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Money Laundering Testimony Heard.

It has been estimated that between $6oo billion and $1.5 trillion in funds is laundered around the world each year. Whatever the figure, money laundering has been widely recognized as an enormous problem, enough to prompt new efforts to crack down on it by law enforcement and Congress. To that end, several experts recently appeared before the House Committee on Government's Subcommittee on Criminal Justice, Drug Policy, and Human Resources. They discussed trends in money laundering, the state of anti-money laundering efforts, and proposed legislation that would crack down on perpetrators of these schemes.

Kenneth Rijock, a former career money launderer for a narcotics trafficking organization, criticized law enforcement efforts as being conducted by agents and officers without advanced degrees in finance and law, and who generally never worked in a commercial business setting." He called for enhanced training and long-term educational requirements for these agents, including subsidies for postgraduate degrees.

He also decried a system in which federal law enforcement agents are routinely transferred to a new assignment just when they are becoming proficient at their current job. He said that money launderers exploit this system, moving money past junior, inexperienced officers while senior officers are off duty. Thus, he argued, "Duty assignments can no longer reward those with the most time in grade; we need those people in the field during high-risk periods."

Deputy Assistant General Mary Lee Warren proposed other solutions, including supporting H.R. 4695, the Money Laundering Act of 2000. She pointed out that the bill would expand the list of crimes that serve as the basis for money laundering prosecutions in cases where the proceeds of foreign crimes by foreign criminals are concealed in the United States. Currently, it is a crime to launder the proceeds categories of foreign crimes in the United States: drug trafficking, bank fraud, and violent crimes linked to terrorism.

New predicate offenses would include bribery of public officials and arms trading, for instance. (Generally if the predicate offenses did not occur in the United States, they are not punishable there.) Several other sections of the bill would help prevent money laundering by criminals who commit a crime in the United States and conceal the proceeds abroad, she testified.

William F. Wechsler, Treasury special advisor to the Secretary and Deputy Secretary, spoke in support of another legislative proposal, the International Counter-Money Laundering and Foreign Anti-Corruption Act of 2000 (H.R. 3886). That bill, which has already been passed by the House Banking Committee, would authorize the Secretary of the Treasury to designate a foreign jurisdiction, a foreign institution, or a class of international transactions as being of "primary money laundering concern."

Under that proposal, the secretary could impose targeted actions on domestic financial institutions, such as additional record keeping and reporting requirements or restriction of correspondent relationships (relationships in which one financial institution provides services on behalf of another) with money laundering havens and rogue foreign banks.

Warren and Wechsler also discussed trends in international money laundering. Warren talked about the use of wire remittance businesses and the Colombian Black Market Peso Exchange for laundering purposes. Wechsler pointed out the positive actions of the Financial Action Task Force, a 26-member organization dedicated to combating money laundering. That organization recently identified a list of noncooperative countries and territories, including the Bahamas, Israel, Panama, and Nauru.

Despite movement in the right direction, Wechsler warned that advances in banking and communications technologies make it possible for launderers to move money "farther and faster than ever before." He said that nations that used to be too physically remote to be involved in money laundering are now becoming havens because they are a mere mouse click away from dirty money.

Also discussing trends was James F. Sloan, director of the Financial Crimes Enforcement Network (FinCEN), one of the Department of Treasury's lead agencies in the fight against money laundering. He noted that large scale money laundering cases "almost universally involve a wire transfer component by which millions of dollars in drug and non-drug financial activity are camouflaged." Sloan also observed that the tools of e-commerce are being exploited by money launderers, ranging from fraud in online auctions to the establishment of rogue financial services institutions.

Other witnesses included Edward M. Guillen, chief of financial operations, Drug Enforcement Agency, and Raymond Baker, a senior fellow at the Center for International Policy. All of the testimony is on Security Management Online.
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Publication:Security Management
Article Type:Brief Article
Date:Sep 1, 2000
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