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Money Laundering.

A Global Threat and the International Community's Response

A new era of globalization has emerged, and it is shrinking the world and shaping domestic politics and international relationships. [1] Globalization involves the international integration of capital, technology, and information in a manner resulting in a single global market and, to some degree, a global village. [2] This integration enables individuals and corporations to reach around the world farther, faster, deeper, and cheaper than ever before. However, the same aspects of globalization that have expanded opportunities for free-market capitalism also have resulted in new risks. Globalization has turned the international financial system into a money launderer's dream, siphoning off billions of dollars a year from economies around the world and extending the reach of organized crime. This unintended consequence of globalization presents a serious challenge to law enforcement agencies and financial regulators.

Because globalization represents an overarching international phenomenon, the international community's response to the challenge posed by money laundering has to address the financial, legal, and enforcement issues in a universal manner, through harmonization of remedies. Understanding the global threat of money laundering and the international community's response will assist investigators pursuing the evidentiary trail of a launderer by identifying the enforcement tools and techniques developed to overcome obstacles encountered when crossing international boundaries.

WHAT IS MONEY LAUNDERING?

Generally, money laundering is "the process by which one conceals the existence, illegal source, or illegal application of income and then disguises that income to make it appear legitimate." [3] In other words, the process used by criminals through which they make "dirty" money appear "clean." Though initially considered an aspect integral to only drug trafficking, laundering represents a necessary step in almost every criminal activity that yields profits.

Criminals engage in money laundering for three reasons. First, money represents the lifeblood of the organization that engages in criminal conduct for financial gain because it covers operating expenses, replenishes inventories, purchases the services of corrupt officials to escape detection and further the interests of the illegal enterprise, and pays for an extravagant lifestyle. To spend money in these ways, criminals must make the money they derived illegally appear legitimate. Second, a trail of money from an offense to criminals can become incriminating evidence. Criminals must obscure or hide the source of their wealth or alternatively disguise ownership or control to ensure that illicit proceeds are not used to prosecute them. Third, the proceeds from crime often become the target of investigation and seizure. To shield ill-gotten gains from suspicion and protect them from seizure, criminals must conceal their existence or, alternatively, make them look legitimate.

HOW IS MONEY LAUNDERED?

Money laundering consists of a three-stage process. The first stage involves the placement of proceeds derived from illegal activities--the movement of proceeds, frequently currency--from the scene of the crime to a place, or into a form, less suspicious and more convenient for the criminal. For example, a government official may take a bribe in the form of cash and place it in a safe deposit box or bank account opened under the name of another individual to hide its existence or conceal the ownership.

Layering constitutes the second stage of the laundering process and involves the separation of proceeds from the illegal source through the use of complex transactions designed to obscure the audit trail and hide the proceeds. This phase of the laundering process can include the transfer of money from one bank account to another, from one bank to another, from one country to another, or any combination thereof. Criminals layer transactions to increase the difficulty of tracing the proceeds back to its illegal source. They frequently use shell corporations and offshore banks at this stage because of the difficulty in obtaining information to identify ownership interests and acquiring necessary account information from them.

Integration, the third stage of money laundering, represents the conversion of illegal proceeds into apparently legitimate business earnings through normal financial or commercial operations. Integration creates the illusion of a legitimate source for criminally derived funds and involves techniques as numerous and creative as those used by legitimate businesses to increase profit and reduce tax liability. Common techniques include producing false invoices for goods purportedly sold by a firm in one country to a firm in another country, using funds held in a foreign bank as security for a domestic loan, comingling money in the bank accounts of companies earning legitimate income, and purchasing property to create the illusion of legal proceeds upon disposal.

The successful money launderer closely approximates legal transactions employed routinely by legitimate businesses. In the hands of a skillful launderer, the payment for goods that appeared to have been delivered by one company based upon an invoice of sale prepared by another company covers the laundering of the purchase price when the goods never existed, and the companies are owned by the same party; the sale of real estate for an amount far below market value, with an exchange of the difference in an under-the-table cash transaction, launders what, on the surface, appears to be capital gain when the property is sold again; and a variety of lateral transfer schemes among three or more parties or companies covers the trail of monetary transactions between any two of them. [4]

WHY IS MONEY LAUNDERING AN INTERNATIONAL THREAT?

