“Holding Individuals Accountable and Deterring Money Laundering Act” Will Help Return Rule of Law to U.S. Financial System; Bring America in Line with International Standards

WASHINGTON, DC – The FACT (Financial Accountability and Corporate Transparency) Coalition welcomed the introduction of legislation to improve anti-money laundering and counter-terror finance safeguards while heightening the accountability of financial institutions. Sponsored by Representative Maxine Waters (D-CA), the Holding Individuals Accountable and Deterring Money Laundering Act [H.R. 4242] targets the individuals (or enablers) at financial institutions responsible for accepting suspect funds, while aligning the United States with a number of international anti-money laundering (AML) standards.

Several scandals at a number of the world’s biggest banks—including BNP Paribas, Standard Chartered, and Wachovia, to name a few—highlight that many financial institutions systematically flaunt sanctions and anti-money laundering controls. Indeed, it was revealed that HSBC failed to apply legally required AML controls to more than $200 trillion (roughly three times global GDP) worth of wire transfers through its New York branch. Despite these revelations, the banks received minor fines and not a single executive was prosecuted.

“We are living in an increasingly dangerous world, yet Wall Street banks and regulators continue to leave the door wide open for dirty money to flow through the U.S. economy,” said Clark Gascoigne, deputy director of the FACT Coalition, which unites over 100 leading small business and faith-based, human rights, investor, anti-corruption, public-interest, government watchdog, labor and global development organizations from across the ideological spectrum. “From Wachovia to Standard Chartered to HSBC, these sorts of cases—where the bank pays a fairly small fine and avoids prosecution for money laundering violations—have occurred time and time again. Without any accountability for the banks and the bankers who knowingly break the law and assist violent criminals, we’re never going to curtail drug trafficking, terror financing, sex slavery, and other heinous crimes.”

“If we are serious about keeping the proceeds of corruption and terrorist finance out of the U.S. financial system, we need to change the incentive structure at banks so bankers have more to lose when they handle suspect funds,” said Stefanie Ostfeld, deputy head of the U.S. office at Global Witness. “Until the people who run banks start to lose bonuses, face personal fines, are suspended from working in the sector, and—in the most extreme cases—face criminal charges and jail time if found guilty, bankers will not take the rules seriously. This bill is a great first step towards changing those incentives—helping to return the rule of law to the financial system.”

Recent studies reveal that the U.S. is the third biggest financial secrecy jurisdiction in the world, after Switzerland and Hong Kong—making it an easy place to hide stolen assets, launder drug money, and finance terrorism.

“Financial secrecy fuels poverty and instability around the world. Whether we’re talking about corruption in the FIFA soccer world or how dictators hide money, the U.S. banking system should lead the fight for transparency. We applaud Representative Waters for her leadership on this issue,” said Eric LeCompte, executive director of the religious anti-poverty coalition Jubilee USA.

International Standards

FACT also praised the Holding Individuals Accountable and Deterring Money Laundering Act for provisions making all felonies underlying crimes for money laundering, which would bring the U.S. in line with the recommendations of the Financial Action Task Force—the international anti-money laundering standard setting body.

“In order for money to be laundered, an underlying crime—known in the U.S. as a specified unlawful activity—such as drug dealing or arms-trafficking, must first be committed to generate the money,” explained Liz Confalone, policy counsel at Global Financial Integrity. “The U.S. currently only lists certain crimes as specified unlawful activities, creating an unnecessarily complex system governing money laundering offenses. The Holding Individuals Accountable and Deterring Money Laundering Act will remedy this situation by making all felonies specified unlawful activities for money laundering, providing clarity for the public, for investigators, and for prosecutors.”

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Notes to Editors:

Click here to read an HTML version of this press release on our website.

Click here to read the press release from Rep. Maxine Waters about the Holding Individuals Accountable and Deterring Money Laundering Act [H.R. 4242].

Click here [PDF] to download the text of the legislation.

Journalist Contact:

Clark Gascoigne

FACT Coalition

[email protected]

+1.202.683.4816