Major reforms needed in ‘struggling’ US agency leading fight against dirty money, report says

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To avoid falling behind in the fight against criminal money and terrorist financing, the United States must put the federal agency back at the center of the fight, according to a new report that draws on the views of top anti-money laundering experts.

The US Department of the Treasury’s Financial Crimes Enforcement Network – known as FinCEN – is underfunded and overburdened in its role as a leading player in the global effort to catch money launderers and other sophisticated financial criminals who use shell companies, cryptocurrencies and other tools to hide. their activities, says the non-profit anti-corruption group Global Financial Integrity.

“It is an agency struggling … to address the country’s emerging money laundering challenges over the next decade and beyond,” the report said. But he adds that the US government “should not view these realities as acceptable and unresponsive to change.”

The report urges the government to increase funding for FinCEN and to adopt fundamental changes in the way the agency operates. He proposes, for example, that FinCEN launch a “Manhattan Project” to develop new ways of using data and cutting-edge technologies to fight financial crime.

The anti-money laundering efforts of the US government and the banks it oversees “are widely viewed as ineffective and ineffective,” the report said, citing the FinCEN Files survey conducted by BuzzFeed News, the International Consortium of Journalists. investigator and other media partners around the world, which found that the big banks continued to profit from suspicious transactions even after authorities fined them for non-compliance.

The United Nations Office on Drugs and Crime has estimated that authorities detect less than 1% of the world’s dirty money. The Global Financial Integrity report released on Monday notes that this estimate is ten years old, but says “there is little evidence to suggest” that the effectiveness of anti-money laundering efforts has improved significantly. since then.

FinCEN is well positioned to crack down on criminal money flows, as US law requires banks and other financial companies operating in the United States to file “suspicious activity reports” whenever they detect transactions that have the characteristics of an illicit activity.

But the agency receives more than 2 million of these alerts each year. This number has grown over the past decade, and FinCEN staffing, budgets and technology have not kept pace. Many reports of suspicious activity simply go unread or even unread.

At FinCEN, according to the Global Financial Integrity report, “innovation is limited and morale is poor”. The report adds that there is “general frustration” among anti-money laundering experts that “the agency’s approach has changed little over the years to the detriment of its ability to fight money laundering. money laundering or to strengthen national security. ”

Reinventing FinCEN for 2021 and beyond

Tom Cardamone, chief executive of the anti-corruption group, said in an interview with the ICIJ that there is consensus among policymakers that money laundering is a key national security issue. This includes President Joe Biden. As a candidate last spring, Biden pledged he would “ lead international efforts to bring transparency to the global financial system, tackle illicit tax havens, seize stolen assets and make it harder for executives who steal their people to hide behind an anonymous front. companies. “

Cardamone’s organization brought together 19 anti-money laundering experts from government, financial industry, and academia in late 2020 to discuss ideas for transforming FinCEN and generally strengthening US anti-money laundering efforts. money laundering.

The resulting report recommends half a dozen strategic changes, including a “Manhattan Project” to reinvent FinCEN’s use of technology. A public-private partnership that draws on “some of the best minds in the country” should fuel this effort, which would include the establishment of a new data center so that the agency can “keep pace with money laundering techniques. rapidly changing money ”. report said.

The group also urges the government to give the director of FinCEN a seat on the committee of deputies of the National Security Council and to create a “strategic analysis team” within FinCEN that “would examine emerging and long-term trends in methods. money laundering and computer technologies to counter these threats. . “

The report calls for “much more funding” and an expanded workforce to better prepare FinCEN “for a new generation of threats”. He notes that since 2015, despite a steadily increasing workload, the agency’s budget has increased by only 3% in inflation-adjusted dollars.

Cardamone said the report “is not meant to be a hit on FinCEN.” Instead, he said, it’s a call to action to push for better resources and better strategies that will help FinCEN, law enforcement agencies and banks to step up their efforts to stop the flow of dirty money around the world.

In September – after BuzzFeed, ICIJ and other media partners briefed U.S. Treasury officials on the findings of the FinCEN Files investigation – FinCEN announced that it was seeking recommendations on new regulations that would help the agency “Dealing with the evolving threats of illicit financing”.

In December, Congress passed the Corporate Transparency Act, which requires many US companies to report their beneficial owners to FinCEN, in an attempt to discourage abuse by anonymous shell companies. The legislation also provided for a modest increase of $ 10 million in the annual budget allocation for FinCEN, which was $ 126 million for the budget year ending in September 2020.

The panel of experts that informed Global Financial Integrity’s report did not take a position on what FinCEN’s budget should be, but agreed that its current level of funding is “far too low to provide the staff, skills and technologies needed to meet today’s challenges let alone. those of the 2030s. “



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