Money laundering has become a global problem as a result of the confluence of several remarkable changes in world markets (i.e., the globalization of markets). The growth in international trade, the expansion of the global financial system, the lowering of barriers to international travel, and the surge in the internationalization of organized crime have combined to provide the source, opportunity, and means for converting illegal proceeds into what appears to be legitimate funds. Money laundering can have devastating effects on the soundness of financial institutions and undermine the political stability of democratic nations. Criminals quickly transfer large sums of money to and from countries through financial systems by wire and personal computers. [5] Such transfers can distort the demand for money on a macroeconomic level and produce an unhealthy volatility in international capital flows and exchange rates. [6]

A recent and highly publicized case prosecuted in New York provides an example of the ease with which criminals can launder large amounts of money in a short time period. [7] Several individuals and three companies pleaded guilty to federal money laundering charges in that case in connection with a scheme that funneled more than $7 billion from Russia through a bank in New York over a 2-year period. The laundering scheme involved the transfer of funds by wire from Moscow to the United States and then to offshore financial institutions. Additionally, in 1998, federal authorities in Florida announced arrests in an international fraud and money laundering scheme involving victims from 10 countries, with losses up to $60 million laundered through two banks on the Caribbean island of Antigua. [8]

Emerging market countries [9] are particularly vulnerable to laundering as they begin to open their financial sectors, sell government-owned assets, and establish fledgling securities markets. [10] The economic changes taking place in the former Soviet States in Eastern Europe create opportunities for unscrupulous individuals where money laundering detection, investigation, and prosecution tools slowly take shape. Indeed, as most emerging markets began the process of privatizing public monopolies, the scope of money laundering increased dramatically.

The international community of governments and organizations that have studied money laundering recognize it as a serious international threat. [11] The United Nations and the Organization of American States (OAS) have determined that the laundering of money derived from serious crime represents a threat to the integrity, reliability, and stability of financial, as well as government, structures around the world. [12] In October 1995, the President of the United States, in an address to the United Nations General Assembly, identified money laundering, along with drug trafficking and terrorism, as a threat to global peace and freedom. Immediately thereafter, he signed Presidential Directive 42, ordering U.S. law enforcement agencies and the intelligence community to increase and integrate their efforts against international crime syndicates in general and against money laundering in particular. [13] The U.S. Department of the Treasury Deputy Secretary summed up the seriousness of the domestic and internationa l threat when he testified before the U.S. Congress on March 9, 2000. During his testimony before the House

Committee on Banking and Financial Services, he advised that money laundering encouraged corruption in foreign governments, risked undermining the integrity of the U.S. financial system, weakened the effects of U.S. diplomatic efforts, and facilitated the growth of serious crime. [14] These assessments make it clear that money laundering presents not only a formidable law enforcement problem, but also a serious national and international security threat as well.

Money laundering threatens jurisdictions from three related perspectives. First, on the enforcement level, laundering increases the threat posed by serious crime, such as drug trafficking, racketeering, and smuggling, by facilitating the underlying crime and providing funds for reinvestment that allow the criminal enterprise to continue its operations. Second, laundering poses a threat from an economic perspective by reducing tax revenues and establishing substantial underground economies, which often stifle legitimate businesses and destabilize financial sectors and institutions. [15] Finally, money laundering undermines democratic institutions and threatens good governance by promoting public corruption through kickbacks, bribery, illegal campaign contributions, collection of referral fees, and misappropriation of corporate taxes and license fees. [16]

HOW MUCH MONEY IS LAUNDERED?

