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1 1 (October 23, 2017)

handle is hein.crs/govcfuq0001 and id is 1 raw text is: 01;0i E.$~ & Updated October 23, 2017 Financial Crime Issues: Global Illicit Drug Proceeds Revenues generated through illicit drug trafficking account for a large proportion of transnational organized crime proceeds, and curbing the global circulation of such illicit financial flows remains a challenge. Following the money is one of several counternarcotics policy options leveraged by authorities, including the U.S. government, to disrupt and dismantle drug trafficking organizations both domestically and abroad. Drug trafficking-related financial transactions occur at all stages of the illicit supply chain, connecting drug source activities to retail markets in consumer countries. Before traffickers can use such ill-gotten wealth as if it were legitimately acquired, drug proceeds must undergo a process of laundering, which typically involves three key steps: (1) placement, in which illicit funds are introduced into the financial system; (2) layering, in which illicit funds undergo various techniques to hide the true origins of the funds; and (3) integration, at which point illicit funds appear to be legitimate. According to the United Nations (U.N.), illicit drug proceeds available each year for money laundering through the international financial system may range between 0.4% and 0.6% of global gross domestic product (between $232 billion and $348 billion in 2009). Some of the more common laundering methods employed by drug traffickers involve * bulk cash smuggling and currency exchange; * structuring deposits and withdrawals, including the use of nominees and funnel accounts; * trade-based money laundering (TBML), including through the so-called Black Market Peso Exchange; and * laundering through real estate, front companies, and the exploitation of offshore financial services. Despite the sheer magnitude of drug-related illicit financial flows, experts view the effectiveness of global efforts to seize and freeze laundered drug proceeds to be limited. .,,,,,-........, ,,,,, ..... - .S', Pok y ..,, , , Through legislation that was first enacted several decades ago, Congress has identified the restriction of drug-related money laundering as a U.S. foreign policy priority and authorized foreign and technical assistance to support international anti-money laundering capacity building. Congress has also mandated annual reporting on major money laundering countries, authorized targeted financial sanctions on designated foreign narcotics traffickers, and established other financial regulatory tools to curb money laundering related to drug-trafficking. UJ.., , StNcy sRa,,v,,s, Pursuant to Section 481 of the Foreign Assistance Act of 1961, as amended (FAA; 22 U.S.C. 2291), it is U.S. policy to address the unparalleled transnational threat of drug trafficking and to ensure that foreign countries adopt measures to combat money laundering and cooperate internationally on narcotics money laundering investigations, prosecutions, and related forfeiture actions. In support of U.S. foreign policy objectives, Section 481 of the FAA authorizes the President, notwithstanding any other provision of law, to provide assistance to foreign countries and international organizations to combat drugs or for other anticrime purposes. Such funds, which Congress provides through annual Department of State and Foreign Operations appropriations for International Narcotics Control and Law Enforcement, are primarily administered by the U.S. Department of State's Bureau for International Narcotics and Law Enforcement Affairs (INL). Section 129 to the FAA (22 U.S.C. 2151aa) additionally authorizes the Secretary of the Treasury to conduct training and technical assistance abroad in support of global financial law enforcement and anticorruption measures, among other requirements. Related efforts are currently conducted by Treasury's Office of Technical Assistance (OTA). Congress provides funds for such assistance to Treasury in annual Financial Services and General Government appropriations. Section 489 of the FAA (22 U.S.C. 2291h) requires the State Department to submit to Congress an annual International Narcotics Control Strategy Report (INCSR), which, for nearly three decades, has addressed the laundering of illicit drug proceeds. Among other provisions, current law requires the INCSR to summarize on a country-by-country basis how U.S. agencies are pursuing a common strategy with respect to achieving international cooperation against money laundering and ... with respect to major money laundering countries. Major Money Laundering Country, Defined Section 481 (e) of the FAA (22 U.S.C. 2291 (e)) defines major money laundering country to mean a country whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking. INL issued the 2017 INCSR in March, which identified 88 foreign major money laundering countries, 22 of which were designated by President Donald J. 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