Regina Brunz moved to Sioux Falls in 1990, as her family sought refuge from communist oppression.
The Ukrainian-American says they found comfort in their new home, since both places rely heavily on farming and agriculture.
Brunz talked at a recent rally near downtown Sioux Falls. She says there’s one growing industry in the state that concerns her—the financial trust business.
“I know South Dakotans are just and compassionate,” Brunz said. “These laws and these loopholes are representations of our elite and our wealthy.”
As support grows for sanctions against Russia’s elite, calls for financial transparency have grown. And there is support for efforts to seize and freeze Russian assets.
“These laws that allow Putin and his wealthy elite to profit in the midst of their unjust devouring of innocent lives of mothers, of children, of husbands, of fathers, of brothers and sisters," Brunz added.
There is no evidence that Russian assets are held in South Dakota based trusts. However, a recent high-profile investigation called The Pandora Papers put the state’s trust industry in the spotlight. It detailed how trust companies have attracted funds from people accused of money laundering and human rights violations.
As a response to the Ukrainian invasion, the U.S. Department of Justice is enforcing sweeping sanctions against Russian banks and oligarchs.
President Joe Biden made the task force a highlight during his State of the Union address last week.
“We’re joining with European allies to find and seize their yachts, their luxury apartments, their private jets," Biden said. "We’re coming for your ill begotten gains.”
However, the uncertainty over whether there are any Russian assets held in South Dakota trusts is by design.
The state has several financial disclosure laws that allow assets to remain hidden.
Republican Governor Kristi Noem said she does not support an investigation to see if Russians are sheltering their money to avoid sanctions.
“Well, it’s all private information," Noem said. "If someone were to decide to do that I’m not in favor of that at this time because our trust industry does have integrity.”
Noem said changing privacy mechanisms and regulations could set a precedent in other areas of the law.
“I do know that our trust industry has a strong vetting process and that they go through every single entity that is coming into South Dakota and engaging with their industry," Noem said.
Leaders in the Republican-controlled Legislature say the state’s trust industry has nothing to do with international sanctions on Russia.
“Anybody that’s making some cheap political argument that has to do with trusts in South Dakota ought to be slapped or spanked," said state Sen. Lee Schoenbeck, a Republican from Watertown. "Spanked would be more appropriate. It’s child behavior.”
The state does not require financial institutions or trust companies to report the nationality of their customers. The trust industry is required to compare its customer lists against a database of prohibited individuals and entities from the U.S. Treasury Department.
The Justice Department declined to comment on whether the state’s trust laws will interfere with its efforts to track Russian assets.
Ryan Gurule is a policy director for the FACT Coalition. It’s a financial accountability and corporate transparency group.
Gurule said international assets can be transferred through anonymous shell companies with few links to their ownership.
He said the state should require any trust formed in South Dakota to disclose the beneficiaries of that trust to the Secretary of State.
“That would subject those trusts to the Corporate Transparency Act,” Gurule said, adding that the 2021 federal law is meant to end anonymous shell companies.
“This would greatly increase the transparency in the trust industry in the state," Gurule added.
Gurule said increasing transparency gives critical tools to the enforcement agencies responsible for implementing financial sanctions.