The International Monetary Fund estimates that the amount of money laundering occurring on a yearly basis could range between 2 and 5 percent of the world's gross domestic product--or somewhere between $600 billion and $1.5 trillion. [17] Estimates come from a variety of sources based upon both macroeconomic theories and on microeconomic approaches. The U.S. Department of the Treasury has suggested that $600 billion represents a conservative estimate of the amount of money laundered each year, and some U.S. law makers believe that, not only does the amount lie somewhere between $500 billion and $1 trillion, but that half is being laundered through U.S. banks. [18] Due to the clandestine nature of laundering activity, governments and concerned organizations cannot accurately quantify the amount of money laundered each year. Some estimates suggest that the amount of money laundered each year is approximately $2.8 trillion, an amount more than four times greater than the figure generally accepted. [19]

Many economists, law enforcement executives, and policy makers agree on the need to develop an acceptable means of identifying the scope of the laundering problem. [20] The inability to determine the amount of money laundered impedes an adequate understanding of the magnitude of the crime, its macroeconomic effect, and the effectiveness of current counterlaundering efforts.

WHAT IS THE INTERNATIONAL RESPONSE?

Efforts by governments to address money laundering have been under way for over 10 years. The international response to laundering has taken a number of forms including multilateral treaties regional agreements, international organizations, and the identification of universal counterlaundering measures.

The United States' Response

The United States commenced one of the earliest responses to money laundering. The Bank Secrecy Act of 1970 authorized the Secretary of the U.S. Department of the Treasury to establish regulatory measures requiring the filing of currency transaction reports and served as a foundation for further measures to combat laundering. [21] Subsequently, Congress enacted the Money Laundering Control Act in 1986, [22] which made the laundering [23] of proceeds derived from any one of a long list of offenses (known as "specified unlawful activities") a crime. [24] This list now includes over 100 federal offenses, selected state offenses, and certain violations of foreign laws. [25] The act also criminalized structuring certain transactions to avoid filing currency reports. [26] Congress made civil and criminal procedures available to forfeit property involved in a laundering offense. Subsequent legislation has added further enhancements. [27]

Most recently, the Money Laundering and Financial Crimes Strategy Act of 1998 called for the development of a national strategy to combat money laundering and related financial crimes. [28] In response, the Departments of Justice and the Treasury developed a 5-year strategy that calls for designating high-risk money laundering zones to direct coordinated enforcement efforts, providing for greater scrutiny of suspicious transactions, creating new legislation, and intensifying pressure on nations that lack adequate countermoney laundering controls. In addition to its domestic efforts, the United States has become a party to multilateral treaties and agreements, as well as numerous bilateral efforts, that support enhanced international cooperation. The United States participates in and promotes the efforts of international organizations that have developed universal standards and monitor current trends to address the laundering threat to the global community. In furtherance of international cooperation, the Uni ted States transfers funds to foreign jurisdictions (known as "international sharing") that have assisted in efforts that resulted in the forfeiture of property.

Vienna Convention of 1988

The Vienna Convention represents the first concerted effort to influence the international community's response to drug money laundering. [29] It requires the signatory jurisdictions to take specific actions, including steps to enact domestic laws criminalizing the laundering of money derived from drug trafficking and provide for the forfeiture of property derived from such offenses. [30] The treaty also promotes international cooperation as a key to reducing the global threat of money laundering and requires states to provide assistance in obtaining relevant financial records when requested to do so without regard to domestic bank secrecy laws.

While the Vienna Convention remains a benchmark in identifying counterlaundering measures on an international level, it does not criminalize laundering. Rather, it obligates the parties to adopt domestic legislation that makes laundering drug proceeds a crime. Unfortunately, compliance with regard to the antilaundering provision has not been universal. The U.S. Department of State recently issued a report tracking the counterlaundering measures of various jurisdictions. The report listed 38 parties to the Vienna Convention that failed to criminalize the laundering of drug proceeds. [31] In addition, the fact that the treaty defined money laundering as a crime predicated on drug trafficking has limited its effectiveness. Of the countries tracked in the U.S. Department of State report, 66 have failed to criminalize the laundering of proceeds derived from nondrug trafficking offenses.

