Photo: AP

On Thursday night, the Obama administration announced that it was taking executive action to close loopholes that enable the kind of tax evasion and money laundering recently revealed by the Panama Papers. The new regulations will compel companies to disclose more information about their owners, the Associated Press reports.

“The Panama Papers underscore the importance of the efforts the United States has taken domestically, and the efforts we have undertaken with our international partners, to address these shared challenges,” the White House said in a statement.

Meanwhile, Treasury Secretary Jacob Lew sent a letter to Congress asking it to pass legislation that would increase transparency in the financial system. “Illicit financial activity is a critical concern for the United States and our partners around the world,” he wrote.

“Additional statutory authority is necessary to put the United States in the strongest position to combat bad actors who seek to hide their financial dealings and evade their tax responsibilities.”

According to the Guardian, the transparency regulations imposed by Obama include:

  • immediate executive action to combat money laundering, terrorist financing, and tax evasion with tighter transparency rules
  • new treasury rules closing a loophole allowing foreigners to hide financial activity behind anonymous entities in the US.
  • Stricter “customer due diligence” rules for banks handling money of behalf of clients

The White House and Treasury also called on Congress to pass a series of detailed measures they say would more directly tackle the problem of offshore tax avoidance in the longer run.

“There is no doubt that the problem of global tax avoidance generally is a huge problem,” Obama said last month. “The problem is that a lot of this stuff is legal, not illegal.”