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1 1 (January 4, 2022)

handle is hein.crs/goveglw0001 and id is 1 raw text is: Congre s&onaI Resedrch Sern anfrming Ih Ieg ilaive dIebate sin o 1914 Updated January 4, 2022 U.S. Efforts to Combat Money Laundering, Terrorist Financing, and Other Illicit Financial Threats: An Overview The United States maintains a multifaceted policy regime for tackling anti-money laundering (AML), combating the financing of terrorism (CFT), and countering illicit financial threats. Key issues for the 117th Congress may include oversight of the U.S. government's legal, regulatory, enforcement, and diplomatic AML/CFT effort-with special focus on the Biden Administration's implementation of significant changes to the AML/CFT regime enacted as part of the William M. (Mac) Thornberry National Defense Authorization Act FY2021 (NDAA; P.L. 116-283). Background Misuse of the international financial system, including for the purposes of money laundering and terrorist financing, can result in significant economic, political, and security consequences at both national and international levels. Money laundering, which broadly refers to the process of disguising financial assets so they can be used without revealing their underlying illicit source or nature (e.g., proceeds of fraud, corruption, and contraband trafficking), is globally ubiquitous. Terrorist financing, a key global security concern, refers to the process of fundraising, through both licit and illicit means, and financially sustaining terrorist groups. Other illicit financial threats span a wide range of concerns, including proliferation finance, tax evasion, sanctions evasion, and the financial facilitation of other state and nonstate threat actors. Despite recent AML efforts in the United States, policymakers face challenges in their ability to counter money laundering effectively. Those include the diversity of illicit methods to move and store ill-gotten proceeds through the international financial system (e.g., trade-based money laundering and misuse of anonymous shell companies); the introduction of new and emerging threats (e.g., cyber-enabled financial crimes); the ongoing use of old methods (e.g., bulk cash smuggling); gaps in legal, regulatory, and enforcement regimes, including uneven availability of international training and technical assistance for AML purposes; the rise of new payment technologies, such as cryptocurrency; and costs associated with financial institution compliance with global AML laws. International Framework Given the global nature of the international financial system and the transnational criminal activity that attempts to exploit it, the United States and other countries have engaged in a variety of international efforts designed to improve global AML responses and build international cooperation and information sharing on AML issues, including through formal bilateral requests for mutual legal assistance on financial crime investigative matters. Multiple international organizations contribute to international AML cooperation through global standard setting, cross-border information sharing, AML assessment and monitoring, and AML technical assistance. Some entities, such as the Financial Action Task Force and the Basel Committee on Banking Supervision, provide standard-setting guidance relevant to AML matters. Others, such as the Egmont Group of Financial Intelligence Units and the International Criminal Police Organization, contribute to the implementation of such standards through information sharing. The United Nations Office of Drugs and Crime, the World Bank, and the International Monetary Fund also maintain capabilities to monitor and assess national AML policies and provide technical assistance on AML capacity-building priorities. Other international and regional organizations-including the Organisation for Economic Co-operation and Development, the G-20, and the Organization of American States-have working groups and initiatives focused on various AML matters. Statutory Framework In the United States, the legislative foundation for domestic AML regulation originated in 1970 with the Bank Secrecy Act (BSA; P.L. 91-508) and its major component, the Currency and Foreign Transactions Reporting Act. Amendments to the BSA and related provisions in the 1980s and 1990s expanded AML policy tools available to combat crime-particularly drug trafficking-and prevent criminals from laundering their illicitly derived profits. Key elements to the BSA's AML framework, which are codified in Titles 12 (Banks and Banking) and 31 (Money and Finance) of the U.S. Code, include requirements for customer identification, recordkeeping, reporting, and compliance programs intended to identify and prevent money laundering. Substantive criminal statutes in Titles 31 and 18 (Crimes and Criminal Procedures) of the U.S. Code prohibit money laundering and related activities and establish civil and criminal penalties and forfeiture provisions. Federal authorities have also applied administrative forfeiture, nonconviction-based forfeiture, and criminal forfeiture tools to combat money laundering. In response to the September 11, 2001, terrorist attacks, Congress expanded the BSA's AML framework to add provisions to combat the financing of terrorism through the USA PATRIOT Act (P.L. 107-56). This provided the executive branch with greater authority and additional tools to counter the convergence of illicit threats, including the financial dimensions of organized crime, corruption, and terrorism. More recently, the Anti-Money Laundering Act of 2020 (AMLA), in Division F of the FY2021 NDAA, provided for wide-ranging updates to the BSA. 0

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