U.S. wants CPAs to help fight money laundering.A federal government report issued in March shed light on how federal agencies battling money laundering The process of taking the proceeds of criminal activity and making them appear legal. Laundering allows criminals to transform illegally obtained gain into seemingly legitimate funds. think CPAs may, in the future, help prevent criminals from converting their illicit gains into cash or goods that can be used legitimately. The National Money Laundering Strategy for 2000 outlines a broad government campaign, which is being undertaken in conjunction with other nations, to fight money laundering. The Treasury and the Justice Department jointly issued the strategy report, the second of five annual reports required by Congress, to present the federal government's plan and its current assessment of the fight against global money laundering. The report advocates better enforcement of existing laws against money laundering and greater cooperation between the public and private sectors and among federal, state and local governments and the international community. It also calls for a study group, made up of representatives of the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. , the SEC, the Commodities Futures Trading Commission and the FDIC FDIC See: Federal Deposit Insurance Corporation FDIC See Federal Deposit Insurance Corporation (FDIC). , as well as the Treasury and the Justice Department, to examine how accountants and auditors could best help detect and deter money laundering. The illicit funds problem is of no small proportion. Michel Camdessus Michel Camdessus (born 1 May 1933) was Managing Director of the International Monetary Fund (IMF) from 16 January 1987 to 14 February 2000. Among the most important events of his tenure was the East Asian financial crisis. , former managing director of the International Monetary Fund, said the annual global volume of money laundering is at least $600 billion--2% of the world's gross domestic product--and that it could be as much as $1 trillion. How do money launderers get such vast sums past the watchful eyes of regulators? By sophisticated concealment of fraudulent transactions in the vast flow of international financial traffic passing through communications networks. Just as legitimate businesses take advantage of the speed and voluminous capacity of these systems, criminal groups exploit them to disguise illegal proceeds and finance their ongoing activities. The federal government requested the cooperation of industry and professional groups, including the AICPA AICPA See American Institute of Certified Public Accountants (AICPA). . In January, AICPA representatives met with members of the federal study group to discuss the role and responsibilities of CPAs and ways the AICPA can work with federal agencies to provide more communications and training to members. The federal study group's goal in the year 2000 is to heighten auditor awareness of possible money laundering and develop additional guidance, training and educational materials that address money laundering vulnerabilities. In addition, the study group wants to continue monitoring various measures undertaken by the accounting profession in other countries to determine their applicability in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Under GAAS See gallium arsenide. , independent auditors consider money laundering as having an "indirect" effect on financial statements that, if detected by an auditor, must be communicated to management. The 1999 AICPA Audit Risk Alerts, issued for auditors of the banking, securities brokerage, investment company and insurance industries, included segments on money laundering. By September 2000, the Director of the Treasury's Financial Crimes Enforcement Network Noun 1. Financial Crimes Enforcement Network - a law enforcement agency of the Treasury Department responsible for establishing and implementing policies to detect money laundering FinCEN (FinCEN) intends to report on progress in developing additional responses to money laundering that can be integrated into the work of both internal and external accounting professionals. The study group also plans to review the professional responsibilities of lawyers and accountants with regard to money laundering and make recommendations--ranging from enhanced professional education, standards or rules to legislation--as necessary. Also in March, a House bill (HR 3886, the International Counter-Money-Laundering Act of 2000) was introduced with provisions that affect independent auditors (for example, safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for those who report suspicious activity to the authorities and a prohibition against informing suspects such activity has been reported), but the bill does not explicitly require independent auditors to report suspicious activities. The bill's congressional sponsors are James A. Leach (R-Iowa), John J. LaFalce John J. LaFalce (b. October 6, 1939) was a congressman from the state of New York from 1975 to 2002. John J. LaFalce was first elected to the 94th United States Congress in 1974 and re-elected to each succeeding Congress through the 107th, serving his Western New York (D-N.Y.), Marge Roukema Margaret Scafati "Marge" Roukema (born