The United States' Problem With Financial Secrecy
How It Undermines U.S. Foreign Policy
The clients of the former arms dealer Viktor Bout spanned the globe. By shuttling weapons to warlords in Liberia and a dictator in Zaïre, among others, Bout became the most notorious gunrunner of the past quarter century. As the former State Department official Witney Schneidman put it, he was also the “personification of evil.” But although the Tajik-born arms trafficker dealt with clients from around the world, there was one place he chose to set up the shell companies he used to expand his business: the United States. (Bout was convicted of terrorism-related charges in 2011 and is now serving a 25-year sentence in Illinois.)
Washington has provided the world with some of the foremost tools for combating crime and grand corruption. Its Kleptocracy Asset Recovery Initiative, for instance, has frozen some $3 billion in ill-gotten wealth since 2010. Yet over the past decade, a handful of states—primarily Delaware, Nevada, and Wyoming—have undermined the federal government’s efforts by making it easy for people such as Bout to use U.S.-based shell companies to protect their loot. The United States’ domestic stability has helped these states attract kleptocrats and criminal groups from around the world.
Thanks to the efforts of these states’ governments to turn their locales into offshore havens, the United States has become one of the most important destinations for offshore ownership vehicles, enabling tax evasion, corruption, and crime. In the first decade of this century, Delaware even hosted anonymous shell companies that had helped siphon off millions of dollars of international aid meant to help maintain Soviet-era nuclear facilities in Russia and eastern Europe.
It is time for lawmakers to demand more transparency. The federal government should do more to push back against the states that are helping transform the United States into a global offshore haven—and they should start to publicize the criminals, arms dealers, and kleptocrats that are taking advantage of American shell companies and trusts.Michel_TheUnitedSTatesProblemWithFinancialSecrecy_ViktorBout_rtxt27z.jpg Sukree Sukplang / REUTERS
Viktor Bout arriving at court in Bangkok, Thailand, October 2010.Viktor Bout arriving at court in Bangkok, Thailand, October 2010. Viktor Bout arriving at court in Bangkok, Thailand, October 2010.
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