The Strasbourg Convention of 1990

The Council of Europe is a regional organization established to strengthen democracy, human rights, and the rule of law in its member states, in part, by harmonizing its policies and encouraging the adoption of common practices and standards. It adopted the Strasbourg Convention in November 1990, [32] which, like the Vienna Convention, requires each party to adopt legislation that criminalizes money laundering. As of December 1999, 27 of 41 member states and one nonmember (Australia) have ratified the Strasbourg Convention. Unlike the Vienna Convention, this treaty does not limit the underlying predicate offense to drug trafficking. The Strasbourg Convention requires members to adopt laws criminalizing the laundering of the proceeds from any "serious crime." [33] The treaty also requires signatories to adopt laws authorizing the forfeiture of the proceeds of serious offenses, as well as any instrumentalities of the crime, or in the alternative, the value of such property. Members must provide investigative a ssistance to foreign jurisdictions regarding forfeiture cases and take appropriate measures to prevent disposal of subject property prior to confiscation.

Financial Action Task Force Recommendations

In response to increasing concerns, the governments of the Group of Seven (G-7) [34] industrialized countries established the Financial Action Task Force on Money Laundering (FATF) in 1989 as an intergovernmental body to develop and promote policies to combat money laundering. [35] The FATF, comprised of members from 26 countries and two regional organizations, includes the major financial centers of Europe, North America, and Asia and works both independently and in cooperation with other organizations to establish and strengthen member and nonmember antilaundering measures. One of the guiding principles of the FATF is that money laundering constitutes a complex economic crime, which conventional law enforcement methods cannot control effectively. Therefore, law enforcement must work closely with financial institution managers and regulators.

In April 1990, the FATF issued a report containing recommended countermeasures to money laundering. Commonly known as the "Forty Recommendations," the FATF designed these countermeasures to provide governments with a comprehensive framework for antimoney laundering action focused around the criminal justice system and law enforcement, the role of the financial sector and government regulators in combating money laundering, and the need for international cooperation. [36] The Forty Recommendations, revised and updated in 1996, encourage the full implementation of the Vienna and Strasbourg Conventions and the lifting of bank secrecy laws. Strategies encouraged by the FATF include the criminalization of the laundering of the proceeds derived from all serious crime, the forfeiture of property connected with a laundering offense or its corresponding value, the establishment of customer identification and record keeping rules, and the creation of financial intelligence units.

As a part of its ongoing efforts to combat money laundering, the FATF prepares annual laundering typology reports and conducts mutual in-depth evaluations of each member's antilaundering regimes. Consistent with its continuing oversight role and its efforts to identify key antimoney laundering weaknesses throughout the world, the FATF approved a report on the issue of noncooperative countries and territories in the international effort against money laundering. The report, adopted on June 22, 2000, named 15 countries and territories with systemic problems indicating a lack of a serious commitment to eliminating or significantly reducing money laundering. [37] The jurisdictions (noncooperating countries) [38] either failed to adopt meaningful legislation criminalizing laundering or have serious deficiencies in their banking laws and implementing regulations. By publicly criticizing these jurisdictions, the FATF and its member countries hope that international public pressure will result in antilaundering refo rms. The list also served as a precursor for countries with major financial centers to issue formal advisories to its financial institutions identifying the risks of conducting financial transactions with the jurisdictions on the list. Accordingly, in July 2000, the U.S. Department of the Treasury issued such advisories on each of the jurisdictions on the name and shame list. [39] As a result of the FATF's continuing efforts to address money laundering on an international scale, their recommendations have become the accepted international standard for antimoney laundering regimes.

CONCLUSION

The global threat of money laundering poses unique challenges to the law enforcement community. To pursue the evidentiary trail of a money launderer, law enforcement agencies must identify and use tools and techniques that can help them when crossing international boundaries. Multilateral agreements that require participants to adopt antilaundering measures and the regional and world organizations that have developed and encouraged a standardized approach to addressing laundering all have contributed to the strides made in addressing the challenges posed. [40] Efforts undertaken by nations independent of the international community often result in significant variations from the accepted standard and have the effect of facilitating laundering activity rather than combating it. [41] For example, the government of Antigua and Barbuda weakened its laws relating to money laundering, resulting in the U.S. Department of the Treasury issuing an advisory warning banks and other financial institutions to be wary of a ll financial transactions routed into, or out of, that jurisdiction. [42] The changes in the law strengthened bank secrecy, inhibited the scope of laundering investigations, and impeded international cooperation. A common, harmonized approach will prevent launderers from using the different laws and practices among the jurisdictions to their advantage both at the expense and disadvantage of countries interested in pursuing them. [43] Only with laws that have been harmonized can law enforcement agencies, working together with financial institution administrators and regulators, combat this ever-increasing problem.

