In his last desperate days, Trump vetoed the national defense authorization in order to protect Russian money laundering

Three years later, Joe Biden has closed the loophole that protected kleptocrats and fueled funding real estate funding in New York. Good news for the world, not so much for Mr. Trump.

The world gets a little less corrupt this week as new rules take effect that will end the use of anonymous shell companies that many in law enforcement believe allowed the laundering of billions of dollars through real estate transactions around the world.

Back in 2020 Candidate Joe Biden campaigned for the anti-money laundering provisions to be included in the National Defense Authorization Act (NDAA) in the waning days of the Trump Administration, promising to “issue a presidential policy directive that establishes combating corruption as a core national security interest and democratic responsibility.” The NDAA passed. Trump vetoed it. Congress overrode his veto. Later, as President, Biden pushed for the subsequent passage of the Corporate Transparency Act and directed further rulemaking that made good on his commitment to fight corruption.

With billions of dollars at stake, and large profits to be had by the real estate industry and their law firms, the bi-partisan commitment to fight corruption here is something to celebrate. Money laundering is a global problem that not only corrupts our financial system, it also undermines honest government.  Consequently, the Biden administration’s efforts have to be seen not only as a blow to the foreign kleptocrats and their greedy partners, but as a renewal of American moral leadership of the international financial system.

Unsurprisingly, if Donald Trump had his way this would never have happened. So important was it for him to shield the corrupt flow of money that he vetoed the NDAA in December of 2020.  This requires some unpacking.

We now know Mr. Trump spent most of that month working furiously to overturn his election loss to Joe Biden. The idea that a president would attempt to overthrow an election is so spectacular that it rightfully overshadows almost everything else. Consequently, his veto did not draw the full attention it deserved.

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Back then, Mr. Trump told us he would not sign the $740 billion defense bill, unless it repealed Section 230, which provided a liability shield that covered social media companies, and because it required the military to rename bases that honor Confederate leaders. Wrong as that is, it made a kind of emotional sense because, at the time, Trump was angry about being kicked off Twitter and he was actively courting white supremacists (we now know, to bring them to the Capitol on January 6^th).  But with Mr. Trump, there’s always more.  And it’s always corrupt.

Congressional leaders and his own staff had told him these reasons would not fly. They warned him that the veto would not stick. They told him that the Section 230 question had no business being in the Defense bill anyway. There were other ways to address his concerns about tech companies.  The renaming of military bases was a tradeoff GOP leadership had made, and it would only hurt them to have the President re-open the question. Trump vetoed the bill anyway.

In retrospect, it seems likely the veto had nothing to do with either Section 230 or the Confederate names on military bases. The real threat to Donald Trump was the embedded Anti-Money Laundering Act.

Recall that the biggest wish on Vladimir Putin’s list was relief from the Magnitsky Act. That Act created sanctions that barred Russian kleptocrats from travel to the US and kept them from owning assets or using the US financial system. Putin made overturning those sanctions official Russian policy in 2012. The ACT was the subject of a much-reported summit between Trump and Putin in Helsinki. Recall that Putin offered to hand over Russian intelligence officers involved in the 2016 election hack in return for Bill Browder, former Ambassador Michael McFaul, and others who had exposed the Kremlin’s murderous corruption and pushed for the ACT named after a Russian killed by Putin’s government. Trump called the offer “incredible,” and even considered turning over the Americans.

As bad as the Magnitsky Act is for Russian kleptocrats, there was a loophole. Anonymous shell companies remained players in international business, particularly in real estate. The provisions tucked into the NDAA would begin the process of closing that loophole.

In hindsight, it is now clear Trump could not let that pass without his strongest opposition. First, his corrupt real estate business appears to have relied on Russian funding. That’s what Eric Trump told us in a now famous interview. New York State Supreme Court Justice Arthur Engoron ruled in September that the Trump Organization has committed fraud by regularly falsifying property valuations. When laundering money, it’s the volume of dirty cash rather than market forces that determine prices.

I suspect the veto had to do with Trump’s political ambitions as well as his business needs. The Mueller Report (and Mr. Trump’s own behavior as President) made clear the connection between President Trump and Russia. We now know that Trump was business trying to overturn the election in December of 2020. We know that Russia had interfered in that election. It is not a stretch to imagine Mr. Trump would want to keep Putin’s favor as continued to battle for his political survival.

As always with Mr. Trump, there are multiple levels of gamesmanship. As we’ve seen, his stated reasons to veto the NDAA were lies, but useful ones. Once he was determined to veto the bill, he needed some kind of reason to explain it. He couldn’t admit his shared interest with Vladimir Putin in killing the anti-corruption legislation. But he could use his opposition to the bill to further other purposes.  

So why not rile up the militias he was planning to use in a few weeks anyway? By targeting Section 230 even though it has nothing to do with the defense bill, Trump could make the argument that the left is cheating him and his followers of their free speech rights. And by standing up for America’s Confederate heritage he could rile up the White Christian Nationalists and wed them to his own lost cause.  

A bi-partisan Congress rightly, and quickly overrode Mr. Trump’s veto, though a rogue’s gallery of corrupt Senators voted with him: Mike Braun (Ind.), Tom Cotton (Ark.), Ted Cruz (Texas), Josh Hawley (Mo.), John Kennedy (La.), Mike Lee (Utah) and Rand Paul (Ky.). Because of that override, and three years of additional work by the Biden Administration, American leadership is once again restoring confidence in the world’s financial system and stepping up to fight international money laundering.