International Money Laundering
and Asset Forfeiture
ONDCP FACT SHEET
Overview
The United States engages in international and domestic efforts to disrupt the flow of illicit capital, track criminal sources of funds, forfeit ill-gained assets, and prosecute offenders. Money laundering plays an integral role in the illicit narcotics industry in that it enables the organizations that supply drugs to finance their ongoing operations and conceal their enormous profits from the reach of law enforcement. These profits are the motivating force behind the supply side of the narcotics equation, and money laundering provides the protective shield against detection and confiscation. To help direct the United States anti-money laundering effort, the Departments of Treasury and Justice collaborate on an annual National Money Laundering Strategy-as called for in the Money Laundering and Financial Crimes Strategy Act of 1998.
The 2007 National Money Laundering Strategy
The latest National Money Laundering Strategy was released in May of 2007 and responds directly to the first-ever interagency U.S. Money Laundering Threat Assessment. The 2007 Strategy builds on initiatives detailed in preceding National Money Laundering Strategies and places an emphasis on bolstering the efficiency of the anti-money laundering processes currently in place. Specifically, the Strategy addresses efforts to combat the laundering of illicit proceeds through the banking system, money services businesses, bulk cash smuggling, trade-based processes, and other methods.
Additionally, the 2007 Strategy focuses on leveling the playing field internationally, helping to ensure U.S. financial institutions are not disadvantaged through the implementation of controls and standards to combat money laundering and terrorist financing. Indeed, money laundering is a global threat the United States is working to address through international bodies, including the Financial Action Task Force (FATF), and through direct private sector outreach in regions around the world.
U.S. Anti-Money Laundering Efforts
Jurisdiction to enforce the money laundering laws of the United States, to include the laundering of narcotics proceeds, has been delegated to the U.S. Drug Enforcement Administration (DEA), The Federal Bureau of Investigation (FBI), U.S. Immigration and Customs Enforcement (ICE), the Internal Revenue Service-Criminal Investigation (IRS-CI), and the U.S. Postal Inspection Service (USPIS). Additionally, the Securities and Exchange Commission (SEC), the Federal Reserve, The Office of the Comptroller of the Currency (OCC), The Federal Deposit Insurance Corporation (FDIC), and the Internal Revenue Service (IRS), all serve regulatory functions over portions of the financial services industry in monitoring compliance with reporting and record keeping requirements related to currency and suspicious activity reporting.
Several recent U.S. enforcement operations have succeeded in depriving traffickers of illicit revenue, while also depriving there operations as a whole. One notable example is DEA's Money Trail Initiative, which in addition to yielding more than $157 million in currency and $23 million in other assets since its inception in 2005, has also resulted in the seizure of over 15 metric tons of cocaine, 550 kilograms of methamphetamine, and 35 kilograms of heroin.
To combat the increasing use of bulk currency smuggling by criminal organizations, ICE and CBP developed a joint strategic initiative called Operation Firewall that began in August 2005. In FY07, Operation Firewall resulted in the seizure of over $49 million in bulk currency. Since its inception Operation Firewall has led to the seizure of over $106 million, of which over $45 million were seized outside of the United States.
To address the threat of money laundering through the use of unlicensed money services businesses, ICE launched an initiative in 2006 that to date has resulted in the identification of over 420 unlicensed money services businesses and in the seizure of nearly $1 million in currency and other assets. With support from the Departments of State and Treasury, ICE has also started Trade Transparency Units with foreign trade partners to facilitate the exchange of trade information and enhance cooperative, international investigative efforts to identify and eliminate trade-based money laundering systems such as the black-market peso exchange, which facilitate the illegal movement of criminal proceeds across international borders disguised as trade.
The Foreign Narcotic Kingpin Designation Act provides a statutory framework for the President to institute economic sanctions against foreign drug kingpins in order to deny their front organizations access to the U.S. financial system and benefits from U.S. trade. Once locked out of American trade, criminal organizations have difficulty participating in open commerce. The Treasury Department's Office of Foreign Assets Control (OFAC) blocks all assets and payments belonging to these kingpins and their associated entities. Additionally, as of March 2001, 548 entities comprised of nine principals, 228 business entities and 311 other individuals have been designated by the President as Significant Narcotics Traffickers Centered in Colombia (SDNTs) under the International Emergency Economic Powers Act (IEEPA).
As part of its annual International Narcotics Control Strategy Report (INCSR) the State Department includes a volume on "Money Laundering and Financial Crimes." This report details and evaluates international anti-money laundering initiatives, significant enforcement efforts, money laundering trends, and offshore banking centers.
International Efforts
The Financial Action Task Force (FATF), formed by the G-7 Economic Summit in 1989, is dedicated to promoting anti-money laundering controls around the world. The United States is a founding member, and major proponent of this effort. All members of the FATF have now criminalized money laundering and are working toward implementing a full range of international anti-money laundering standards known as the "40 Recommendations." The FATF has also established a list of 25 criteria against which countries' anti-money laundering regimes can be measured.
Efforts to build effective international cooperation encompass two major areas of activity: (1) establishing or strengthening countries' financial intelligence unit counterparts, and (2) facilitating the exchange of information among these institutions in support of anti-money laundering investigations. The United States has been working with the Egmont Group (which includes countries from Europe, Asia and the Western Hemisphere) to develop Financial Intelligence Units (FIUs), which receive, analyze, and (where appropriate) refer for prosecution suspicious transactions reported by financial institutions.
The operation of financial intelligence units (FIUs) may prove to be one of the most effective means for combating money laundering around the globe. This development provides a centralized mechanism for tracking criminal proceeds, collecting investigative data, and contributing to international cooperation by combating money laundering. Currently, FinCEN is working with Egmont member governments to share information through a secure Intranet.
The Department of State's Bureau for International Narcotics and Law Enforcement Affairs coordinates and funds all U.S. government bilateral and multilateral anti-money laundering training in an effort to increase the number of countries engaged in this fight.
Additional Information/Links
More information concerning the activities of the Office of Foreign Assets Control in narcotics may be found at http://www.ustreas.gov/offices/enforcement/ofac/programs/narco/narco.shtml.
More information on the activities of the FATF and the Egmont Group may be found at www.fatf-gafi.org.
Last updated: April 2008
