House Passes Waters’ Resolution Supporting Strong Anti-Money Laundering Efforts

See Chairwoman Waters’ floor statement below.

As Prepared for Delivery

Mr. Speaker, I rise in strong support of H. Res. 206, a resolution I have introduced to inform the Congress and the American people about the persistent money laundering loopholes and problems that continue to plague the American financial system.

I am pleased to bring this resolution to the floor, in recognition of Sunshine Week. As part of Sunshine Week, the Financial Services Committee is shining a bright light on money laundering and discussing ways to strengthen our country’s anti-money laundering and counterterrorism finance efforts.

Criminals like drug traffickers, human traffickers, fraudsters, kleptocrats, rogue governments, and other corrupt individuals and organizations know our financial system well and work hard to find ways to circumvent our anti-money laundering laws.

Congress has enacted numerous laws to improve the transparency of financial transactions that touch institutions in the U.S. and those on each end of a financial transaction. We have created reporting mechanisms, strengthened law enforcement and intelligence capacities, and promoted responsible, privacy-protecting information regimes to ensure that both the industry and the government have the tools needed to rid the economy of these illicit funds.

However, there are still glaring problems and loopholes in our system that Congress must address. The resolution that I’ve introduced highlights two significant loopholes that remain: the lack of transparency in 1) the arts and antiquities industry and 2) the real estate industry.

First, we know that ethnic and cultural artifacts are stolen and traded to garner funds for bad actors. According to the Antiquities Coalition, ‘‘the United States is the largest destination for archaeological and ethnological objects from around the world.” We know, too, that terror groups like ISIS have looted and sold these treasures to fund their operations, which the head of UNESCO, the United Nations’ cultural heritage agency, said was worth millions of dollars and conducted at an “industrial scale.” However, today, dealers in arts and antiquities are exempt from the Bank Secrecy Act, creating a huge loophole for bad actors to launder funds.

Second, the significance of the real estate loophole in the U.S. was acknowledged in 2017 by the Financial Crimes Enforcement Network (FinCEN) when it issued Geographic Targeting Orders (GTOs) requiring limited beneficial ownership information to be disclosed and reported in some high-end real estate transactions. In fact, FinCEN has noted that “about 30 percent of the transactions covered by the GTOs involve a beneficial owner or purchaser representative that is also the subject of a previous suspicious activity report.’’

The movement of illicit funds throughout the global financial system raises numerous questions regarding the actors who are involved in these money laundering schemes, and where the money is going. This is precisely why the Financial Services Committee is investigating the questionable financing provided to President Trump and the Trump Organization by banks like Deutsche Bank to finance his real estate properties. The Committee is also concerned that Trump-branded and managed condo buildings, for example, have taken millions from suspect Russians or individuals from former Soviet states through cash transactions, some well above the market value and many through shell companies.

Congress must close these loopholes, and financial institutions, including the biggest banks, also must do their part and fully comply with our BSA-AML laws. Although most do, we continue to see not only failures in compliance but also egregious acts where money laundering and terror finance are facilitated.

Further, many of our largest financial institutions have facilitated money laundering through our U.S. financial system from abroad. One scheme was carried out in Deutsche Bank’s Moscow and London branches using mirror trading, in which corrupt traders in Russia managed to move $10 billion in illicit funds out of Russia by buying blue chip stocks in rubles and selling them for U.S. dollars in London. Deutsche Bank was fined nearly $630 million for allowing this mirror trading scheme to take place.

Another scheme involved Danske Bank, where $230 billion in suspicious funds moved from Russia and other former Soviet states through one of Danske Bank’s small Estonian branches to several U.S. financial institutions.

We also know that real estate is frequently used to launder dirty money. Bad actors like Russian oligarchs and kleptocrats often use anonymous shell companies and all-cash schemes to buy and sell commercial and residential real estate to hide and clean their money. Today, these all-cash schemes are exempt from the Bank Secrecy Act.

This must stop. In passing this resolution today, we also remind our colleagues in the banking industry of their responsibilities.

In closing, Mr. Speaker, this resolution has benefitted from the comments of the Ranking Member of the Financial Services Committee, Mr. McHenry, and other members of the Committee, and I thank them for their thoughtful consideration of this resolution.

I urge all of my colleagues to support this resolution that recognizes the need to close these loopholes and to urge financial institutions to comply with the law.

Thank you Mr. Speaker and I reserve the balance of my time.

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