10. Elise Bean on financial fraud, money laundering and the top 3 policies to curb corruption

KickBack - The Global Anticorruption Podcast

This time on the podcast: Elise Bean, from the permanent sub-committee on investigation (PSI: https://www.hsgac.senate.gov/subcommittees/investigations). The first part of the interview describes the work of the PSI which was set up by Harry Truman and was the first to make #moneylaundering a crime. The discussion touches on the famous case of Raul Salinas that the PSI investigated and that drew drew massive media attention (https://www.nytimes.com/2005/12/10/world/americas/killing-of-expresidents-brother-is-still-a-mexican-mystery.html). Part 2 – Practical challenges In the next part Elise and Matthew discuss some of the practical challenges to detect what is suspect money. Elise describes how the incentives of bankers might run counter to anti-corruption by creating #conflictofinterest. The discussion delves into the balancing act of prosecuting the individuals who are responsible (who are often hard to identify) vs. using settlements with company (which often do not serve as a real deterrent) (11:16). One important example discussed in this context is the case of HSBC investigation 2012 (summarized here: https://www.bbc.com/news/business-18880269). The two also discuss whether and how it has become more difficult to get around a disclosure and reporting-based system. Elise describes the “the game of bulk cash smuggling” that includes money launderers shipping large sums of money across borders in trains and even submarines. Part 3: What do about it? The last part of the conversation focuses on the concrete steps against money laundering related to corruption. One concrete loophole that hinders prosecution of money laundering is the US 2002 temporary exemption from the PATRIOT Act requirement for implementation of anti-money laundering programs, on sectors such as real-estate, hedge funds, and luxury items. Elise describes the story behind the exemption, stemming from the push after the 9/11 attacks to tighten anti-money laundering laws, outlining the mystery why the exemption has lasted for over 17 years even though bipartisan support exists to end it. With bipartisanship generally playing a big role for PSI, after the reputation of the subcommittee was tarnished by Joe McCArthy (https://www.senate.gov/artandhistory/history/common/generic/Featured_Bio_McCarthy.htm), Elise outlines how it has how it is shaped which investigation the PSI launches. Elise also describes how she chooses the cases to look into (30:40) and how this has led to investigations into #Taxdodging of large companies such as Caterpillar and Apple, and the Foreign Policy implications. Finally, she gives her Top3 policy wish list for changes still need to be made (39:20) to reduce money laundering and cleptocracy? Top 3 : 1. Transparency about beneficial ownership 2. End temporary exemption from the PATRIOT Act requirement for implementation of anti-money laundering programs in the real-estate, hedge funds and luxury goods sector 3. Making data collected by Foreign account tax compliance act available to be broadly analyzed