Sheldon Whitehouse Calls To Fight ‘Illicit Economy’ Funding Miscreants, Cites National Security Threats

Forbes Breaking News

At a Senate Finance Committee hearing on Tuesday, Sheldon Whitehouse (D-RI) spoke of the existence of an international ‘illicit economy.’

Transcript

00:00Thank you Senator Grassley. Senator Whitehouse. Thanks very much Chairman.

00:07Mr. Morrissey, section 7217 of the Internal Revenue Code says that it is

00:13unlawful for the president or for cabinet secretaries to request directly

00:19or indirectly that the Internal Revenue Service audit or investigate any

00:25particular taxpayer. Are you clear on that provision? Senator, thanks for the

00:34question and for the time you and your staff took to meet with me on this. Yes,

00:38I'm clear and aware of that statute. And it's a criminal act? I think that statute

00:42includes, yes, reporting instructions and potential criminal penalties as well.

00:48Let me turn to the Corporate Transparency Act which we also talked about and which

00:55also has both law enforcement and national security components to it. And

00:59since Chairman Crapo and Chairman Grassley are both here, let me take a moment to

01:05thank them for their leadership and getting that bill through. It sort of

01:09developed in the Judiciary Committee under Senator Grassley and moved to the

01:14Banking Committee under Chairman Crapo to get past there. So I want to thank them

01:20for their good work. We did good work here too. So just a couple of observations. The

01:28Foundation for Defense of Democracies has said that the existing proposed FinCEN

01:34final rule, quote, would deliver a profound blow to U.S. law enforcement and

01:39national security interests. And noted that narco-traffickers widely use U.S.

01:45anonymous shell companies to hide their identities, launder cash, and commit crimes.

01:50The Hudson Institute warned that the interim final rule, quote, undermines U.S.

01:56foreign policy and national security. The George W. Bush Institute agrees that it

02:01undermines the intended purpose to safeguard the national security of the

02:05United States. The Quincy Institute said the rule, quote, is a threat to U.S.

02:11national security. The National District Attorneys Association predicted

02:16devastating consequences for law enforcement's ability to fight criminal

02:20enterprises that exploit shell companies to launder money, traffic drugs and

02:24weapons, and fund human trafficking and terrorism. And the National Narcotics

02:28Officers Association said that requiring businesses to disclose their true

02:32beneficial owners under the CTA is a critical tool for law enforcement. Do you

02:37understand the national security and law enforcement imperatives that caused this

02:43bipartisan law to be passed in the last Trump administration with the active

02:47support of the administration? Senator, thank you, and thank you for our

02:53discussion of this in your office. Yes, I'm familiar with that statute and the

02:58important responsibilities the Treasury has to root out illicit finance. I think

03:04this is, you know, the information covered by this is some of the, you know, is very

03:08important information to those responsibilities. Well, I would I would urge

03:10you to bring that awareness with you into your position at Treasury. I believe that

03:21there is a an international illicit economy that is now sufficiently robust and takes on

03:30all kinds of different miscreants. Whether you're a kleptocrat who's rooted, who has

03:36looted your country so that it doesn't have good roads or hospitals but you have

03:40billions of dollars to stash away, or whether you're a fentanyl trafficker dealing

03:44in billions of dollars that needs to be hidden and squirreled away, or a human

03:49trafficker, or an arms trafficker, or an international criminal organization, or one

03:54of Putin's crooked oligarchs, they are all served by this illicit economy. And I think

04:05it is very much in the United States both law enforcement domestically and national

04:12security internationally interests to make sure that we are attacking that illicit

04:21economy. Because the entities that it serves and the individuals that it serves are almost

04:27certainly our enemies. So I hope that you understand that. I'll ask you to, I've got

04:3530 seconds left, so I'll ask you to comment on what you think is the case with respect to

04:39the danger to the United States of that international illicit economy that aids and abets or gives aid

04:46and comfort to our enemies. Thank you, Senator. Yes, I think illicit finance can foster a range

04:55of criminal activities that undermine national securities, whether it's drug trafficking,

04:59money laundering, human trafficking. I think when the department considers regulating in this space,

05:05it's imperative that we are working to make sure law enforcement has the information it needs,

05:09and that we're regulating responsibly in a way that does not impose undue burdens on

05:13law-abiding taxpayers as we try to do that. My time has expired, and I thank the

05:20ranking member. Senator Blackburn's next.

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