September 19, 1929 in Newark, New Jersey) represented New Jersey in the U.S. House of Representatives for twenty-two years as a Republican. (R-N R-N Raion (Russian, district; used in postal addresses) .J.) and Bruce F. Vento (D-Minn.), who referred it to the House Banking and Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. Committee. The committee may chose to amend the bill and submit it for a vote by the entire House. Sources on Capitol Hill say it's too late in this session of Congress for anti-money-laundering legislation to have more than a slim chance Noun 1. slim chance - little or no chance of success fat chance probability, chance - a measure of how likely it is that some event will occur; a number expressing the ratio of favorable cases to the whole number of cases possible; "the probability that an of passing. But the bill's bipartisan support is evidence of the seriousness with which both sides of the aisle view financial crime. "It's an issue that won't go away, regardless of which party wins the presidential election" said one observer. Financial institutions already must comply with two requirements of which CPAs should be aware. One is a long-standing provision of the Bank Secrecy Act The Bank Secrecy Act of 1970 (or BSA, or otherwise known as the Currency and Foreign Transactions Reporting Act) requires U.S.A. financial institutions to assist U.S. government agencies to detect and prevent money laundering. of 1970 that financial institutions must report cash transactions over $10,000. The other is a newer requirement that, so far, applies to banks only. If a bank's management observes suspicious activity, which the requirement defines, it must report the activity to the Treasury. Industry sources estimate there are hundreds of thousands of such reports each year, with companies like Citigroup filing approximately 6,000 of them. Sources also note that if the government expands the reporting requirement to dealers, brokers, casinos and other organizations as has been rumored, CPAs will be responsible for reporting suspicious activity in a greater variety of settings. Following the revelation in 1999 that $7 billion, possibly originating in the Russian underworld, had passed through the Bank of New York The Bank of New York, abbrieviated to BNY, was a global financial services company that existed until its merger with the Mellon Financial Corporation on July 2, 2007.[1] The bank now continues under the new name of The Bank of New York Mellon Corporation. , the Clinton administration began a high-profile war against international financial crime. U.S. regulators, working in conjunction with their counterparts in the G-7 nations (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) and representatives from the Organization for Economic Cooperation and Development Organization for Economic Cooperation and Development (OECD), international organization that came into being in 1961. It superseded the Organization for European Economic Cooperation, which had been founded in 1948 to coordinate the Marshall Plan for European (OECD OECD: see Organization for Economic Cooperation and Development. ), established a "gatekeepers" working group to strengthen and coordinate measures against money laundering. Each member state of the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community currently does, or soon will, require accountants and auditors to report suspicious financial activity; Italy and the Netherlands do not. The National Money Laundering Strategy for 2000 is available at the Treasury's Web site (www.treas.gov/ press/releases/docs/ml2000.pdf) Nothing Small About Leap-Year Numbers The IRS could collect as much as $5.3 billion more in taxes as a result of the additional day of economic activity this year. On February 29, U.S. workers ... Contributed $25 billion in gross national product Worked 1.1 billion hours Earned $6 billion in extra pay (hourly wage earners) Sent 1.1 billion e-mails Drank 82 million additional cups of coffee Securities Industry Shatters Profit, Revenue Records Pretax profit for the securities industry surged to an all-time high of $16.3 billion in 1999. far surpassing both the 1998 total and a record $12.2 billion reached in 1997. Industry revenue also soared, reaching peak levels in asset management fees, commissions, margin interest, trading gains and revenue from mutual fund sales, underwriting and research. [GRAPH OMITTED]
Asset Mutual
Revenue Management Margin Fund Sales
(in millions) Fees Commissions Interest Revenue
1998 $ 8,995 $24,188 $12,119 $6,213
1999 $11,450 $29,311 $13,416 $6,663
Revenue Research Trading Underwriting
(in millions) Revenue Gains Revenue
1998 $ 55 $19,703 $14,651
1999 $157 $36,423 $16,026
Revenue Total Pretax
(in millions) Revenue Profit
1998 $170,805 $ 9,790
1999 $183,367 $16,270
Source: Securities Industry Association, New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . Make Mine Football, CFOs Say Baseball may be the national pastime, but when it comes to spectator sports, CFOs prefer football to any other game, says a new survey. In fact, baseball--which only one out of seven finance chiefs, whether stadium- or couch-based, put at the top of the list--trails basketball, the game ranked second. |
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