Thread by @jentaub

🧵 Live-thread. Amazing hearing happening right now in the Senate Judiciary Committee. Senator @SenWhitehouse just explained how "America enables global corruption."

Topic is "Combating Kleptocracy: Beneficial Ownership, Money Laundering, and Other Reforms."

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@SenWhitehouse The senator is sponsoring a bill called "The Title Act" which would require states to require shell companies to disclosure their beneficial owners.

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@SenWhitehouse Senator @LindseyGrahamSC agrees and explains how beneficial ownership is what facilitates money laundering. We are becoming "second only to Switzerland" to where illicit money is being parked.

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@SenWhitehouse @LindseyGrahamSC As @SenWhitehouse explained, American institutions are becoming part of this kleptocratic racket.

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@SenWhitehouse @LindseyGrahamSC Now @LindseyGrahamSC referenced the Internet Research Agency and its use of money laundering to support the trolls who interfered in the US election.

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@SenWhitehouse @LindseyGrahamSC There are four witnesses.

Clay Fuller from American Enterprise Institute

Adam Szubin from Johns Hopkins and Sullivan Cromwell

Tom Firestone from Baker McKenzie

Sheila Krumholz Exec. Director Center for Responsive Politics

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@SenWhitehouse @LindseyGrahamSC Szubin mentions how US shell companies are used by foreign nations to launder illicit money. We are thought to be a leader in getting our banks to turn away dirty money. Yet, "we are one of the world's biggest problems" when it comes to shell companies.

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@SenWhitehouse @LindseyGrahamSC He supports legislation that would be the "single most impactful step" that congress could to take to combat foreign money laundering and terrorist funding. Require the provision of beneficial ownership information as companies are formed. Would take little time.

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@SenWhitehouse @LindseyGrahamSC Compliance is the best antidote to corruption says Tom Firestone. "When the system works well, transparency minimizes the risk that good companies will partner with bad companies."

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@SenWhitehouse @LindseyGrahamSC Opposes anonymous corporate structures that allow parties to hide their identities and sources of ill-gotten gains.

This helps protect honest businesses.

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@SenWhitehouse @LindseyGrahamSC Firestone says US law needs to better punish the demand and receipt of bribes by foreign bribers of US companies. Our Foreign Corrupt Practices Act is not sufficient.

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@SenWhitehouse @LindseyGrahamSC Firestone said it would help US businesses resist a shakedown by saying not only can we be prosecuted, but so could you.

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@SenWhitehouse @LindseyGrahamSC Now @skrmhlz from the Center for Responsive Politics is speaking about federal campaign finance law. Ban on foreign government, businesses and citizens from funding our elections. But money from anonymous sources is getting into US elections through use of shell companies

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@SenWhitehouse @LindseyGrahamSC @skrmhlz In 2018, more than $539 million in spending was reported to FEC by groups that don't fully disclose their donors.

"The US must be the leader this issue. . .we cannot ignore these weaknesses."

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@SenWhitehouse @LindseyGrahamSC @skrmhlz Evasions have eroded public trust in our system. Krumholz says this is a bipartisan issue. Money goes into campaigns and into inaugural committees.

"Networks of LLC and offshore bank accounts."

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@SenWhitehouse @LindseyGrahamSC @skrmhlz "Lack of sunlight . . .into entities funneling significant sums into US elections" she says poses a threat to our sovereignty and our national security.

We need to expose foreign kleptocrats

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@SenWhitehouse @LindseyGrahamSC @skrmhlz Graham asks about legislation. Szubin says short piece of legislation already in banking committee.

Need to disclose who true owners are and who controls made available in confidential database to law enforcement. Perhaps a 25 percent threshold.

Other witnesses agree

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@SenWhitehouse @LindseyGrahamSC @skrmhlz Senator Whitehouse thanked the Treasury Department for helping and "leaning in in a variety of ways." He also thanked the Hudson Institute.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz Sorry I got off-count and doubled up.

Senator Whitehouse prefers public record, but would accept a confidential one.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz By the way, when he began speaking at the hearing, Senator Whitehouse framed this as a "rising threat of kleptocracy."

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@SenWhitehouse @LindseyGrahamSC @skrmhlz Now a witness is explaining at the senator's request the threat to markets that shell companies present. Unfair competition for legitimate businesses that need to compete for a profit.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz The senator requested for the record the witness submit examples.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz Senator Whitehouse now asks Krumholz if threats and promises can have influence and effect without spending money. She said yes that "credible" threats would be received just as seriously as spending money.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz Money flows in from "Boris and Natasha LLC" (a name he makes up), but no one really knows who is behind it. And she agrees that the beneficiaries of dark money spending are aware of the original source, but press and public does not.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz Now Senator Grassley says he supports this legislation. He's glad the hearing addresses beneficial ownership.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz Unfortunately, this hearing is sparsely attended. Perhaps 3-4 here. Graham had to leave for another hearing and Grassley just department. Feinstein was there earlier, not sure if still. Whitehouse is there.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz Senator @maziehirono is here with questions.

Asks about use of real estate used to launder money. What are the challenges in law enforcement detecting.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz Thread continues here:

https://twitter.com/jentaub/status/1141356332479647746?s=20

@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono Now Szubin is talking about FinCen requirement of disclosing beneficial ownership for cash purchases. (But I believe this is only a pilot program targeting certain geographical areas.)

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono He said real estate is attractive because criminal enterprises like legit businesses need to invest in real estate, securities, hotel chains, horses.

"What they really what is opacity. They want to invest in things without people knowing who they are."

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono Now Hirano is getting into the interesting details. The suggestion that title companies make disclosures with cash purchases of real estate.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono "We have to make it as hard as possible for them." We should make it difficult for criminals to move money into the United States says Szubin.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono If law enforcement can trace the illicit foreign money then they can identify and freeze the asset.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono Now @SenBlumenthal is asking questions. Szubin says "where we have the information, we can act on it." Asks whether more resources (meaning money) would be helpful for intelligence to track.

Szubin said, "Absolutely. Intelligence and law enforcement" are essential.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono @SenBlumenthal Blumethal: "Combating kleptocracy" can involve exposing assets. What he calls "naming and shaming."

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono @SenBlumenthal "Stealing Russian citizens' money to buy luxury goods" would not be popular there, whereas the adventures in Crimea were, says Szubin.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono @SenBlumenthal Blumenthal is now mentioning the "Duty to Report Act." Says there are 10 co-sponsors in the senate. This would require US campaign to report offer of foreign assistance.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono @SenBlumenthal But, he asks Krumholz whether there's a problem because the intermediary who offers help to campaign may not know the original source is foreign (even if the campaign knows), and this will not get caught (or even reported under the proposed bill).

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono @SenBlumenthal Now he is mentioning "The Shell Company Abuse Act" that has bipartisan support.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono @SenBlumenthal Senator Hirono asked for data re the growth in dark money. @skrmhlz described an increase activity of non-disclosing LLCs in campaign funding.

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono @SenBlumenthal Firestone answers Hirono's questions about human trafficking. He said that aggressive effective enforcement of money laundering laws is an important part of that. He said "opacity is the lifeblood of criminal organization and corruption."

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono @SenBlumenthal Fuller does not want to "name and shame" and thinks instead these registries should be on a database available to government/law enforcement as that would in his view "respect privacy rights."

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@SenWhitehouse @LindseyGrahamSC @skrmhlz @maziehirono @SenBlumenthal Okay, signing off now. Hearing seems like it's coming to a close soon.

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