Endnotes

(1.) Thomas L. Friedman, The Lexus and the Olive Tree: Understanding Globalization (New York, NY: Farrar, Straus, Giroux, 1999).

(2.) Ibid.

(3.) President's Commission on Organized Crime, Interim Report to the President and the Attorney General, The Cash Connection: Organized Crime, Financial institutions, and Money Laundering 7 (1984).

(4.) Jack A. Blum, et al., "Financial Havens, Banking Secrecy and Money Laundering," Crime Prevention and Criminal Justice News Letter 8, no. 34/35 (1998).

(5.) See, for example, Eduardo Gallardo, "Chile Attracts Drug Money for Laundering: Strong Economy, Financial Market Lure Foreign Cartels," Washington Times, Oct. 21, 1997 ("Most experts believed drug gangs view Chile mostly as a good place for money laundering because of its thriving economy, with money flowing in and out of the country which would allow traffickers to make their money look legitimate by channeling it through businesses...Nearly $2 billion in foreign money poured into Chile in the first 6 months of the year for investment in its companies.").

(6.) See remarks of Michel Camdessus, managing director of the International Monetary Fund, at a plenary meeting of the Financial Action Task Force on Money Laundering, February 10, 1998; http://www.inf.org/external/np/speeches/1998/021098.htm. accessed November 13, 2000.

(7.) Mark Hosenball and Bill Powell, "The Russian Money Chase," Newsweek, February 28, 2000, 42-43.

(8.) Catherine Skipp, "Six Arrested in Global Fraud, Money-Laundering Case: Group Allegedly Bilked victims of $60 Million," Washington Post, May 8, 1998, sec. A, p. 2.

(9.) For example, countries in Eastern Europe, Asia, and South and Central America that have undergone transformation from a government-controlled economy to one with fewer government controls and greater market freedom for companies to trade on an international scale, such as the Czech Republic, Slovenia, and Thailand.

(10.) See, Stephen R. Kroll, "Money Laundering: A Concept Paper Prepared for the Government of Bulgaria," International Law 28 (1994): 835, 869 (a discussion on criminalization of money laundering for Bulgaria and the special concerns about misappropriation of value from privatized enterprises during the transformation of the Bulgarian economy from a government controlled economy to a market economy).

(11.) For example, representatives of the "G-7" (now referred to as the "G-8"), seven major industrial countries in the world, including the United States, the United Kingdom, France, Germany, and Japan, who formed the Financial Action Task Force (FATF); the Organization of American States (OAS); the Council of Europe; the United Nations (UN); the Asian Pacific Group on Money Laundering; and the European Union.

(12.) United Nations Declaration and Action Plan Against Money Laundering, United Nations Resolution S-20/4 D (June 10, 1998); and the Ministerial Communique, Ministerial Conference concerning the Laundering of Proceeds and Instrumentalities of Crime, Buenos Aires, Argentina (December 2,1995); http://www.oecd.org/fatf/Initiatives_en.htm; accessed November 13, 2000.

(13.) U.S. Department of State, International Crime Control Report, 1999, Money Laundering and Financial Crimes, 599.

(14.) See, House Committee on Banking and Financial Services, prepared statement of Smart Eizenstat, Deputy Secretary, U.S. Department of the Treasury (March 9, 2000); http://www.ustreas.gov/press/releases/ps445.htm, accessed November 13, 2000.

(15.) Supra note 6, ("Potential macroeconomic consequences of money laundering include, but are not limited to: inexplicable changes in money demand, greater prudential risks to bank soundness, contamination effects on legal financial transactions, and greater volatility of international capitol flows and exchange rates due to unanticipated cross-border asset transfers.").

