The Pandora Papers showed that South Dakota has become one of the most popular hiding places for wealth by oligarchs, kleptocrats and criminals, the Washington Post reported. The state’s attractiveness lies in the regulations that make it possible to hide the actual owners of the assets invested there. Similar laws exist in Nevada, Delaware, and New Hampshire.
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South Dakota – one of the country’s least populous states – has become in recent years “the leading tax haven, hiding billions of dollars linked to those accused of serious financial crimes,” according to the Washington Post and the International Consortium of Investigative Journalists (ICIJ). Documents indicate that the state has become a rival to traditional tax havens such as Jersey and the Caribbean islands.
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The state’s attractiveness lies not so much in its protection against taxes – although South Dakota has no state income tax or capital gains levy, but in its regulations to conceal the real owners of the assets invested there, which protects them from civil lawsuits by creditors or family members. All using the so-called trusts – legal constructs traditionally used to pass inheritance to children. Those in the state enjoy exceptional legal protection. As the newspaper reported, this is the result of intricate state laws, often written by lobbyists and enacted by lawmakers who often do not understand them themselves.
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Similar laws exist in Nevada, Delaware, and New Hampshire
As a result, the amount of money “parked” in South Dakota trusts has quadrupled to $ 360 billion in recent years, tempting the rich to relocate their fortunes from “traditional” tax havens such as the Bahamas. It is not the only state with an interesting offer for those interested in anonymous protection of their money. Similar provisions exist in, inter alia, in Nevada, Delaware, and New Hampshire.
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Although companies offering products such as trusts – like banks – are required by law to check that the funds received are not derived from crime, according to the Washington Post, in practice this process is not too strictly regulated.
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SEE ALSO: Pandora Papers. Names of world leaders in the latest leak of financial records
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Moreover, many of the South Dakota trust holders mentioned in Pandora Papers, including the current president of Ecuador, Guillermo Lasso, or the former vice-president of Dominican Republic, Carlos Morales Troncoso, were accused of financial crimes and human rights violations.
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“Corruption is a threat to national security”
Even though the US has taken steps at the central level to make it difficult to conceal assets – for example, forcing the real owners of anonymous bush companies to be disclosed – these regulations have not yet entered into force. They also do not apply to trusts themselves, although such regulations may be adopted next year. Much, however, comes down to the enforcement of regulations, which has so far suffered from underfunding of FinCEN (Financial Crimes Enforcement Network), the main law enforcement agency.
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– President Biden announced this year that corruption is a threat to national security and he is absolutely right, because along with dirty money, dirty influences appear in our country – said Paul Massaro, adviser to the Helsinki Committee of Congress for the fight against corruption. – I have the impression that after decades of neglect, we are making a mental breakthrough in this matter. But there is still a lot of work ahead of us to get this fight seriously going – he added.
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photo-source">Main photo source: Shutterstock
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