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Global corruption has exploded in scale and scope, threatening international stability and American national security.
As the Trump administration goes to war against Venezuelan drug traffickers, we must confront that systemic corruption is a prime cause of Venezuela’s narco-terrorism.
Corruption fuels China’s debt assault on the Global South, the human-rights violations of Myanmar’s repressive junta, Russian President Vladimir Putin’s war of aggression against Ukraine and the US fentanyl emergency.
Corrupt dictatorships like Iran and North Korea wreak havoc and violence.
Everywhere, corruption is thriving — in no small part because of the shadow financial world America and Western allies promote and protect.
It’s time to take the fight to the lawless world of hidden cash.
Corruption was at the center of Mexican drug gang Cártel de Jalisco Nueva Generación’s recent purchases of anti-aircraft guns, rocket launchers and anti-personnel mines, says the US Department of Justice.
To clean their cash, the cartels turn to Chinese money-laundering gangs working within the United States.
These gangs sell drug dollars to Chinese nationals who want to buy houses and luxury goods or pay for college tuition here in America but are barred by China from taking more than $50,000 out of that country per year.
The US Treasury Department has flagged more than $300 billion in suspicious transactions tied to potential Chinese money laundering — including $33 billion in cash deposits by Chinese nationals with no verifiable income or working low-wage jobs.
Overseas, corruption is just as harmful to American interests.
As US soldiers and civilians gave their lives in the thousands to rebuild Afghanistan, the wildly corrupt Karzai government directly undermined their efforts, stealing billions in US aid and channeling support to the resurgent Taliban.
America has been an anti-corruption leader since 1977, but the tools we’re relying on are not just outdated — they are failing.
Innovations in opacity, such as shell corporations, financial secrecy and offshore banking, have taken over the US financial system and turned the global economy into a money-laundering paradise.
The whole system thrives, in large part, because of one thing: secrecy.
The good news is we have a powerful weapon if we are brave enough to use it.
Radical transparency will require bold steps: punishing secrecy havens, outlawing anonymity structures, banning opaque foreign influence and demanding accountability for dirty-money enablers.
Money is stolen in Afghanistan, in Mexico and throughout the Global South, but it doesn’t stay there.
It flows into the opaque financial instruments of stable Western jurisdictions — like our own.
Some estimates indicate that for every dollar of aid going to impoverished countries, more than 10 times that amount floods out of the same countries — corrupt and criminal proceeds stolen from the people and hidden in Western havens, buying Malibu mansions and Fifth Avenue skyscrapers.
As we send bags of rice in through the front door, corrupt actors are sending bags of embezzled gold out the back.
Tragically, America has actively helped build the hidden world of dirty cash. We are the world’s leading secrecy jurisdiction.
Drug lords, corrupt dictators and terrorists are all eager to launder their money within our borders, relying on American shell companies’ anonymity and our ask-no-questions professionals — lawyers, accountants, art dealers and more — who lack even the most basic client due-diligence requirements.
We have voluntarily chosen to blindfold ourselves — unwilling to look at the clear source of cash funding those global threats and bankrolling transnational crime.
But this self-inflicted crisis also provides the seeds to the solution.
While the United States has limited tools to stop corruption at its source, it has abundant power over the locations where the funds end up, including here at home.
We need only remove our blindfold.
We must fight for radical and systemic transparency reforms in conjunction with our allies.
America, the United Kingdom, Switzerland, the Netherlands, Luxembourg and their territories and former colonies represent an enormous chunk of the “offshore” and unregulated secrecy infrastructure. Together, we could dismantle global opacity and illicit financial flows.
Here’s how.
First, we must outlaw all anonymous companies and vehicles, both foreign and domestic.
Anonymous shell companies pop up in nearly every crooked and criminal scheme: Iranian sanctions evasion, Russian black-market arms dealing, Mexican drug trafficking, Chinese money laundering and, of course, corruption, corruption, corruption.
Anonymous companies are good law enforcement’s nemesis, which is why organizations like the Fraternal Order of Police, the National District Attorneys Association, the National Narcotic Officers’ Associations’ Coalition and the overwhelming majority of state attorneys general have lined up to oppose these secrecy vehicles.
Second, we must require that professionals who help clients navigate the financial system or make large purchases — such as advisers, hedge-fund managers, real-estate agents, sellers of yachts, airplanes and luxury cars, art dealers and auction houses, accountants, auditors and, yes, transactional lawyers — conduct meaningful and good-faith due diligence and know-your-customer investigations of clients and retain records on their findings.
Third, cash buyers of high-value goods should be required to keep records as to the funds’ legitimate source and provide these to law enforcement upon issuance of a court order.
Requiring evidence of the source of wealth for a high-value purchase is an easy way to stop illicit money — both foreign and domestic — from undermining the integrity of our financial system.
Finally, all jurisdictions that fail to comply with baseline levels of transparency should face swift and severe economic consequences — US-led sanctions, export controls and tariffs, to allow US-based due diligence, law-enforcement investigations, asset tracing and tax collection.
Opacity is the greatest own goal in law-enforcement history.
It is a cloak of invisibility we hand to every criminal and corrupt official with virtually no positive benefit for society.
Radical transparency seeks to address major and systemic vulnerabilities that have weakened our national security, compromised our financial system’s integrity and empowered our enemies.
It’s time to take off our blindfolds.
Josh Birenbaum is the deputy director of the Foundation for Defense of Democracies’ Center on Economic and Financial Power.