As of: December 9th, 2021 12:28 p.m.
US President Biden has made fighting corruption a goal. He wants to start in his own country. Experts have been calling for this for a long time – nowhere is it easier to launder money than in the USA.
He became known as the “Dealer of Death” and a film was made based on his story: The Russian businessman Viktor But sold weapons in conflict areas around the world until he was arrested in 2008 and sentenced to 25 years in prison by a US court in 2012. The investigation revealed that But used at least twelve mailbox companies in the US state of Delaware to launder its income, the New York Times reported in 2009.
More companies than residents
But was just one of many who funneled their money through mailbox companies in Delaware, Nevada, Wyoming, or South Dakota. These are used to disguise the real owners of wealth. Oligarchs, autocrats, criminals and tax evaders benefit. The USA is “the most important oasis for kleptocrats and the largest money-laundering place in the world”, writes the corruption expert Casey Michel in his recently published and highly acclaimed book “American Kleptocracy”.
Mailbox companies are the most important and most important tools for corruption on a large scale, Michel quotes another expert and describes how Delaware has developed into one of the leading places for money laundering worldwide over the decades. It began with the fact that since the US was founded, it was not the government in Washington but the states that had oversight over companies. In competition for business, New Jersey began to offer increasingly favorable conditions to businesses in the late 19th century.
Other states followed suit, above all Delaware, whose representatives also advertised abroad with extremely business-friendly conditions. Meanwhile, the number of companies with 1.5 million exceeds the number of residents by 500,000. 225,000 new companies are added every year. In 2020 corporate registration taxes and fees were $ 1.45 billion. These numbers can be found in a “New York Times” article about Joe Biden: The US President is from the state between Washington and New York.
A threat to national security
And yet it was now Biden who already declared war on corruption in the presidential election campaign. His reasoning: Corruption endangers the national security of the USA and democracy. Just one example that is at the end of a long development: The House of Representatives is investigating whether Donald Trump’s predecessor in office accepted improper funds from abroad – whether he allowed himself to be corrupted by foreign forces.
The Pandora Papers show what experts have been saying for years: Countries like the USA, Great Britain and Germany play into the hands of dictators and autocrats by allowing illegal cross-border money flows. Politicians and business people can also circumvent sanctions imposed on them by using the anonymous structures.
Comprehensive strategy presented
The problems are now so serious that cross-party consensus has been reached: at the end of 2020, before Biden took office, Congress passed changes to the law on corporate secrecy, according to which the owners of companies must be clearly identified on the basis of personal data. Transparency International praised this as a “historic” step, if only a first.
On the occasion of the international democracy summit proclaimed by Biden on December 9, his government delivered what he had requested in June: a comprehensive strategy to fight corruption.
In particular, the US authorities should learn to better understand the cross-border dimension and limit the possibilities of international actors to use the global financial system to hide assets and launder the proceeds from corrupt activities.
A key element is greater transparency with business owners, the banking sector and fiduciary and corporate service providers, lawyers and accountants. Then there is the real estate sector and the art market. In addition, law enforcement and international cooperation are to be strengthened.
First money laundering law passed in the USA
Experts are full of praise and hope for full implementation. After all, it was the USA that passed the first anti-money laundering law worldwide in 1986, writes Michel in his book. He also refers to the Patriot Act, which was passed after the September 11, 2001 attacks. This contains the most extensive legislation to date on combating gel laundry.
In Germany, under the old federal government, little attention was paid to the dangers of international corruption. In white papers and guidelines, corruption has been described as a characteristic of countries with fragile statehood. After all, the head of the Munich Security Conference, Wolfgang Ischinger, also pointed out the security-political and democratic-endangering dimension of international corruption – alongside NGOs and other actors who have been pointing out a lack of transparency in a large number of sectors for years.
As a result of the Pandora Papers, the Azerbaijan affair, and above all the mask deals, the issue of corruption has recently moved more into the focus of politics. The hope of anti-corruption organizations such as Transparency International is that the new federal government will devote more time to the issue.