The US double standard against financial crime

For more than a decade, USA has lobbied the rest of the world to hunt down and crack down on the favorite financial secret of tax evaders and international crime. The Foreign Account Tax Compliance Act (Fatca), adopted in 2010, requires other countries to report the accounts of U.S. taxpayers with the intention of preventing them from using foreign financial accounts. from the country.

Governments complied, despite the costs imposed on their financial institutions (and on US taxpayers living abroad). In fact, they went further: more than 100 countries signed the Common Reporting Standard, ECR, which exchanges more information than the Fatca requires.

However, the US itself did not reciprocate. It is not part of the ECR, and Congress has denied the Treasury Department the authority to collect information on foreign account balances in US bank accounts and their true owners.

As the recent investigation of Pandora’s papers attests, the US became the preferred haven for people seeking to hide their money. States like South Dakota and Nevada offer additional protections against disclosure, and have gained a competitive advantage over Switzerland and the Cayman Islands: if wealthy foreigners place assets in carefully structured trusts, nor the US Internal Revenue Service, not even the governments of their home countries will know. Ecuadorian President Guillermo Lasso and Chinese billionaire Sun Hongbin are reportedly among those who have taken advantage of this attractive resource.

It is not an easy thing to ask the US to provide the same transparency that it requires of all the others. This year, Congress took a step in the right direction when it passed a law that requires certain companies to register their beneficial owners. However, it is not yet clear whether the requirement will apply to trusts, so it is necessary for the Treasury to specify that it will.

Beyond that, Congress should empower the Treasury to collect the data necessary to participate in international information exchanges and to play its full role in ensuring that dirty money has nowhere to hide.