For the past 18 months, nearly all of the efforts to demolish America’s anti-corruption architecture have come from one source: the White House. Under President Trump, it was the White House that announced both the elimination of task forces specifically tasked with tackling kleptocracy and a pause on enforcing the Foreign Corrupt Practices Act. The Trump administration has also transformed everything from white-collar prosecutions to presidential pardons into an open-air feast of corruption. And all the while, the president and his family have watched their net worth explode, thanks to billions in ill-gotten gains streaming in from around the world.
It goes without saying that Trump now oversees the most corrupt White House the U.S. has ever seen. But it would be a mistake to say that he and his White House are acting alone. Indeed, in the latest assault on America’s anti-corruption edifice—perhaps the most destructive effort yet—the White House is taking a back seat, and is instead looking to Republican allies in Congress to undo the single most important anti-corruption step the U.S. has taken in years.
First, a bit of history. For decades, until the early 2020s, the United States stood at the center of the world of offshore finance. While places like Switzerland, Panama, the Cayman Islands, and other smaller locales got most of the headlines regarding offshore secrecy, in reality it was the U.S. that dominated the world of laundering illicit wealth, attracting billions (and potentially more) from narco-traffickers, arms dealers, kleptocrats, and others looking to wash their wealth clean.
Many industries accelerated America’s transformation into an offshore behemoth, including real estate and private equity, both of which enjoyed decades-long loopholes in basic anti–money laundering provisions. But there was one industry in particular that served as the bedrock for all of these laundering networks: shell companies. Thanks to America’s fractured corporate formation landscape, the federal government had no say in how U.S. shell companies were formed—or what kind of information was needed when setting up a shell company.
As a result, states like Delaware, Wyoming, Nevada, and others provided all of the secrecy and legal protections that cartel heads, dictators, human smugglers, and others needed to hide their financial tracks. In a matter of minutes, anyone around the world could set up a U.S. shell company and immediately access their own bespoke U.S. money-laundering network—all of it perfectly legally. Time and again, investigators both domestic and foreign could track a dirty money trail, only to watch their efforts collapse in the face of a Delaware or Nevada shell company.
It wasn’t simply autocrats and their oligarchic proxies who benefited from these anonymous shells. Wealthy Americans, those looking to secretly influence American politics, those searching for ways to covertly inject finance into U.S. elections—all of them profited from this rank secrecy.
Efforts to bring the barest transparency to U.S. shell companies stretch back to at least 2008. But it wasn’t until the early 2020s that legislators finally passed something called the Corporate Transparency Act. The bill was hardly partisan; remarkably, a slate of legislators from both sides of the aisle passed the bill over President Trump’s veto. Nor was the bill onerous. Instead of a public registry of corporate owners, as seen in places like the United Kingdom, America’s new shell company database would remain private, accessible only to federal authorities and other officials tracking illicit and looted wealth.
It’s difficult to overstate just how momentous this new legislation was. For the first time in decades, the U.S. was no longer the leading font of anonymous shell companies. The best days of U.S. offshoring appeared behind us.
How much can change in just a few short years. Unsurprisingly, the opening salvo against the Corporate Transparency Act came from the politician who’s benefited from anonymous shells perhaps more than anyone else: Trump. Barely a month into his second term, Trump announced that the Corporate Transparency Act was an “absolute disaster,” an “economic menace” that would “soon be no more.” He announced that his administration would no longer be enforcing the law for U.S. shell companies—and that no one would need to worry about prosecution for breaking the law. A few months later, Trump’s Treasury Department announced that it was destroying all of the filings the registry had compiled thus far, torching the database entirely.
Still, the law technically remained, as did the related statutes of limitations—and the potential for a future administration to go after malefactors still setting up anonymous shells. Trump could announce that the law was a dead letter, but that didn’t mean he could repeal it fully.
Enter Congress. In late April, Trump’s allies on the House Financial Services Committee pushed through legislation by a one-vote margin to formally repeal the requirement that U.S. shells divulge their true owners. Claiming that the transparency requirement—which requires that company managers take approximately five minutes to fill out a form disclosing company ownership—was an onerous burden, the new bill, dubbed the Repealing Big Brother Overreach Act and sponsored by Ohio Republican Representative Warren Davidson, will restore America’s status as the leading offshore haven. Last month, Senate colleagues introduced similar legislation, aiming to attach it to the broader defense bill set to be passed later this year.
All of this is a staggering gift to cartels, Chinese money-laundering networks, Iranian proxies, and others who have relied on anonymous U.S. shells—all of whom Republicans supposedly stand against. The repeal effort “ignores clear warnings from American national security and law enforcement officials,” as Transparency International’s Gary Kalman said, all of which “risks turning the United States back into a place where criminals and foreign adversaries can more easily fund their networks and hide dirty money in plain sight.”
It’s not difficult to see where this new momentum for effective repeal is coming from. Trump, saturated as he is in rampaging anonymity and international financing, has gone as far as he can to flip the U.S. from an opponent of corruption to a confederate of kleptocrats around the world. But he needs his allies in Congress to help him achieve all of his pro-kleptocracy aims—and to help all of their wealthy, oligarchic benefactors continue to benefit from anonymous U.S. shell companies, as well.
In the service of aiding those wealthy donors, Republicans pushing for the bill’s effective repeal are willing to aid Russian gun-runners, terrorist financiers, transnational criminal syndicates, and others who need all of the anonymity that states like Delaware, Nevada, Wyoming, and others perfected. “Introducing this bill isn’t about lowering costs for small businesses: it’s about Congress choosing to protect the interests of wealthy donors over the safety of their communities,” Erica Hanichak, deputy director of the FACT Coalition, said.
All of which is to say: Trump may be the leading wrecking ball destroying America’s anti-corruption credentials. But he is hardly alone. Thanks to congressional Republicans, Trump—and corrupt actors around the world, salivating at the chance to turn the U.S. back into their own personal dirty-money laundromat, can finally restore an American kleptocracy in which only oligarchs, grifters, and criminal kingpins benefit, while everyone else pays the price.
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