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Sanctions against Russia raise questions on Russian funds in South Dakota Trust Companies

Pandora Papers Author believes Russian money could be hidden in South Dakota Trust Funds
Published: Mar. 14, 2022 at 5:20 PM CDT
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SIOUX FALLS, S.D. (Dakota News Now) -A trust is a type of financial agreement that allows a person or institution to hold another person’s assets. South Dakota has very trust-friendly laws, that are also very private, which attract money from individuals all over the world.

Information leaked from various trust companies, also known as the Pandora Papers report tells an interesting story about trust companies in our state. Will Fitzgibbon is a reporter who published the Pandora Papers.

“These otherwise unassuming buildings that so many of you walk past every day have become the beating financial heart of some of the financial empires of the world’s wealthiest people,” said Fitzgibbon. “There was no suggestion in our reporting that any of the individuals who parked money through South Dakota trust or any of the South Dakota trust companies have done anything wrong or anything illegal.”

To Fitzgibbon, it’s a matter of ethics.

“For example, a Colombian businessman who set up a trust in South Dakota again for millions of dollars into a South Dakota trust and a number of years ago, he was named by the US Department of Justice as having been involved in a money laundering, and cocaine busting ring,” said Fitzgibbon.

He believes more should be done to ensure South Dakota doesn’t become a harbor for unscrupulous money.

“Shouldn’t South Dakota and authorities, lawmakers, and even members of the public be able to know who’s putting their money here and where it came from? And that’s incredibly important, as we’re now every day talking about the origins of Russian wealth,” said Fitzgibbon.

Right now, the good reputation of South Dakotans could be an alluring place for those around the world to set up their trusts right here.

“Over time, does South Dakota want to become another byword for tax havens just like Panama or the British Virgin Islands?” said Fitzgibbon.

Fitzgibbons says trust companies are not obligated to reveal the country of origin of their clients or funds to the public.

We reached out to two of the main trust companies from South Dakota listed in the Pandora Papers. Both are located in Downtown Sioux Falls. We asked about Russian-based money in trust funds here.

One did not return our e-mail or phone calls placed earlier this week.

We did hear back from South Dakota Trust Company’s COO, Managing Director, and Chief Legal Counsel Matt Tobin who said:

“I can confirm that South Dakota Trust Company, which is fully regulated by the South Dakota Division of Banking, does not have any trust or business connections with any Russian leaders or persons on the Russian sanctions list. As a regulated company, we comply with all state and federal requirements, including OFAC, FINCEN, and Anti-Money Laundering (AML). We also have strict policies and procedures related to Customer Identification Program (CIP) and source of wealth. All of our clients, both persons and business entities, must clear background checks before becoming clients. We have great confidence in both the legal and ethical elements of our business.”

Matt Tobin

Although the Legislature has addressed issues regarding trust companies in previous years, Fitzgibbon says there was nothing brought forward in a bill during the 2022 legislative session.

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