Session 2: Opacity and Illicit Flows

 

This session explores the hidden infrastructure of illicit finance—offshore accounts, shell companies, and the gatekeepers who make them possible. From weak enforcement in high-risk jurisdictions to the surprising role of U.S. laws in enabling secrecy, the panelists unpack how opaque systems fuel global corruption and democratic backsliding. Strategies for reform range from sanctioning enablers to building unlikely coalitions for financial transparency.

Moderator:  Victoria Baranetsky, The Center for Investigative Reporting

Panelists:

  • Dan Nielson, Government, University of Texas at Austin
  • Gary Kalman, Transparency International US
  • Brooke Harrington, Sociology, Dartmouth College

Discussant:  Mark Weidemaier, University of North Carolina School of Law

 

Key Takeaways:

Anonymous Companies Obstruct Transparency: Victoria Baranetsky shared how U.S. laws allow ownership of property and assets through LLCs, making it nearly impossible for journalists and the public to identify true owners, even in cases involving national security concerns, like land purchases near Travis Air Force Base.

Banks and Firms Still Serve Sanctioned Clients: Dan Nielson presented audit research showing that many financial institutions continued offering services to clients with high-risk or even sanctioned profiles, despite global regulations intended to prevent it, revealing deep flaws in enforcement.

Deception-Based Audits Reveal Global Access Gaps: Nielson detailed how his team sent over 40,000 emails to banks and incorporation services, using sanctioned personas and shell company requests to test compliance. A majority failed to request required ID from beneficial owners, especially in high-risk jurisdictions.

The U.S. Is a Top Enabler of Illicit Finance: Gary Kalman cited multiple studies, including by the GAO and Transparency International, demonstrating that the United States is one of the easiest places in the world to hide money through anonymous companies and opaque financial systems.

U.S. Retreat Weakens Global Anti-Corruption Norms: Kalman warned that recent U.S. backsliding, such as the dismantling of the Kleptocracy Asset Recovery Initiative and delays in enforcing new rules, undermines decades of progress and leaves a vacuum in global leadership.

Wealth Managers Are the System’s Critical Vulnerability: Brooke Harrington argued that a few hundred elite wealth managers are the linchpins of the global offshore system, helping oligarchs and billionaires hide assets, evade taxes, and fund anti-democratic movements across borders.

The Offshore System Funds Authoritarian Politics: Harrington traced how private wealth stored offshore is funneled into political campaigns and disinformation campaigns, including Brexit and Trump’s 2016 election, framing offshore finance as a direct threat to democracy.

Opaque Ownership Impedes Asset Recovery: Mark Weidemaier noted that in sovereign debt and corruption cases, governments often don’t know who owns what, especially as elites use offshore structures to siphon and stash public wealth beyond jurisdictional reach.

Private Litigants Are Key But Compromised: Weidemaier explained how hedge funds and litigation financiers are increasingly central to asset recovery, yet they often benefit from the same opaque structures they help dismantle, raising concerns about their motivations and public accountability.

Anti-Corruption Requires New Coalitions: Kalman concluded that building a stronger anti-corruption framework means forming unlikely alliances with trade associations, real estate lobbies, and even hesitant philanthropies like the Gates Foundation, based on shared interest in financial integrity.

Slide Decks from This Session: