The negative socioeconomic impact and global instability triggered by the expropriation of nations’ wealth by kleptocratic regimes around the world cannot be understated. Tom Burgis’ book, The Looting Machine, takes an in-depth look specifically at the continent of Africa, where post-colonial relationships founded upon natural resource extraction have continued unabated, and where a select few in power have gained immeasurable wealth while leaving their nations’ citizens in unspeakable conditions of needless poverty and suffering. Burgis identifies a number of African countries where such social contracts run rampant and human suffering is magnified as corruption, resource trafficking, smuggling, illicit weapons and even wars undermine the pillars of what could otherwise be governable and productive societies.
A common denominating driver for these conditions is an unyielding thirst for wealth and power by a minority of individuals who forsake both their fellow citizens’ human rights to self-preservation and their country’s futures for personal gain. Nowhere on earth is this crisis more evident than in Africa, where money laundering, assisted by abuse of shell corporate structures and offshore financial centers, serves as the fuel that keeps the kleptocratic engine running. Simultaneously, international corporations compete for resource exploitation rights while running afoul of various offshore—and their own domestic—regulations and laws.
Moreover, The Looting Machine includes mention of the money laundering and fiscal extraction of over $480 million by former Nigerian Dictator Sani Abacha, noted within the U.S. Federal Bureau of Investigation’s (FBI) media publications of both an asset freeze and subsequent forfeiture of stolen funds back to the people of Nigeria.1,2 Other infamous names include Equatorial Guinea’s Teodoro Obiang Nguema, whose son Teodorín Obiang is a well-known playboy and owns extensive amounts of luxury goods, exotic cars and real estate around the world—once owning a $30 million mansion in Malibu, CA; Democratic Republic of Congo’s Joseph Kabila, rumored to be at the center of a corporate funded, state-supported pillaging apparatus; and, of course, Zimbabwe’s longtime Dictator Robert Mugabe, whose pariah status and unofficial wealth remain a topic of debate.
From a U.S. perspective, in 2014, the U.S. Financial Crimes Enforcement Network (FinCEN) issued its Notice of Proposed Rulemaking on beneficial ownership, further aligning the U.S. regulatory regime with the Financial Action Task Force’s (FATF) internationally recognized guidance and recommendations on money laundering.3 In March 2015, the FBI established International Corruption Squads, designating kleptocracy-based crimes and perpetrators as targets of interest for investigation, arrest, and where possible prosecution.4 As of January 13, 2016, FinCEN has issued new Geographic Targeting Orders that will temporarily require certain U.S. title insurance companies to identify the natural persons behind “shell” companies at the source of all-cash transactions for high-end residential real estate in the Borough of Manhattan in New York City, New York, and Miami-Dade County, Florida.5 This current combination of trends in regulatory scrutiny, international law enforcement initiatives and targeted anti-money laundering focus may finally signal the potential for positive movements toward restricting the socioeconomic damage inflicted by kleptocratic wealth extraction, as described in Burgis’ book.
- “U.S. Freezes More Than $458 Million Stolen by Former Nigerian Dictator in Largest Kleptocracy Forfeiture Action Ever Brought in the U.S.,” U.S. Department of Justice, March 5, 2014, https://www.fbi.gov/washingtondc/press-releases/2014/u.s.-freezes-more-than-458-million-stolen-by-former-nigerian-dictator-in-largest-kleptocracy-forfeiture-action-ever-brought-in-the-u.s
- “U.S. Forfeits More Than $480 Million Stolen by Former Nigerian Dictator in Largest Forfeiture Ever Obtained Through a Kleptocracy Action,” U.S. Department of Justice, August 7, 2014, https://www.fbi.gov/washingtondc/press-releases/2014/u.s.-forfeits-more-than-480-million-stolen-by-former-nigerian-dictator-in-largest-forfeiture-ever-obtained-through-a-kleptocracy-action
- FinCEN Beneficial Ownership, August 4, 2015, https://www.fincen.gov/statutes_regs/files/CDD-NPRM-Final.pdf
- “FBI Establishes International Corruption Squads,” FBI, March 30, 2015, https://www.fbi.gov/news/stories/2015/march/fbi-establishes-international-corruption-squads/fbi-establishes-international-corruption-squads
- “FinCEN Takes Aim at Real Estate Secrecy in Manhattan and Miami,” FinCEN, January 13, 2016, https://www.fincen.gov/news_room/nr/pdf/20160113.pdf