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12/10/2021

Remarks by Secretary of the Treasury Janet L. Yellen at the Summit for Democracy | U.S. Department of the Treasury

U.S. DEPARTMENT OF THE TREASURY
Remarks by Secretary of the Treasury Janet L. Yellen at the
Summit for Democracy
December 9, 2021

As prepared for delivery
This gathering is a remarkable cross-section of the worldʼs democracies and, as we have
heard so far, we share a common adversary: corruption. Whether itʼs public o icials on the
take or laws that apply to everyone except the well-connected, corruption makes a mockery
of our free and fair institutions.
That is one thing all acts of corruption have in common, but today, I would like to focus my
remarks on another shared link – and that is the global financial system.
Corruption, a er all, is just a form of financial alchemy. Itʼs the transformation of power into
illicit money or illicit money into power, and in order to catalyze that transformation, bad
actors usually need an intermediary, a place to store or launder their ill-gotten gains: a shell
company, a real estate transaction, an art purchase.
For this reason, combatting corruption is not just the work of the justice ministries – of
prosecutors and law enforcement agents. It is also the work of finance ministries – of
financial regulators and economic development experts. And we believe that our finance
ministry, in particular – The United States Treasury – must play a leading role.
The U.S. financial system is the backbone of the world economy. Enormous amounts of illicit
funds can pass through – or land – in our markets. But just because bad actors want to
launder money through the United States does not mean we need to make it easy for them.
There are far too many financial shadows in America that give corruption cover. We need to
throw a spotlight on them, and that is what we are doing through many of the measures that
are part of the governmentʼs holistic strategy to combat corruption, which we released this
week.
One crucial measure is exposing who owns shell companies and other illicit funds.

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12/10/2021

Remarks by Secretary of the Treasury Janet L. Yellen at the Summit for Democracy | U.S. Department of the Treasury

In the popular imagination, the money laundering capitals of the world are small countries
with histories of loose and secretive financial laws. But thereʼs a good argument that, right
now, the best place to hide and launder ill-gotten gains is actually the United States. And
thatʼs because of the way we allow people to establish shell companies. Since Andrew
Jackson, individual states have been free to set their own rules for incorporating companies,
and since the early 20th century, some states have allowed anybody to establish a shell
company without disclosing who really owns it, what we term “the beneficial owner.” This is
about to change.
Thanks to Treasuryʼs Financial Crimes Enforcement Network – FinCEN – weʼre now in the
process of implementing the Corporate Transparency Act. A big bipartisan majority passed the
law last year, and it allows us to build a national database of who owns what shell company.
On Tuesday, FinCEN, issued a proposed rule to collect the necessary information that will help
us build this database. It will require many U.S. and foreign companies to report their true
beneficial owners to FinCEN and to update that information when those beneficial owners
change.
Weʼre also ensuring a similar principle applies to real estate because many corrupt actors can
hide their money in Miami or Central Park skyscrapers the same way they do in shell
companies. An LLC or trust can be listed as the owner. A lawyer can sign the paperwork.
Indeed, sometimes the only thing these luxury properties are home to are ill-gotten gains –
theyʼre money laundromats on the 81st floor. And so, weʼre also soliciting public feedback on
a future rulemaking, one that will make sure that when someone buys one of these properties
with all cash, they canʼt hide their identity.
Of course, these are just a few of our e orts. Once we shine a light on places where corrupt
actors operate, we need to go a er them, like when we see people pocketing money that is
meant go towards crucial public e orts like fighting the pandemic. Today, Treasury sanctioned
several corrupt actors, including two who did exactly this.
Weʼve also established a kleptocracy fund to reward people who can provide intelligence
about where corrupt foreign leaders are hiding their money in the United States. This work –
the work shutting kleptocrats out of American markets and pursuing them abroad – is work
weʼre carrying out with partners at State, Justice, and USAID. In fact, today, the State
Department announced a new coordinator on Global Anticorruption Issues and committed a
substantial amount of funding to support members of the media and other activists who
expose bad actors. USAID is launching a series of programs with similar goals.
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Remarks by Secretary of the Treasury Janet L. Yellen at the Summit for Democracy | U.S. Department of the Treasury

But let me close by saying this: Itʼs very important that we recognize that itʼs not only foreign
actors who abuse our financial system. There is corruption here at home. Especially when it
comes to how people pay taxes – or rather, how they donʼt. Last year, more than $600 billion
was withheld from public co ers because of our broken tax system, which e ectively lets the
countryʼs top earners and largest corporations get away with evasion.
Obviously, thereʼs a di erence between a tax evader and autocrat who drains the public
treasury, but the financial implications are similar: The country is deprived of funding for
things that benefit everyone – education, childcare, roads and bridges. The dollar that stays in
a tax cheatʼs account is also the dollar denied to the child who needs subsidized
kindergarten.
A er all, the United States cannot be a credible voice for free and fair government abroad if at
the same time, we allow the wealthy to break our laws with impunity. The idea of democracy
is bound up in the idea of America. If we want free institutions to thrive the world over, then
first, we must model what they look like at home.
And with that, I am happy to turn the discussion back to our moderator. Andrea, thank you
again.
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