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5/5/2020 Remarks by Assistant Secretary Daniel Glaser at the Atlantic Council and Thomson Reuters “Power Of Transparency” Speaker Series: “T… U.S. DEPARTMENT OF THE TREASURY Press Center Remarks by Assistant Secretary Daniel Glaser at the Atlantic Council and Thomson Reuters “Power Of Transparency” Speaker Series: “The Role of Transparency in Fighting Corruption in Financial Systems” 4/21/2016 WASHINGTON - Thank you Dawn for that kind introduction – and thank you to both the Atlantic Council and Thomson Reuters for organizing this event today. As you know, I’ve been asked to speak today about corruption and our efforts to ensure that the financial system is a hostile environment to its proceeds. It should go without saying that corruption harms the global community for a wide range of reasons: it stifles economic development, impairs democratic institutions, erodes public trust, and impairs international cooperation. Moreover, corruption creates space for criminals to flourish and abuse the financial system – threatening local, regional, global, and U.S. national security. The eradication of corruption—like the eradication of crime—is a noble pursuit for which we will likely always fall somewhat short. However, we do have the capacity to reduce corruption, make it less profitable, and bring corrupt officials to justice. That is why we criminalize corruption, and continue to investigate and prosecute those who engage in it – both here and abroad. But fighting corruption is about more than just prosecutions. At Treasury, we have the unique ability to make it more difficult for corrupt individuals to use the money that they steal. The key to doing this is by focusing on strengthening financial transparency – particularly through effective implementation of measures regarding anti-money laundering and countering the financing of terrorism, known as AML/CFT. Domestically, this work is led by the U.S. Treasury Department in collaboration with a variety of regulatory and law enforcement agencies. Globally, this work is led by finance ministries throughout the world, working through bodies such as the G-7, G-20, and Financial Action Task Force, as well as the IMF and World Bank. Today, I would like to talk about these efforts and their importance to our collective fight against corruption. This is where the work of the Treasury Department and my office – the office of Terrorist Financing and Financial Crimes – is essential. Financial Transparency Financial transparency, at a basic level, means having timely, meaningful, and reliable information about the parties to transactions and assets. We achieve this through preventive measures on the front end, as well as effective monitoring and reporting on the back end. Financial transparency is essential to the success of corruption investigations and the investigations of many crimes, because it better enables us to trace, identify, and ultimately return assets stolen by corrupt leaders and regimes. What’s more, financial transparency itself has a strong deterrent effect on criminals, keeping their money out of the financial system to begin with. The U.S. financial transparency framework is already strong and effective. An interlocking array of identification, recordkeeping, and reporting requirements help shed light on illicit actors and transactions, and ensure the integrity of our efficient financial system. Of course, we recognize there are steps we can and should take to improve our system. This is a point that I will discuss in a moment, but it is important to first place these legitimate criticisms in the context of the broad U.S. system and in particular our strong enforcement culture. The United States has always pioneered anti-money laundering. We were the first country to criminalize money laundering and to put in place an anti-money laundering framework, and we continuously work to ensure its effectiveness, and rigorously enforce its requirements. Of note, the United States prosecutes well over 1,000 cases each year for money laundering and related violations. Each year we seize and forfeit billions of dollars of assets that represent the proceeds of, or were used to facilitate, crimes. And we diligently and carefully enforce for compliance in financial institutions, matching penalties with the severity of infractions. Last year alone we assessed total regulatory and criminal penalties of more than $1 billion, imposing criminal fines for particularly egregious, willful behavior and imposing lower regulatory penalties or informal remedial actions for less egregious or unknowing behavior. And over the past several years, criminal fines imposed against banks for egregious, prolonged, and willfully illegal activity can be measured in the billions of dollars. This is a record that no one in the world can match. It creates a hostile environment for those who want to hide their assets in our financial system, and sends the message that when we put a law or regulation on our books, it is a serious matter, and we hold people to account for violations. Domestic Implementation Yet, as I noted, we can do better. We are constantly working to enhance financial transparency to prevent corrupt individuals and other criminals from abusing legal entities in order to conceal their identities and move stolen assets into and through the financial system. One key measure underpinning financial transparency is effective customer due diligence – called CDD for short. Financial institutions are our front line of defense, and they need to be empowered to identify their customers, verify the information they have, and monitor for suspicious activity. In order for these relationships to be truly transparent, financial institutions also need to know who is ultimately behind an account, that is, who is the “beneficial owner.” To further improve our own system in this regard, we are developing a rule to clarify and strengthen financial institutions’ CDD obligations. Our proposed rule clarifies CDD expectations and https://www.treasury.gov/press-center/press-releases/Pages/jl0437.aspx 1/2 5/5/2020 Remarks by Assistant Secretary Daniel Glaser at the Atlantic Council and Thomson Reuters “Power Of Transparency” Speaker Series: “T… includes a requirement to identify and verify beneficial owners of certain legal entity customers. After a careful review of public comments to the proposed rule and related cost-benefit analysis that Treasury prepared, we sent a final draft of the rule to the Office of Management and Budget earlier this month. But financial transparency goes beyond the role of financial institutions alone. That’s why we are also focusing on improving the transparency of companies themselves. Such a reform requires congressional action, and the Administration continues to advocate for legislation that would require the identification of the beneficial owners of U.S. legal entities and provide law enforcement with ready access to this important information. We are committed to working with Congress to pass meaningful beneficial ownership legislation. To be effective, this legislation must require that all companies know and disclose adequate and accurate beneficial ownership information at the time of creation, regularly update this information, as well as face penalties for failure to comply with these provisions. Global Implementation Addressing financial transparency is not just a U.S. responsibility. It is a global responsibility. The international financial system is integrated, leaving us only as strong as our weakest link. A timely example is the so-called Panama Papers, which underscore the importance of a broader set of issues that we are working to address alongside our international partners. Only through effective implementation of the international AML/CFT standards around the globe we can address the corruption challenges that we all face. The key here – one that I cannot stress enough – is implementation. Countries must do more to effectively implement their laws. When we pass a law in the United States, we implement it. We have a longstanding record demonstrating the effective implementation of our laws. Now we need to see our partner countries around the world take this approach and implement strong laws. One way we do this is by working through the Financial Action Task Force (FATF), the global standard-setting body for AML/CFT and the forum for international dialogue on these issues. The FATF and the FATF regional style bodies are essential to global implementation of the AML/CFT. We also work through the G-20 and the G-7 to advance financial transparency. Recently, the G-20 anti-corruption working group developed the G-20 High Level Principles on Beneficial Ownership and has pressed members to publish action plans. Ours was published last October and is available on the White House website. And we maintain close and ongoing bilateral efforts with countries around the world, focused on supporting key partners as they make improvements to their AML/CFT frameworks and advance financial transparency even further. Conclusion Financial transparency is a key element in the fight against corruption, money laundering, and terrorist financing. The core elements of financial transparency, provided by international AML/CFT standards, help identify, trace, and ultimately return corrupt proceeds to their rightful owners. It’s clear that there is more work to be done. At home, we will take steps to clarify and strengthen the diligence performed by financial institutions. And, at an even more fundamental level, we are seeking to inject transparency into the root of company formation. Just as we have work to do at home, there is much that needs to be done globally. Countries around the world need establish and implement AMF/CFT regimes that create environments that are hostile to all forms of financial crime, including corruption. Thank you again for inviting me here today. ### https://www.treasury.gov/press-center/press-releases/Pages/jl0437.aspx 2/2
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