The White House has announced that Stuart Levey, the Treasury Department’s Undersecretary for Terrorism and Financial Intelligence, will resign. His replacement will be Democrat lawyer David S. Cohen, the current Assistant Secretary for Terrorist Financing. Cohen doesn’t deserve his current job, much less a promotion. The Republicans in the Senate need to resist and grill Cohen during confirmation hearings. Here’s why:
- Cohen has praised Treasury’s efforts at containing terrorist financing to Al Qaeda while failing to recognize the contribution of the U.S. military in the war against terrorism. It is largely the military pursuit and elimination of insurgent and terrorist financiers and cell leaders that has pushed Al Qaeda closer to insolvency. It has not been the men in navy blue suits inside the beltway.
- Cohen “is pleased with the contribution that Saudi Arabia” has made in combating the financing of terrorism. Pleased? Cohen’s statements on Saudi Arabia are for public show and border on outright lies. His statements to more than one media outlet have been made to highlight a spirit of cooperation with the Muslim world and to paint a picture of Pres. Obama’s effectiveness at using “soft” power. The reality is that Saudi cooperation in the financial war on terror is limited to public statements, meager proof, and multiple examples of Saudi duplicity. Relatedly, Cohen has downplayed the role of the Middle East in international terrorist financing. At a speech to the Washington Institute for Near East Policy, Cohen addressed terrorist financing problems in Mexico, North Korea, Africa, and getting slightly closer, Afghanistan and Pakistan. He spoke some about Iran and Hezbollah, ignored Yemen, and left out Saudi Arabia’s role in funding Al Qaeda and the Taliban entirely.
- Cohen supports Carl Levin’s dreadful incorporation transparency bill which would deepen the federalization of what has historically been a state role—the incorporation of businesses. The bill would require additional disclosures by companies, additional paperwork by the state incorporation agencies, and would subject the states to turn over records on their businesses to Washington, D.C., and even to foreign countries upon request. Contrary to what supporters say, the bill would not help expose the Iranian or terrorist shell companies of tomorrow—it is a bill designed to discourage foreign companies to offshore their revenues in the U.S. in the vein hope that foreign countries will reciprocate by helping the U.S. crackdown on its own tax deadbeats. Cohen’s support for the bill was a deviation from the Treasury policy stated by another assistant secretary who testified under oath before Congress that no new laws are necessary to fight terrorist financing. Cohen’s position also put him at odds with current FinCEN director Jim Freis, who has a less rigid approach toward beneficial ownership. That makes Cohen the odd man out among the assistant secretaries he will be supervising if confirmed.
- More broadly speaking, sanctions are the last bow in Pres. Obama’s quiver against a nuclearizing Iran. Either the Obama administration is or is not serious about enforcing those sanctions, about bringing more nations on board with those sanctions (particularly Europe and Russia), and about keeping the sanctions tight. Letting the well-respected Levey go and selecting a lightweight like David Cohen suggests that Pres. Obama is no longer serious in this approach. More menacingly, that suggests that the Obama administration no longer has a genuine plan for containing Iran’s nuclear ambitions.
Reuters reports that the announcement of Levey’s replacement “comes as the United States and its allies appear likely to make a push for stiffer sanctions on Iran… U.S. officials emphasized they did not think the staff change would stem the momentum for the drive to put the financial squeeze on Iran or to choke off access by militant groups to international sources of money. ‘It will have no effect on policy, or on our ability to execute the president’s policy,’ U.S. Treasury Secretary Timothy Geithner said.”
Really, Tim? But is it not informative that the question is being asked?
FinCEN overreaches on beneficial ownership
March 22, 2012The Democrats in Congress weren’t making much progress with their silly attempt to force a federal mandate down the throats of state officials who register and regulate corporations. Despite arm-twisting and getting the Obama administration on board with Sen. Levin’s “incorporation transparency” bill, and getting Time magazine to write a glowing piece about the proposed law, the bill’s sponsors are stuck.
So what have they done? Pres. Obama’s Treasury Department has established a rule that Congress could not get passed as a law. Rather than getting the states to hunt down the “beneficial owners” (ie, the true owners of the corporation), the new rules established by FinCEN, an agency within Treasury, will require banks to discover the beneficial owners of all their commercial accounts. This burden on the compliance division of banks will not be well-received by the business end of a still recovering financial sector.
Giving the states an unfunded mandate through a law would be bad enough, but imposing a costly regulation on the private sector through a backdoor rule is even worse.
This rule will not prevent terrorist financing or secret business activities by Iran. The effect will be to increase tax revenues to the federal government by forcing banks to figure out what entities may be subject to additional American taxes. If it is discovered that the customer is subject to a foreign tax, it may well be that the State Department will be lobbying the governments of those countries for a reciprocal law or rule to target Americans who off-shore their wealth.
The rule will also gum up the works at American financial institutions by creating new regulations that banks will have to pay for by increasing bank fees for ordinary customers.
From Complinet with a hat tip to Bachir El Nakib:
Posted in News commentary | Tagged AML, beneficial ownership, compliance, FinCEN, incorporation transparency, know your customer, Treasury Department | Leave a Comment »