(16.) See, Barry R. McCaffrey, "Efforts to Combat Money Laundering," Loyola of Los Angeles International and Comparative Law Journal 791, no. 20 (1998). Also, supra note 13.

(17.) Financial Action Task Force, Basic Facts About Money Laundering, http://www.oecd.org/fatf/Mlaundering_en.htm; accessed November 13, 2000; and supra notes 6 and 14.

(18.) Elise J. Bean, Deputy Chief Counsel to the Minority Senate Permanent Subcommittee Investigations, U.S. Congress, Money Laundering 2000: What's Going On? a presentation made at the American Bankers Association/American Bar Association Money Laundering Enforcement Seminar, October 29-31, 2000.

(19.) John Walker, Measuring the Extent of International Crime and Money Laundering, paper prepared for the Kriminal Expo, a conference held in Budapest, Hungary, on June 9, 1999, http://www.ozemail.com.au/[sim]born1820/Budapest html; accessed October 11, 2000.

(20.) There are ongoing efforts in several countries to estimate the magnitude of money laundering. An ad hoc group composed of members of the FATF is engaged in a study to quantify the amount of money laundering activity. Supra note 13.

(21.) Pub. L. 91-508, [sections] 202, Oct. 26, 1970, codified at 31 U.S.C. [sections] 5311. ("It is the purpose of this subchapter...to require certain reports or records where they have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings.").

(22.) Subtitle H of the Anti-Drug Abuse Act of 1986, Pub. L. No. 99-570, 100 Stat 3207, codified at 18 U.S.C. [sections][sections] 1956, 1957, 31 U.S.C. [sections][sections] 5324-26.

(23.) 18 U.S.C. [sections][sections] 1956(a)(1) and 1957(a).

(24.) See, generally, Barrett Atwood and Molly McConville, "Money Laundering," Am. Crim. L. Rev. 36 (1999): 901 for a discussion of the conduct criminalized by this act.

(25.) 18 U.S.C. [sections] 1956(c)(7).

(26.) 31 U.S.C. [sections][sections] 5322, 5324; 18 U.S.C. [sections] 1956(a)(2).

(27.) Annunzio-Wylie Anti-Money Laundering Act, Pub. L. No. 102-550 (1994). Changes included: 1) an expanded definition of "financial transaction" to include the transfer of title to vehicles, aircraft, and real property; 2) authority for the U.S. Treasury to require financial institutions to carry out antimoney laundering programs; 3) increased record keeping to cover wire transfers; and, 4) authority for the U.S. Treasury to require financial institutions to file suspicious transaction reports. See also, Matthew S. Morgan, "Money Laundering: The American Law and Its Global Influence," 3-SUM NAFTA: Law & Business Review of tire Americas 24, 26 (Summer 1997).

(28.) Pub. L. 105-310, [sections] 2(a), 112 Stat. 2942 (Oct. 30, 1998) codified at 30 U.S.C. [sections] 5341.

(29.) The United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988 is commonly known as the "Vienna Convention," U.N. Does. E/Conf. 82/15 (Dec. 19, 1998), WL 28 I.L.M. 493 (1989). One hundred fifty-three countries are parties to this treaty.

(30.) See, Vienna Convention, at Article 3(1)(b) requiring each signatory state to enact domestic legislation criminalizing money laundering activity and Article 5(1), which requires each signatory to adopt measures to enable confiscation of drug trafficking and money laundering offenses.

(31.) Supra note 13.

(32.) Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds of Crime commonly known as the "Strasbourg Convention," Eur. Consult. Ass., Doe. No. 141 (Nov. 9, 1990), WL 30 I.L.M. 148 (1991).

(33.) Ibid., at Article 6 (serious crime under the treaty may be defined by each signatory as identified by declaration).

(34.) Supra note 11.

(35.) House Committee on Banking and Financial Services, "Committing Money Laundering," prepared testimony of Jonathan Winer, Deputy Assistant Secretary of State, U.S. Department of State (June 11, 1998).

(36.) See, Financial Action Task Force on Money Laundering: The Forty Recommendations of the Financial Task Force on Money Laundering, with Interpretative Notes, WL 35 I.L.M. 1291 (1996).

