Legislature(2021 - 2022)BARNES 124
04/15/2022 09:00 AM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Board of Veterinary Examiners | |
| HB405 | |
| HB406 | |
| HB407 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 405 | TELECONFERENCED | |
| *+ | HB 406 | TELECONFERENCED | |
| *+ | HB 407 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 174 | TELECONFERENCED | |
HB 406-MORATORIUM ON TRUSTS/PROPERTY ACQUISITION
9:55:20 AM
CO-CHAIR SPOHNHOLZ announced that the next order of business
would be HOUSE BILL NO. 406, "An Act relating to the validity of
trusts involving persons sanctioned by the United States
Department of the Treasury; and relating to the recording of
documents conveying land to persons sanctioned by the United
States Department of the Treasury."
9:55:35 AM
EVAN ANDERSON, Staff, Representative Zack Fields, Alaska State
Legislature, provided a PowerPoint presentation titled "House
Bill 406" on behalf of the House Labor and Commerce Standing
Committee, sponsor. He spoke from the fourteenth slide, "HB
406: Moratorium on Trusts / Property Acquisition." He explained
that HB 406 would: update Alaska law to ensure trusts held or
managed by enemies of the United States can no longer operate in
the state of Alaska; prohibit these individuals from acquiring
real estate, which is the biggest difference between HB 406 and
HB 405; and protect Alaskans' access to services provided by
trusts, such as estate planning, while ensuring foreign
adversaries cannot hide their wealth in Alaska.
MR. ANDERSON moved to the fifteenth slide, "Office of Foreign
Asset Control," and stated that the U.S. Department of the
Treasury has used economic power to freeze assets of enemies of
the U.S. since 1940 when Nazi Germany invaded Norway. He said
OFAC's authorities were expanded with the 2016 Global Magnitsky
Act and stressed that sanctions from OFAC target individuals,
not countries, deemed enemies of the U.S. He specified that
financial transactions with individuals on the sanctions list
are prohibited for U.S. citizens, which makes it even more
concerning that Alaska's trust laws could potentially conceal
some of these transactions. He stated that [in October 2021]
the Pandora Papers revealed that U.S. states like Alaska have
trust laws so strong that they may effectively conceal assets of
international criminals.
MR. ANDERSON displayed a photograph on the sixteenth slide
depicting Monaco's Monte Carlo Star, a luxury apartment complex
located between the casino [and the sea] and which has in front
of it a marina full of yachts. He said the complex was worth
$3.1 million when it was cited in the Pandora Papers. He
related that according to a recent report by the International
Consortium of Investigative Journalists (ICIJ), one of the
multi-million-dollar flats inside this building was purchased
through a Caribbean-based shell company in 2003 for Alina
Kabaeva, whom some reports have identified as the rumored mother
to a child of Russian President Putin.
MR. ANDERSON presented the seventeenth slide, "Why do criminals
like trusts?" He paraphrased a quote from ["The Puppet Masters"
report by the World Bank, October 2011], which states: "Trusts
prove such a hurdle to investigation, prosecution (or civil
judgment), and asset recovery that they are seldom prioritized
in corruption investigations. Investigators and prosecutors
tend not to bring charges against trusts, because of the
difficulty in proving their role in the crime".
MR. ANDERSON showed the nineteenth slide and said the photograph
includes Alisher Usmanov, a notorious Russian oligarch who until
recently was majority owner of Arsenal football club in the
United Kingdom (UK) and who is a major financier of Putin's
efforts in Russia. Mr. Anderson moved to the twentieth slide
and related that Mr. Usmanov made news a few weeks ago when his
spokesperson said that Mr. Usmanov's assets, including a yacht
and a London apartment, were out of reach of sanctions in the
UK, even though located in the UK, [because they had been
transferred into irrevocable trusts]. Mr. Anderson stated that
things can be done about these legal loopholes in Alaska by
taking steps to integrate the state's trusts into the existing
federal enforcement mechanisms.
10:00:14 AM
MR. ANDERSON reviewed the sectional analysis of HB 406. He
spoke from the document provided in the committee packet titled
"Sectional Analysis House Bill 406 Version B," which read as
follows [original punctuation provided]:
* Section 1. AS 13.36 is amended by adding a new
section that strips a trust of its legal status in the
State of Alaska if any individual associated with it
is named on the sanctions list by U.S. Department of
Treasury.
Trusts are a legal recognition of relationships
definitions for these relationships already exist in
statute:
- a settlor places their assets into trust
- a trustee or trustor holds the assets in their name,
but the assets do not belong to them, and they can not
[sic] financially benefit from them
- a beneficiary will receive distributions from the
assets held in trust
* Sec. 2. AS 40.17.070 is amended by adding a new
subsection to make it impossible for individuals on
the U.S. Department of Treasury sanctions list to
acquire, sell, or gift real property in the State of
Alaska.
The Recorders Office in Department of Natural
Resources is responsible for keeping records on real
estate transactions. The Recorders Office can utilize
the Office of Foreign Assets Control sanctions list to
avoid any future sale of Alaskan properties to
individuals on the sanctions list.
* Sec. 3. This section provides for an effective date.
This bill will not impact trusts established or real
estate transactions completed prior to its effective
date.
10:01:41 AM
CO-CHAIR SPOHNHOLZ opened invited testimony on HB 406.
10:01:56 AM
RYAN GURULE, Policy Director, Financial Accountability and
Corporate Transparency (FACT) Coalition, provided invited
testimony on HB 406. He urged that in promulgating HB 406 the
committee consider typical real estate anti-money laundering
typologies and creative corporate structuring that is available to
sanctioned individuals, such as the ability to purchase real estate
through trusts or other anonymous legal entities or arrangements,
or via nominees. He said HB 406 needs to contemplate and look past
legal blinders to identify problematic buyers. In other words, he
continued, HB 405 will help to ensure that HB 406 is effectively
implemented in Alaska as would similar measures with respect to
other typologies. This would ensure that sanctions against
oligarchs cannot be avoided through secrecy and that Alaska is
encouraging the type of investment that will ensure the long-term
growth of the Alaskan economy to the benefit of the Alaskan
citizenry.
10:03:55 AM
The committee took an at-ease from 10:03 a.m. to 10:04 a.m.
10:04:31 AM
CO-CHAIR FIELDS opined that international criminals who use
trusts to shield their assets are like vermin and it must be
ensured that they cannot come into Alaska. He said Alaska
cannot control what South Dakota or Nevada do, but Alaska can
protect itself as well as set a good example with its state
laws. These goals are important, he continued, because it is a
reality that Putin and other rogue regimes operate through
informal networks of hiding and generating wealth, including
through criminal organizations. Alaska must do its part to stop
someone like Putin from deriving funding for a criminal and
aggressive regime, he added.
10:05:36 AM
CO-CHAIR SPOHNHOLZ offered her belief that the committee process
will make the bill better. She stressed that the intent is not
to undermine individual Alaskans or good acting Americans who
want to establish trusts. She said the trust industry in Alaska
is an important part of the state's commercial spectrum and most
trusts are family trusts that are designed to make it easy to
convey assets. [The intent], she continued, is to ensure that
Alaska is not part of propping up bad actors that might take
advantage of Alaska's trust system.
[HB 406 was held over.]