IRS investigating cases of sanctioned Russian assets in SD Trusts
This interview originally aired on In the Moment on SDPB Radio.
A special agent with the Internal Revenue Service said the agency is investigating cases of assets in South Dakota trusts that owned by sanctioned Russian oligarchs.
Since Russia’s invasion of Ukraine, the United States and the West have sanctioned Russia's leader and many wealthy individuals close to him.
Tom Larson, a supervisory special agent with the Internal Revenue Service, said the department has ten to 12 agents who are devoted to locating assets owned by Russian oligarchs who are subject to sanctions.
During an interview on SDPB's In The Moment, Larson said some individuals are holding money outside of Russia right in South Dakota.
“We’ve found that some of that stuff is being held in trust in South Dakota,” Larson said. “We’ve had some of those agents who’ve worked with agents we have here to go and interview those people who run those trusts, and try to unravel where that money is coming from and who is the owner of it, the beneficial owner of it.”
Assets can make their way into trusts through a complex web of shell companies and favorable trust jurisdictions across the world.
At least one Russian oligarch is tied to the Pandora Papers leak, which culled trust documents from one of South Dakota’s largest Trust companies—Trident Trust.
It’s unclear what South Dakota trust companies are holding these Russian assets, and at what level. Larson said the cases that have touched on South Dakota trusts are still under investigation.
In the past, state lawmakers have pushed back against the notion Russian oligarchs might be using South Dakota trusts to avoid sanctions.
Larson said it’s not just Russian oligarchs who are registering their assets in the US.
“We also see a lot of Chinese individuals, business owners, and such, they want to keep their money out of the country—out of China, that is,” Larson said. “So they look at the US as a safe place to hold their money, but they also don’t want the Chinese government to know where the money is. So, they’re also doing it in trust in South Dakota because of the privacy laws that South Dakota has.”
South Dakota Gov. Kristi Noem and state lawmakers have taken a harder line on China in recent years.
Every year, the Governor's Trust Task Force, which is comprised of trust industry officials, meets to write bills to keep South Dakota a favorable trust jurisdiction. The group does not announce their meetings, but has already met this year.