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By Casey Michel, Director Combatting Kleptocracy Program

For years, the US acted as one of the world’s leading centres for money laundering and offshore finance. Now, that reality is changing fast.

With little fanfare, the US has in the past few weeks announced or implemented new reforms across a range of sectors that traditionally lent themselves to money laundering. All of this is an outgrowth of the Biden administration’s focus on countering corruption.

The most important measure came last month, when the US finally brought its new beneficial ownership registry online. The registry will shine a light on the constellation of anonymous shell companies previously formed in the country. For years, the US enabled the creation of these shells at a far higher clip than competitors, led especially by states such as Delaware and Nevada. To take but one data point, the World Bank found in 2011 that the US formed more anonymous legal entities than 41 tax havens combined — a trajectory that has, by all appearances, only continued since.

Now, thanks to the new registry, the ability of anyone — from kleptocrats and oligarchs to cartel heads and arms traffickers — to obtain their own anonymous shell in Wilmington or Reno is no more. Those forming companies will need to identify the so-called “beneficial owners”, or face potential jail time if they wilfully avoid providing the information.

That move alone would have been laudable. After all, it’s these anonymous shells that serve as the bedrock for almost all offshore networks, helping strip identifying information from the dirty money in question.