Warren Vows to Crack Open Ubiquitous Shell Companies

(CN) — Recalling how the Panama Papers laid bare a worldwide network of tax-avoiding shell companies in 2016, Democratic presidential hopeful Elizabeth Warren released a new plan Tuesday to fight corruption at home and abroad. 

Democratic presidential candidate Sen. Elizabeth Warren, D-Mass., gestures as she speaks during a campaign stop, Saturday, Nov. 23, 2019, in Manchester, N.H. (AP Photo/Mary Schwalm)

The explosive data dump uncovered the asset-shuffling activities of leaders and luminaries from around the world including Russian President Vladimir Putin, soccer star Lionel Messi, the brother-in-law of Chinese President Xi Jinping and former Trump campaign chair Paul Manafort.

Warren noted in her plan unveiling Tuesday that laundered money represents $2 trillion a year, or between 2-5% of the global GDP. Thanks to the sway the U.S. still holds in the markets, however, Warren said the global financial system can still be reformed.

“Dark money is used to bankroll repressive and hostile regimes,” Warren wrote. “Illicit networks foster corruption, inequality, kleptocracy, and financial crime. Shell corporations, complex money laundering schemes, and inadequate international financial controls enable nuclear proliferation, terrorism, drug and human trafficking, and tax avoidance. All are major threats to our security, our democracy, and our way of life.”

She called out the business practices of President Trump and his companies, over half of which are registered in Delaware, whose state loopholes make it easier for companies to avoid disclosing ownership or financial information. 

An all-caps graphic in Warren’s plan calls it easier to establish a shell company in Delaware than getting a library card. The senator also counted 60% of the units of one of Trump’s Florida buildings as owned by shell companies.

Despite the corruption here at home, Warren said, the U.S. holds a lot of power in the global financial system and shapes the rules. 

As president, she said she would require “beneficial ownership” disclosure, meaning companies must be transparent about who owns them. She would work with Congress to pass reforms against money laundering and to better track international payment flows.

Anti-bribery authority and enforcement systems need a boost as well, Warren said, promising to get foreign service officers involved and better fund the IRS for better watchdogging at home.

She also promised to expand real estate disclosure requirements to be sure people aren’t hiding funds in property investment. 

“While foreign investment has dipped in the face of Trump’s trade wars, U.S. real estate remains attractive for illicit money from all over the world,” Warren wrote. “It’s a stable investment that generally maintains or grows in value — and it gives corrupt oligarchs and dictators a potential escape route if they’re ousted from their home countries. But this money drives out honest purchasers and makes cities hotbeds for dirty, unproductive cash.”

To keep corrupt foreign leaders in check, Warren also promised to cooperate with international partners.

“This means investigating, naming, and shaming corrupt individuals and their criminal rings — including through targeted sanctions on individuals and by excluding them from the financial system — limiting their ability to steal from their countries and stash the money overseas,” Warren wrote. 

Warren cited her other plans to get big and dark money out of politics, fight corruption at home, and reform trade. She said that most of all, the U.S. needs to lead by example.

“Without action, the problem will only get worse,” Warren wrote. “Around the world — in places including Chile, Lebanon, Iraq, and Iran — protesters are rising up against corruption and economic inequality. The United States must stand with them.”

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