(37.) Review to Identify Non-Cooperative Countries or Territories: Increasing tire Worldwide Effectiveness of Anti-Money Laundering Measures, report issued by FATF, June 22, 2000.

(38.) Jurisdictions named as noncooperating countries are: the Bahamas, Cayman Islands, Cook Islands, Dominica, Israel, Lebanon, Liechtenstein, Marshall Islands, Nauru, Niue, Panama, Philippines, Russian Federation, St. Kitts and Nevis, and St. Vincent and the Grenadines.

(39.) See FinCen Advisories issued by the U.S. Department of the Treasury for each of the 15 countries on the name and shame list in July 2000; http://www.ustreas.gov/fincen; accessed November 13, 2000.

(40.) There are additional regional organizations, not discussed in this article, that address money laundering. They include the OAS (established in 1948), which developed model regulations for member jurisdictions to prevent money laundering through a statutory framework; the Asia/Pacific Group on Money Laundering (APG) (established in 1997) to address laundering on a regional basis by applying, inter alia, the FATF Recommendations; the Caribbean Financial Action Task Force (CFATF), which consists of representatives of 25 countries and territories in the Caribbean, along with five cooperating and supporting nations from outside the region. The CFATF has adopted the FATF Recommendations and added 19 additional region-specific recommendations.

(41.) Jeffrey Lowell Quillen, "The International Attack on Money Laundering: European Initiatives," Journal of Comparative and International Law 213 (1991).

(42.) "Treasury Warns Banks on Transaction with Antigua and Barbuda," press release issued by the U.S. Department of the Treasury, RR-3066 (April 1999) http://www.ustreas.gov/press/releases; accessed November 13, 2000.

(43.) At the Summit of Americas held in Buenos Aires, Argentina, in 1995, representatives of 34 countries in the Western Hemisphere agreed to recommend to their governments a plan of action for a coordinated hemispheric response to combat money laundering.

Ten strategies that countries and territories can follow to synthesize the universal standards adopted by the international community to combat money laundering:

* Enhance cooperation among law enforcement, financial institutions, and judiciary: a coordinated response involving the financial industry, the judiciary, and law enforcement is necessary to address the issues regarding effective counterlaundering measures.

* Criminalize laundering: adopt legislation that criminalizes the laundering of the proceeds of all "serious crime."

* Establish a financial intelligence unit (FIU): an FIU is a central office, generally composed of investigators, banking experts, and financial analysts, that obtains and analyzes information from financial institutions and then provides that information indicative of laundering to an appropriate government authority for investigation.

* Repeal bank secrecy laws: laws that unduly restrict the flow of information between financial institutions and law enforcement should be repealed and specific protections afforded those appropriately disclosing information to the authorities.

* Report large/suspicious transactions: to obtain needed information on a reliable basis, banks and other covered institutions should be required to report all "suspicious" transactions and all "large" transactions, where the reports on large transactions would help law enforcement agencies in a manner that is not cost prohibitive.

* Identify bank customers: because launderers covet anonymity for their clandestine activity, institutions must identify their customers and pass pertinent information to the appropriate authorities.

* Record customer and transaction information: banks and other covered institutions must record information obtained in identifying their customers and certain transactions and keep such records for up to 5 years.

* Establish effective antimoney laundering programs in banks: banks should establish effective internal antilaundering programs, conduct laundering-detection training for officers and employees, and provide for meaningful institutional accountability.

* Ensure international cooperation: given the ease and speed that criminals can layer and integrate funds across international boundaries, cooperation among enforcement authorities on an international basis is essential. Countries should adopt laws to facilitate such international cooperation.

* Adopt forfeiture laws: countries should adopt laws that permit the forfeiture of property connected to laundering offenses and the pretrial restraint and seizure of property subject to forfeiture in domestic cases and upon request by authorities from foreign jurisdictions.
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Author:SCHROEDER, WILLIAM R.
Publication:The FBI Law Enforcement Bulletin
Geographic Code:00WOR
Date:May 1, 2001
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