Highlights of First "U.S. Money Laundering Threat Assessment"

By Andrew Cochran

In what might be a positive sign about U.S. government counterterrorism efforts amidst the waning interest noted by Doug Farah, the first official "U.S. Money Laundering Threat Assessment" was released this morning at the Treasury Department. It's the first time that the 16 U.S. government bureaus, offices and agencies involved in the issue have combined to present their data and summary of programs, and it discusses (quoting the Treasury press release) "the characteristics of a specific method of money laundering, outlining the current legal and regulatory landscape and presenting known patterns of abuse, geographical concentrations, and real-world case studies." The MLTA is a valuable tool for use in benchmarking government efforts and trends in money laundering prevention. Although terrorist financing is not the subject of the assessment, money laundering techniques are employed by numerous terrorist groups and allies in criminal gangs, as testified to last year by Steven Emerson and former Contributing Expert and current senior Treasury official Matthew Levitt. You can download the entire MLTA from the Justice Department (large Acrobat file), and it will be linked in the Counterterrorism Library. Some highlights:

"FBI field offices consistently identified MSBs (money service businesses) as the third-most utilized money laundering method that they encounter, after formal banking systems and cash businesses, and particularly pointed to money remitters as a threat...Despite repeated outreach efforts to the sector, only a small fraction of the total MSBs � around 23,000 � have registered with the federal government...With respect to destinations, most federal law enforcement agencies identified Mexico as the primary destination for suspicious funds sent through MSBs."

"Stored value cards (sometimes referred to as prepaid cards) are an emerging cash alternative for both legitimate consumers and money launderers alike."

"The State of New York Banking Department recently noted that Suspicious Activity Reports filed by New York banks indicate an increase in the volume of shell company wire transfer activity through high-risk correspondent bank accounts, both in terms of dollar amounts and the number of transactions. These reports indicate that money is passing through correspondent accounts established for Eastern European banks." (See Victor Comras' September post and my last post on the correspondent banking regulations under section 312 of the USA Patriot Act, issued on December 16.)

"Indeed, NDIC�s analysis (the National Drug Intelligence Center) suggests that drug money may be the most common source of illicit proceeds being laundered in the United States."

One notable deficiency in the MLTA was a candid admission at the end of the Introduction that "Agencies may not even share common definitions of what constitutes 'money laundering proceeds,' or what nexus to the United States warrants defining illicit activity as 'United States' money laundering." During the press briefing for the release of the MLTA, I asked if there was a mechanism for determining a common definition and a deadline for its adoption, and the reply was not definitive. The agencies and Congress should pursue that matter vigorously to ensure a unified commitment to a single set of objectives and comparability of data between years.

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