IRS Pursues Russian Oligarchs Hidden Wealth in South Dakota Trusts Amid Pandora Papers Revelations

IRS Pursues Russian Oligarchs Hidden Wealth in South Dakota Trusts Amid Pandora Papers Revelations.In an effort to combat the evasion of sanctions by Russian oligarchs, the Internal Revenue Service (IRS) has initiated a comprehensive investigation into the use of South Dakota trusts.

IRS Pursues Russian Oligarchs Hidden Wealth in South Dakota Trusts Amid Pandora Papers Revelations

These trusts, as unveiled by the International Consortium of Investigative Journalists (ICIJ) in their Pandora Papers investigation of 2021, have become attractive destinations for individuals with questionable financial dealings seeking to shield their wealth anonymously.

A Hub for Financial Secrecy

The Pandora Papers investigation shed light on South Dakota’s growing trust industry, positioning the state as a domestic haven for financial secrecy. This industry strategically lured high-net-worth clients, including millionaires and billionaires, by promising privacy and wealth protection comparable to offshore tax havens.

IRS’s Special Task Force

Special Agent Tom Larson, speaking to South Dakota Public Broadcasting (SDPB), disclosed that the IRS has assembled a dedicated team tasked with unearthing assets owned by sanctioned individuals who have concealed their wealth within trusts established through shell companies. Larson emphasized the importance of identifying the ultimate beneficial owners and tracing the origins of these assets.

The Pandora Papers Revelation

The Pandora Papers investigation brought to light 206 U.S.-based trusts collectively holding over $1 billion in assets connected to 41 countries. Notably, nearly 30 of these trusts, many of which were based in South Dakota, were linked to entities and individuals implicated in criminal activities and human rights violations. This global investigation, conducted by ICIJ in collaboration with over 150 media partners, drew from a substantial cache of 11.9 million leaked documents, including a significant portion from within the traditionally opaque trust industry.

South Dakota Predominance in Trusts

South Dakota emerged as the leading state for trusts by a substantial margin, with most of the trust documents originating from its largest trust company, Trident Trust. Among those mentioned in the leaks was Anatoly Lomatkin, a fertilizer magnate with an estimated net worth of $1.4 million, who, at the time, was not subject to sanctions.

Addressing the Issue

The efforts by U.S. authorities to trace and confiscate assets belonging to Russian oligarchs, combined with the revelations of the Pandora Papers, have spurred numerous proposals from both state and federal lawmakers. These proposals aim to curtail the flow of anonymous and illicit funds facilitated by state laws that permit the concealment of trust and limited liability company owners’ identities.