the collection, standardization,
transmission, and sharing of information that the Secretary
may require under such section 5337; and
(ii) minimize the burdens associated with the collection,
standardization, transmission, and sharing of information
that the Secretary may require under such section 5337.
(5) Effective date.--This subsection, and the amendments
made by this subsection, shall take effect on the effective
date of the regulations issued by the Secretary of the
Treasury pursuant to section 5337(a) of title 31, United
States Code, as added by this subsection.
(d) Gatekeepers Strategy.--Section 262 of the Countering
Russian Influence in Europe and Eurasia Act of 2017 (title II
of Public Law 115-44) is amended by adding at the end the
following:
``(11) Gatekeeper strategy.--
``(A) In general.--A description of efforts to impose
sufficient anti-money laundering safeguards on designated
non-financial businesses and professions, as that term is
defined by the Financial Action Task Force.
[[Page S5905]]
``(B) Update.--If, as of the date of enactment of this
paragraph, the updates to the national strategy required
under section 261 have been submitted to appropriate
congressional committees, the President, acting through the
Secretary of the Treasury, shall, not later than 1 year after
that date of enactment, submit to the appropriate
congressional committees an additional update to the national
strategy with respect to the addition of this paragraph.''.
(e) Agency Coordination and Collaboration.--The Secretary
of the Treasury shall, to the greatest extent practicable--
(1) establish relationships with State, local, territorial,
and Tribal governmental agencies; and
(2) work collaboratively with the governmental agencies
described in paragraph (1) to implement and enforce the
regulations prescribed under this section, and the amendments
made by this section, by--
(A) using the Domestic Liaisons appointed under section
310(f) of title 31, United States Code, to share information
regarding changes effectuated by this section and the
amendments made by this section;
(B) using the Domestic Liaisons appointed under section
310(f) of title 31, United States Code, to advise on
necessary revisions to State, local, territorial, and Tribal
standards with respect to relevant professional licensure;
(C) engaging with various persons described in section
5312(a)(2)(Z) of title 31, United States Code, as so
redesignated by subsection (c) (including persons described
in section 5337(a)(2) of that title, as added by subsection
(c)), as appropriate, including with respect to information
sharing and data sharing; and
(D) working with State, local, territorial, and Tribal
governmental agencies to levy professional sanctions on
persons that facilitate corruption, money laundering, the
financing of terrorist activities, and other related crimes.
(f) Report.--Not later than 3 years after the date of
enactment of this Act, the Secretary of the Treasury shall
submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives a report that--
(1) describes any findings of the Secretary with respect to
technologies that may effectuate the collection,
standardization, transmission, and sharing of information
that the Secretary may require under section 5337 of title
31, United States Code, as added by subsection (c); and
(2) makes recommendations for implementing the technologies
described in paragraph (1).
(g) Authorization of Appropriations.--In addition to
amounts otherwise available for such purposes, there are
authorized to be appropriated to the Secretary of the
Treasury, without fiscal year limitation, such sums as may be
necessary, to remain available until expended, exclusively
for the purpose of carrying out this section and the
amendments made by this section, including for--
(1) the appointment of personnel;
(2) the exploration and adoption of information technology
to effectively support enforcement activities or activities
described in subsection (c) and the amendments made by that
subsection;
(3) audit, investigatory, and review activities, including
those described in subsection (c) and the amendments made by
that subsection;
(4) agency coordination and collaboration efforts and
activities described in subsection (e);
(5) voluntary compliance programs;
(6) compiling the reports required under--
(A) subsection (c);
(B) the amendments made by subsection (c); and
(C) subsection (f); and
(7) allocating amounts to State, local, territorial, and
Tribal jurisdictions to pay reasonable costs relating to
compliance with, or enforcement of, the requirements of this
section and the amendments made by this section.
(h) Rule of Construction.--Nothing in this section, or the
amendments made by this section, may be construed to be
limited or impeded by any obligations under State, local,
territorial, or Tribal laws or rules concerning privilege,
ethics, confidentiality, privacy, or related matters.
______