Strategy for combatting illicit finance, risk assessments issued by Treasury

Treasury issued a “National Strategy for Combating Terrorist and Other Illicit Financing” Thursday that addresses current U.S. government efforts to combat illicit finance threats and risks and identifies priorities, objectives, and “potential areas for future improvement.”

The strategy, and three other reports issued with it, was issued under requirement of a 2017 sanctions law. It looks at U.S. efforts to combat illicit finance domestically and internationally, noting sanctions prosecutions and asset forfeiture. It also addresses improvements in information sharing mechanisms and updated guidance to aid financial institutions in detecting and combating illicit finance threats.

The report notes the following emerging and continuing risks:

  • the growing misuse of virtual currencies, exacerbated by a lack of regulation and supervision of virtual currency providers in many foreign jurisdictions;
  • complicit insiders at financial institutions facilitating sanctions evasion and money laundering;
  • complicit merchants facilitating money laundering; and
  • the recruitment of unwitting and unquestioning individuals to facilitate money laundering.

The strategy’s authors nod to the 2018 implementation of the Financial Crimes Enforcement Network (FinCEN) customer due diligence rule. Implemented in May, the rule requires covered financial institutions to identify and verify beneficial ownership information when companies open accounts. “This rule is a significant step in improving financial transparency and preventing criminals and terrorists from misusing companies to disguise their illicit activities and launder their ill-gotten gains,” they wrote.

The strategy document also notes work under way to improve the effectiveness of current anti-money laundering/countering the finance of terrorism (AML/CFT) safeguards, including work being done by Treasury and the Federal Banking Agencies Working Group on Bank Secrecy Act/Anti-Money Laundering (BSA/AML) to modernize the regulatory regime “in ways that support efforts by financial institutions to devote their resources toward addressing the areas of highest risk for illicit finance activities.” It also notes efforts under way within the Bank Secrecy Act Advisory Group (BSAAG) – chaired by FinCEN and comprised of members from financial institutions, trade groups, and law enforcement – to obtain feedback on opportunities to improve the BSA framework.

“Treasury is also conducting outreach with financial institutions and businesses in the FinTech and regulatory RegTech sector in order to understand and assess the potential of technological innovations coming to market,” the report says.

Also issued with the strategy were three risk assessment reports. They focus on terrorist financing, money laundering, and proliferation financing.

National Strategy for Combating Terrorist and Other Illicit Financing

National Terrorist Financing Risk Assessment

National Money Laundering Risk Assessment

National Proliferation Financing Risk Assessment

Be the first to comment

Leave a Reply

Your email address will not be published.