Latest Paradise Papers leak highlights the role of US banks in selling secrecy to foreign individuals seeking to register aircraft in the US – even those with links to companies under US sanctions.
Documents obtained by the International Consortium of Investigative Journalists show that an American bank – the Bank of Utah – helped Russia’s richest oligarch Leonid Mikhelson, a close ally of Russian President Vladimir Putin, secretly register a private jet in the U.S. Mikhelson runs Novatek, a major gas company that is on the U.S. sanctions list. A current legal loophole in the U.S. allows criminals, terrorists and sanctioned individuals and companies to register aircraft in the U.S. hiding behind anonymous companies or trust accounts, warns Global Witness.
The Bank of Utah used a trust account under the bank’s name to enable Mikhelson to register a private jet in the U.S. without having to disclose his identity. Such registrations would normally require American citizenship or residency – neither of which Mikhelson had.
All private aircraft seeking to operate in the U.S. must register with the Federal Aviation Administration (FAA). However, if you purchase an aircraft using a shell company whose ownership isn’t disclosed, the only name that shows up on the registration is the company name or a nominee, not the actual owner.
“Anonymous companies are key getaway vehicles for a whole range of criminals looking to commit crimes and launder money – terrorist organizations, drug traffickers, human traffickers, corrupt officials, the list is endless,” said Mark Hays, Anti-Money Laundering Campaign Lead at Global Witness. “The fact that the U.S. still allows suspicious actors to register aircraft in the U.S. by hiding behind anonymous companies puts Americans at risk, undermines national security and helps criminals bypass U.S. sanctions and conduct other misdeeds abroad. The time to change this is now.”
Global Witness calls on Congress to pass the Aircraft Ownership Transparency Act to ensure a wide range of suspicious actors, including criminals and terrorists, are not able to use U.S. aircraft as a vehicle to commit criminal acts and launder suspect funds. This bill would require the FAA to obtain and regularly update records on the real owners of aircraft registered in the U.S.
Notes to editor:
to the New York Times, Mr. Mikhelson
declined to answer questions about his plane and his representative released a
statement saying, “Mr. Mikhelson acts strictly within the boundaries of the law
and in compliance with applicable legislation at all times.”
July 2017, Congressman Stephen Lynch (D-Massachusetts), Congresswoman Carolyn
Maloney (D-New York) and Congressman Peter King (R-New York) introduced The Aircraft Ownership
Transparency Act (H.R. 3544) – a bill that would require those seeking to
register aircrafts with the FAA through anonymous shell companies to disclose
the real owners behind the entities in question.
are several additional bills currently before Congress that seek to tackle the
problems posed by anonymous companies – from real estate purchases, to defense
spending and high security spaces leased out by the US government. More
information on the various incorporation transparency bills and proposals can
be found here.
- Past Global Witness investigations (see here and here) have explored how the use and purchase of private aircraft often feature in corruption scandals either as a way to launder or spend ill-gotten gains.
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The Paradise Papers
The ‘Paradise papers’ revelations shine a fresh light on how the secrecy for sale in tax havens facilitates tax evasion, organised crime and corruption.
Anonymous Companies, Banks, Corruption & Money LaunderingPress release
PARADISE PAPERS: Global Witness Statement on Wilbur Ross, Offshore Secrecy and Beneficial Ownership Transparency
Global Witness Statement on Paradise Papers Wilbur Ross and Offshore Secrecy
What’s wrong with anonymous companies?
Criminals and fraudsters need three things to move large sums of money: a bank willing to take the money; a lawyer or other facilitator to set up the laundering scheme; and some way of disguising who really owns the assets.