As separation of concerns, this sounds reasonable and efficient: why should it be the financial sector's job to weigh whether someone is good or bad?
Better to make finance focus on ensuring there are quality, documented links where legally required... and then perform the judging elsewhere (e.g. legal system, FBI, journalism).
That the US (and especially certain states) permits opaque corporate structures is a different problem.
> why should it be the financial sector's job to weigh whether someone is good or bad
In practice though that’s exactly what happens. Banks have to look for transactions that are potentially illegal (including OFAC and AML). And the banks not only report but have to block some of those transactions or they become liable for the initial crime (if it existed at all).
I'd go further and say it isn't the job of Western countries to fix corruption.
If Putin wants to fleece his people he can take his billions to a European bank.
I'd ask a slightly different set of questions: (1) "Is it good for {country} if {country's corrupt leaders} are able to bank elsewhere?" (2) "Is it good for {bank elsewhere country} if they accept corrupt money?"
(1) is probably not good for that country, but do other countries care? To some extent, this is just colonialism by proxy: extracting wealthy inequitably from a foreign country. Historically, few third party countries take issue with that, when they're the winners.
(2) is where the more interesting point is. Does the country accepting the money net benefit, or net loss? Aka the London banking question in a nutshell.
I'd argue that if money is political power (it is) and corrupt money can't be firewalled (it can't), then it's net loss.
Inevitably and especially if we're talking lifestyle roots (e.g. property, establishing a home, etc), that corrupt money corrodes government and civil systems in the banking country. At minimum, because the wealthy corrupt people bring their expectations and behavior with them!
>But tracking down holding companies consumes precious resources, and would be strategic, not just legal, decision.
And 9x/10 when you track down Perwinkle LLC you'll find that it's owned by a couple American brothers who own a successful regional HVAC business and everything they are doing is legal.
People love to act as if all this offshore stuff is frequently closely connected to illegal things but if you just randomly pull samples you'll be hard pressed to find anything that isn't just a case of someone completely legally doing what the law incentivizes. If there was actually anywhere near as high a crime to not-crime ratio as people imply every bureaucrat with political ambitions would be all over it.
The bank would report it, and in theory the feds could track down Periwinkle LLC.
But tracking down holding companies consumes precious resources, and would be strategic, not just legal, decision.
The US is obsessed with having a clean financial sector, but doesn’t care one jot or tittle about corporate transparency.