Tags: China | Trump Administration | china | iran | trump | shell | games

Trump to End China's Pro-Iranian Shell Games

Trump to End China's Pro-Iranian Shell Games
Werner Münzker | Dreamstime.com

By Thursday, 23 May 2019 08:00 AM Current | Bio | Archive

President Donald Trump has drawn the line on the Chinese government’s habitual cheating on trade deals, arguing that the American people have been taken advantage of for too long.

However, trade is not the only place where the Communists in Beijing have decided to play by their own set of rules. Money laundering has become part and parcel of the Chinese economy, and it appears that Congress and the White House have finally started taking this problem seriously.

Recently, the House of Representatives’ Committee on Financial Services held hearings designed to explore ways to bring these transactions to light – assisting banks and financial institution in preventing, investigating, and reporting criminal activities, including those made by countries that fund terrorist regimes like Iran and North Korea.

To force rogue nations into changing their ways and co-existing peacefully with the Western hemisphere, the White House imposed economic sanctions that provide the rest of the world with an ultimatum: trade with either these bad actors or the wealthiest, most powerful country in the world.

While China pays lip service to the U.S., the country thinks that, through clever accounting gimmicks, it can have it both ways – fueling the financial lifeblood of America’s adversaries while continuing to have access to U.S. markets.

Ever since its economic liberalization, Chinese nationals and conglomerates have exercised this “have our cake and eat it too” loophole by creating shell companies – pass-throughs that cloak their business dealings. These companies exist in name only; they have no offices, and their only “customers” are the law-breakers that covertly funnel their money into them to evade the law.

These shell companies are not just run by the average Joe and Jane; as explained by Professor Arthur Cockfield: “Chinese money laundering is suspected to go all the way to the top of the power echelons of the Chinese Communist Party.”

A 2014 report by the International Consortium for Investigative Journalists exposed over 20,000 secret offshore accounts from Chinese citizens – many of which were relatives of the Communist Party of China, including the brother-in-law of President Xi Jinping. This duplicitous short-circuiting of U.S. law is compromising the diplomatic strategies that policymakers have exercised for decades and needs to end.

While financial institutions want to crack down on these shell companies – a survey by the Bank Policy Institute (BPI) found that they filed over 600,000 suspicious activity reports and invested over $173 million to combat the problem – the trouble is that presently, U.S. law enforcement does not have the tools it needs to clamp down on these fuelers of terrorism. In fact, that same survey found that only 1.5-percent of suspicious activity reports from financial structuring received follow-up inquiries from law enforcement.

The reason for this low number just might have something to do with how the U.S.’s anti-money laundering laws remain stuck in the 20th century, while the rest of the world – from the Union to China itself – continues to adapt to theirs to the digital age. For all of these reasons and more, Nate Sibley of the Hudson Institute categorized America one of the biggest jurisdictions for abuse in this sphere.

All of this is troubling, but due to the laudable efforts of many in Congress, it may change soon.

The House Committee on Financial Services has been moving ahead rapidly to come to terms with a solution, deliberating this issue at length and exploring ways to utilize new technology and innovation to uncover the smoke screens of bad actors like China.

On May 9, the committee announced plans to create task forces that will explore the use of artificial intelligence (AI) and fintech for fighting fraud and furthering digital identification.

Moreover, that same day, the committee also passed the bipartisan Coordinating Oversight, Upgrading and Innovating Technology, and Examiner Reform (COUNTER) Act out of committee.

This bill will “better [ensure] the detection and capture of illegal activity” by “[empowering] the U.S. Treasury Department to protect our national security and safeguard our financial systems by codifying an information-sharing program between law enforcement, financial institutions, and the Treasury Department.”

Stopping these fuelers of international terrorism will not come overnight, but it is comforting to see that Congress has gotten serious about taking a stand a stand against those who are treating U.S. law like a suggestions box. With that said, nothing will get done should the committee’s commendable work not advance to the full chamber.

It is critical for House Speaker Nancy Pelosi to work with Republican Minority Leader and fellow California representative Kevin McCarthy in coming to terms with reasonable solutions to this complex problem.

Failing to do so demonstrates complicity with reckless regimes fueling terrorism abroad, and that is something both sides of the aisle should find inexcusable.

Dr. Michael Busler, Ph.D., is a public policy analyst and a Professor of Finance at Stockton University in Galloway, New Jersey, where he teaches undergraduate and graduate courses in Finance and Economics. He has written Op-ed columns in major newspapers for more than 35 years.

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President Donald Trump has drawn the line on the Chinese government’s habitual cheating on trade deals, arguing that the American people have been taken advantage of for too long.
china, iran, trump, shell, games
Thursday, 23 May 2019 08:00 AM
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