Former Treasury Agent Urges Authorities to Target the Drivers of Human Trafficking, Drug Smuggling, and Corruption

Ending Anonymous Companies; Trade Transparency Units; Holding Gatekeepers Accountable Among Policy Recommendations

WASHINGTON, D.C. – Worldwide anti-money laundering efforts are currently just a decimal point away from total failure, according to a new report published Wednesday by the Financial Accountability and Corporate Transparency Coalition (FACT Coalition), a non-partisan alliance of more than 100 state, national, and international organizations promoting policies to combat the harmful impacts of corrupt financial practices.

Authored by former Treasury Special Agent John Cassara, the study — titled Countering International Money Laundering: Total Failure is “Only a Decimal Point Away” — details the near failure of current efforts to combat the flow of dirty money and the impact of this negligence on the American people — where money laundering fuels everything from terror finance and sanctions evasion to human trafficking and corruption.

“For too long, policymakers and law enforcement leaders have prioritized arresting low-level criminals on the streets, while failing to target the life-blood of organizations: the money,” said Mr. Cassara, an internationally-renowned expert on financial crime. “Criminal enterprises are just that — enterprises. They’re about the money. Unless we prioritize efforts to follow the money, we will fail to impede human traffickers, drug cartels, and rogue states.”

“The magnitude of illicit money flowing around the world is enormous — as John clearly demonstrates in this report,” said Gary Kalman, the executive director of the FACT Coalition. “Whether its terror finance, trafficking, or tax evasion, we’ve failed to equip our police and prosecutors with the tools they need to keep Americans safe. It’s time we put an end to the abuse of anonymous shell companies, boost efforts against trade-based money laundering, and bring our anti-money laundering policies in line with international standards.”

The report notes that police and prosecutors are currently only interdicting less than one-half of one percent of the trillions of dollars laundered each year — quoting one financial crime expert as saying “total failure is just a decimal point away.”

Policy Recommendations

The report proscribes a number of policy measures to improve efforts to combat the dangerous threats to our safety and security from the crimes funded through illicit finance.

Congress

Congress should move legislation to end the abuse of anonymous shell companies by requiring beneficial ownership transparency.

Congress should make all felonies predicate offences for money laundering.

Congress should provide specific line item funding to the U.S. Trade Transparency Units (TTUs) so as to enhance their analytic capabilities and augment the personnel necessary to foster trade transparency in the United States and to expand the international TTU network.

Congress should pass legislation which requires U.S. companies that engage in financial transactions to obtain a Legal Entity Identifier (LEI).

Congress should pass legislation requiring transactional lawyers, and anyone else who forms legal entities, to carry out anti-money laundering due diligence.

Inter-Agency

The U.S. should develop an updated anti-money laundering strategy to address new and continuing threats to the financial system.

The U.S. should convene an inter-agency task force to adapt crime-fighting strategies to cover the use of mobile payment systems.

The administration should require bidders for federal contracts and grants to publicly disclose their beneficial ownership information.

The administration should adopt the Legal Entity Identifier (LEI), or a similar, non-proprietary and open system, that makes the hierarchy of entity ownership transparent, as the standard identifier in the federal procurement process.

Treasury Department and the Financial Crimes Enforcement Network (FinCEN)

The Department of the Treasury, which leads the U.S. Financial Action Task Force (FATF) delegation, should introduce a resolution calling for members to promote trade transparency in order to combat trade-based money laundering and value transfer.

Treasury should instigate a new rule-making process to strengthen due diligence requirements for financial institutions.

FinCEN should be tasked with aggressive outreach to communities that rely on informal Money Service Businesses (MSBs). FinCEN should pre-empt state MSB licensing requirements and establish uniform licensing requirements that would be applicable to any company designated as an MSB/money transmitter in the United States.

FinCEN should finalize the proposed rule to impose anti-money laundering (AML) and suspicious activity reporting requirements on registered investment advisers.

FinCEN should re-examine each of the temporary AML exemptions to determine whether these exemptions are still warranted.

Department of Justice

The Department of Justice should ensure that the top decision-makers at financial institutions, accounting firms, and law firms are held personally accountable for the actions of their organizations.

Justice should change the incentives for law enforcement to encourage them to pursue complex financial crimes cases.

Justice should provide specific funds for anti-money laundering/counter-terrorist finance (AML/CFT) training to the 93 U.S. Attorneys’ offices.

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Notes to Editors:

Read an online version of this release.

Learn more about the report on FACT’s website (HTML | PDF).

Learn more about John Cassara at www.JohnCassara.com.

The FACT Coalition is using the hashtag #AMLFailure for this report on social media.

Journalist Contact:

Clark Gascoigne

Deputy Director, The FACT Coalition

+1 202 827-6401

[email protected]