
Well, it’s official.
Not only will the US Treasury Department not enforce the Beneficial Ownership requirement under the Corporate Transparency Act, but the Financial Crimes Enforcement Network (FinCEN) has issued an interim final rule removing the requirement for US companies and US persons to report beneficial ownership information to the agency.
In that interim final rule, FinCEN revises the definition of “reporting company” in its implementing regulations to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as “foreign reporting companies”). FinCEN also exempts entities previously known as “domestic reporting companies” from BOI reporting requirements.
I previously noted that the move will erode trust in the United States, the dollar, and the US financial system. But it will do so much more than that, given the new Gold Card program that’s supposed to help us reduce our debt.
Corporate transparency is the cornerstone of anticorruption efforts. The global anti-money laundering watchdog, the Financial Action Task Force (FATF) recently strengthened beneficial ownership standards and guidance in its Recommendation 24 in an effort to help identify corruptocrats, sanctions evaders, money launderers and others who hide or launder their misappropriated assets or proceeds of crime in shell companies or other complex structures and legal arrangements.
FATF did not issue this guidance in a vaccuum. The organization extensively engaged with the private sector and other stakeholders in an effort to improve transparency of beneficial ownership on a global level.
The United States is one of the leaders of FATF and had the FATF presidency during the first Trump administration. We are now opening the floodgates to illicit money and undermining our own leadership, claiming that this is an effort to “to alleviate unnecessary regulatory burdens placed on the American people.”
As I mentioned previously, it took me 10 minutes to register an LLC with FinCEN without hitting the final submission.
But that 10-minute (a little bit more if there’s a web of legal entities involved) alleged regulatory “burden” can help mitigate a variety of risks, according to the Financial Accountability and Corporate Transparency (FACT) Coalition.
…anonymous shell companies have been able to facilitate a wide variety of illicit activities that directly harm U.S. domestic and foreign policy interests: from public corruption to government and defense contract fraud, organized crime, intellectual property theft, money laundering, terrorism financing, and the opioid crisis. Requiring companies to report their beneficial owners will help prevent the exploitation of U.S.-registered companies by rogue nations, terrorists, drug and human traffickers, weapons smugglers, and other criminal operations.
But it’s only US persons that are exempt!
US companies and US persons are no longer required to report beneficial ownership information to FinCEN under the Corporate Transparency Act (CTA). Foreign reporting companies that only have beneficial owners that are US persons will also be exempt from the requirement to report any beneficial owners.
This assumes that US persons and companies do not abuse our lax corporate transparency rules.
In general terms, a US person is a citizen or resident of the United States, according to Treasury. So do US persons abuse shell companies and other structures to move and launder illicit funds?
Of course they do!
The Justice Department in 2020 filed a civil forfeiture complaint alleging that more than $6 million in proceeds from the sale of commercial real estate in Dallas, Texas, was maintained and improved using the proceeds of embezzlement and fraud from PrivatBank in Ukraine by its former owners, Ihor Kolomoisky and Gennadiy Boholiubov. The two corrupt Ukrainian oligarchs stole $5.5 billion in deposits from the bank and almost caused an economic crisis in the country, prompting the bank to be nationalized.
The duo laundered a portion of the theft through PrivatBank’s branch in Cyprus, and once the money wound up in the United States, they worked with their Miami-based associates Mordechai Korf and Uriel Laber to create a web of entities to further launder the misappropriated funds.
Miami Beach residents Korf and Laber became officers and part-owners who helped create a network of companies operating under variations of the name Optima, according to the Organized Crime and Corruption Reporting Project (OCCRP). They purchased hundreds of millions of dollars in real estate and businesses across the country, including commercial towers located at 8787 North Stemmons Freeway in Dallas (Stemmons Towers), as well as the office tower known as 55 Public Square in Cleveland, a Louisville office tower known as PNC Plaza, and a Dallas office park known as the former CompuCom Headquarters, according to the Justice Department.
Another US resident—this time in New Jersey—Olga Shriki helped sanctioned Russian oligarch Oleg Deripaska evade sanctions.
For example, in or about 2019, SHRIKI facilitated for DERIPASKA’s benefit the sale of a music studio in California for over $3 million. DERIPASKA had owned the studio through a series of corporate shell companies that obscured his actual ownership. Following the sale of the studio, SHRIKI attempted to expatriate over $3 million in proceeds through one such shell company, “Ocean Studios California LLC,” to a Russia-based account belonging to another DERIPASKA company.
But hey! They’re US residents, so it’s good, right?
Pardon my sarcasm, but the assumption that US persons and entities do not need to be transparent about their beneficial owners is absurdly naive.
1,000 US Gold Cards
Commerce Secretary Howard Lutnick this past week announced on a podcast that he has sold 1,000 Gold Cards in one day. The Gold Card program, for a price of $5 million, grants individuals the right to US citizenship. It’s like a Green Card, but with more privileges for those who can afford it. The Green Card affords individuals the privilege of living permanently and working in the United States. Legal permanent residents are also considered as US persons, so ostensibly, any oligarch can purchase a Gold Card and establish legal entities in the United States to hide beneficial ownership and illicit assets.
Russian oligarchs? No problem. President Trump knows some nice ones.
Are they sanctioned? The President said nothing about blocking designated oligarchs from applying for a Gold Card, although he did snort that some of them are "not quite as wealthy as they used to be," apparently referencing Western sanctions. But he thinks the price is not all that steep. "I think they can afford $5 million," he said.
