“It’s Mueller Time.”
Few phrases I overhear in Washington depress me as much as this. And this is not at all because I’m a Sean Hannity fan or a Chapo Trap House bro who thinks investigating Russian electoral interference is for globalist shills. Don’t get me wrong: I want crimes to be punished and action to be taken against Russian electoral interference. This is certainly no hoax.
But “Mueller Time,” the Mueller merch, the #Resistance—what Katherine Miller writing for BuzzFeed News has called “the Robert Mueller Fanclub”—really gets me down. Because what I think it shows is that, when it comes to thinking about the most important story of our time, analysis has failed.
This is something systemic, not personal. And yet the #Resistance, and too many Democrats in Congress, keep talking about Trump-Russia naively like a story about heroes and villains, where a few bad apples need to be tossed out; where all we need is “Mueller Time” for everything to be alright. Believe me, it won’t be. This is systemic. And it’s about money.
Call it America’s laundromat.
The Trump-Russia story is a corruption story. It’s a story about dark money—money that both operates within the system and determines its contours.
Few people realize how central America is to global money laundering. Fewer people realize how becoming central to global money laundering has not only brought billions in dirty money to the United States, but has also created a billions-strong shadow economy servicing foreign kleptocrats. And even fewer people still realize that this system is a byproduct of decades-long efforts by American billionaires, American corporations, and various other American vested interests hell-bent on eliminating transparency efforts that would impinge on their ways of doing business or influencing politics.
It needs to be more widely known that the United States is the world’s number one manufacturer of the shell companies used to launder and conceal dark money. Not only does the United States produce more than 2 million corporate entities annually—by some estimates pumping out 10 times more shell companies than the world’s 41 other tax havens combined—U.S. firms were also the most willing to set up untraceable shell companies in a study where researchers posed as money launderers, corrupt officials and terrorist financiers. And shell companies themselves are not a harmless phenomenon. A 2011 World Bank forensic study of grand corruption cases found that the United States was the leading jurisdiction for the incorporation of entities involved in foreign money laundering schemes.
The scale of the American laundromat is huge. The Department of the Treasury estimates that $300 billion is laundered annually in the United States. This is roughly equivalent to the U.S. mining sector—or 2 percent of American GDP. These shocking statistics expose by themselves the complete failure of the existing U.S. anti-money laundering (AML) system.
Worse still, few realize how important defending the interests of this system has become to the Washington lobbying industry. Whether it is certain U.S. states defending their rights to produce anonymous shell companies, or kleptocratic governments such as Equatorial Guinea and Uzbekistan that have spent hundreds of millions on dollars to hire U.S. lobbying firms, or lawyers and real estate agents fighting to ensure that anti-money laundering legislation continues not to apply to sectors known to function as money laundering conduits, the rot runs deep.
Only by thinking of those convicted of charges filed by the Special Counsel as products of a deeply corrupt system can we begin to properly analyze the Trump-Russia story—not as some unfortunate gathering of a particularly rotten set of apples, but as the consequences of the American laundromat.
It is the system that produced these people and their sordid connections. And it is the system that continues to produce what amounts to a national security threat. None of this can be properly addressed without fundamental structural changes. We don’t need “Mueller Time.” We need something far more boring and technical: systematic legal, financial and political reform making America’s financial system much more transparent and much less corrupt.
Congress should stop waiting for Mueller and begin dismantling the American laundromat immediately. One doesn’t need the results of a particular investigation to grasp the outlines of the bigger picture.
Ending the mass production of anonymous shell companies could be done quickly by authorizing the creation of a federally administered register of beneficial ownership of all new and existing corporate entities owning assets in the United States.
A different anti-money laundering approach is also needed. Congress should pass a new Money Laundering Act, recasting the U.S. AML system as an investigative rather than reporting regime. This should extend AML requirements to high-risk sectors not covered by the existing regime, especially to lawyers and real estate professionals. It should also extend new powers to U.S. law enforcement—for example, a mechanism based on the United Kingdom’s Unexplained Wealth Order.
Ending the access foreign kleptocrats have to Washington pay-to-play politics could also be done quickly. Systemic reform of the sector would begin with Congress passing legislation fortifying the Foreign Agents Registration Act (FARA). Ambiguities in the existing legislation need to be clarified and any remaining loopholes should be closed, for example whether lobbyists register under the Lobbying Disclosure Act (LDA) instead of FARA. In any case, there should be zero tolerance for late filing.
FARA 2.0 will not work without enforcement, which admittedly has been ramped up in recent months. Congress should provide the Department of Justice with greater investigative powers for cases of suspected non-compliance. New civil penalties for non-compliance should complement criminal punishments. There should be an awareness campaign and training exercise to educate lobbyists. Ultimately, given the stigma attached to being a “foreign agent,” legislation should be prepared replacing the existing LDA and FARA regimes with a single system that avoids such labels.
Dismantling the American laundromat means facing up to an unnerving truth: The whole system did not arise due to the importation of something “foreign” but is rather the result of kleptocrats exploiting the tools and structures honed over the decades by homegrown corporations and billionaires to protect their own wealth and influence politics.
Senators Marco Rubio, Sheldon Whitehouse, and Ron Wyden among others have proposed bipartisan legislation to clamp down on anonymous shell companies and money laundering in real estate. The House Financial Services Committee came very close to passing such a bill in the form of the Counter Terrorism and Illicit Finance Act at the end of the last Congress, and should do so now as an immediate bipartisan priority. Meanwhile, Senator Elizabeth Warren’s Anti-Corruption And Public Integrity Act includes a lifetime ban on lobbying for presidents, vice presidents, members of congress, federal judges and cabinet secretaries; provides for a new independent U.S. Office of Public Integrity; and attempts to change the rulemaking process of federal agencies to restrict lobbyist influence on lawmaking. These measures would enhance national security more than a new round of fighter jets.
It’s a good start. This is what the Robert Mueller fanclub should be cheering for—seeking to change structures, not turning everything into a morality play about good Americans, bad Americans, and bad foreigners.
The problem runs much deeper than that.