Private Investments, Public Harm

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In Private Investments, Public Harm: How the Opacity of the Massive U.S. Private Investment Industry Fuels Corruption and Threatens National Security, a joint report from the FACT Coalition, Global Financial Integrity, and Transparency International U.S. Office, authors warn that the lack of anti-money laundering (AML) requirements and oversight over private investment industry poses significant vulnerabilities to U.S. national security.

The U.S. private investment industry, unfortunately, offers a perfect confluence of factors that make it an ideal place to hide and launder the proceeds of corrupt and criminal activity.

  •  It is large. The U.S. market alone holds more than US$11 trillion dollars in assets.
  •  It is opaque. Private funds, which target high-net worth investors, do not have the same reporting requirements as public equity and retail funds marketed for ordinary investors.
  •  It is complex. In the United States, there are nearly 13,000 investment advisers with little to no anti-money laundering due diligence responsibilities.

The report provides an overview of the current anti-money laundering framework, details various case studies demonstrating the wide range of issues, and concludes with policy recommendations aimed at bolstering transparency and oversight. “Committing to finalize a rule on unregistered investment companies and the full range of investment advisers would provide critical safeguards to close money laundering loopholes and protect the integrity of the U.S. and global financial systems.”

For more information on topics related to this document, visit the HSDL Collection for articles related to Money laundering–Prevention and Financial services industry–Corrupt practices.

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