What about those who are designated by our allies, but not by the United States? Putin’s buddy Roman Abramovich is sanctioned by the EU and the UK, but for some unfathomable reason (he supposedly (unsuccessfully) tried to broker a peace deal between Moscow and Ukraine in the early months of the war), not by the United States. Since Abramovich is not designated by OFAC, what’s to stop him from setting up shell entities in the United States and moving corrupt assets?
It’s not like he’s not already doing it in Europe, allegedly registering luxury properties, including a 19th-century villa in Garmisch-Partenkirchen and several works of art to Parados Ltd in Luxembourg. And although Abramovich’s lawyer claims he’s not the beneficial owner of the property, the local mayor in 2005 stated that the villa had been purchased by him, and locals reported seeing the Russian oligarch there.
Aside from sanctioned oligarchs, you know who else can afford a $5 million path to US citizenship? Cartel leaders, like one of the founders of the Medellín cartel Carlos Enrique Lehder Rivas, who was released from a US prison in 2020 and sent back to Germany. I’m sure he’d be able to afford $5 million to come back and get his prostate cancer trated. Also, high-level HAMAS terrorists, who are living high on the hog in Qatar. They can also afford the not-so-steep price tag. Indian gangster and wanted terrorist Dawood Ibrahim is a billionaire. Will his designation, links to al-Qa‘ida, and terrorist activities stop him from receiving a Gold Card?
The risk is just too great
Lutnik’s claim that he has sold 1,000 Gold Cards in one day suggests that the program generated total revenue of $5 billion. Lutnik previously suggested that the sale of 200,000 Gold Cards could contribute $1 trillion toward reducing the US national debt.
IF the claim of the one-day sale is true, how much due diligence has been done on the buyers? Have their links to illicit actors been examined? What about their family members and their links to corruption? What about previous fraud allegations and convictions?
The EB-5 program, created by Congress in 1990, is already rife with fraud. The Immigrant Investor Visa Program offers foreign investors and family members an opportunity to obtain a US Green Card and provides a source of financing for developers to use in, among other things, construction and business projects.
The Gold Card program raises even bigger national security and fraud concerns, because bigger fraudsters and other illicit actors will be purchasing US residency for a higher price than the EB-5. “Any immigration benefit draws fraud … people are willing to do anything and say just about anything to come to the U.S.,” Lora Ries, director of the Heritage Foundation's Border Security and Immigration Center, told Fox News.
Wait… THAT Heritage? Apparently so.
Ries was skeptical that applicants could be vetted well enough to prevent the kind of fraud currently seen in the EB-5 program, which this Gold Card program would replace. Even Lutnick admitted the program is “full of nonsense, make belief, and fraud.”
"Fraud is rarely detected, let alone enforced … so it’s low risk, high reward to commit immigration benefit fraud," Ries said, adding that even Commerce Secretary Howard Lutnick admitted to the widespread fraud plaguing the EB-5 program.
At least the EB-5 has some guardrails in place.
The EB-5 residency is conditional for two years to help ensure that the program doesn’t just allow anyone to buy their way into the country. Before the two-year period ends, the EB-5 investor has to show evidence that they’ve created at least 10 jobs in the US economy and invested in commercial enterprises in the United States.
It’s not perfect, but it’s something.
Lutnick claims, the Gold Card buyers would have to go through a vetting process. What does that look like? He claims he’s sold 1,000 of them in one day. There’s no way that many people could be vetted well enough in the one day Lutnick claims the cards were sold.
And once they’re in, these Gold Card holders would not be subject to beneficial ownership requirements, since they would be considered US persons. They would be free to establish shell companies and other legal arrangements to move stolen funds, proceeds of kleptocracy, drug proceeds, and other illicit assets.
By defanging the CTA and not requiring US persons to submit beneficial ownership information, the United States just opened the doors for financial criminals, oligarchs, kleptocrats, drug traffickers, and possibly even sanctioned individuals to gain permanent residency and use the US financial system to hide, transfer, and launder funds.
Wealthy spies? Come on in!
Rich fentanyl traffickers? Why not?
Putin, ya wanna hide some dough? Just give the US government $5 million and come on in! It’s not like we’re signatories to the Rome Statute and would have to arrest you for the thousands of Ukrainian kids you’ve kidnapped and russified!
The Trump administration revealed no details about how individuals purchasing these Gold Cards would be vetted. The EB-5 program accepts about 10,000 new foreign investors per year, along with their families, according to Congressional information. The vetting process can take several years. Does the US government have the resources to conduct due diligence and vetting on Gold Card investors in as quickly as in one day?
Don’t make me laugh!
And the more applicants there are, the longer the process should theoretically take.
And yet, those who pay the $5 million price tag will not only be able to exploit the US financial system with relative impunity, but hide their involvement in doing so.
FATF Evaluation is Coming
The FATF is due to conduct an onsite evaluation of the US AML/CFT regime in early 2026, according to Treasury.
During our 2016 Mutual Evaluation, the global watchdog noted that “the system has serious gaps that impede timely access to beneficial ownership information.”
FATF last year upgraded our rating on beneficial ownership transparency to “largely compliant” with FATF Recommendation 24 because of the CTA requirement to submit beneficial ownership information.
What do you think will be the findings after the Trump administration crippled beneficial ownership reporting?
How much will our Transparency International Corruption Perceptions Index drop?
And what will that do to the global standing of our financial system?