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Money Laundering
The International Monetary Fund estimates money laundering, the process drug
traffickers use to introduce the proceeds gained through the sale or distribution of
controlled substances into the legitimate financial market, to amount to between 2 and 5
percent of the world's Gross Domestic Product, about $600 billion annually. Money
laundering allows the true source of the funds gained through the sale and distribution of
drugs to be concealed and converts the funds into assets that appear to have a legitimate
legal source. The need to launder conspicuously large amounts of small-denomination
bills renders the traffickers vulnerable to law enforcement interdiction. Tracking and
intercepting this illegal flow of drug money is an important tool used to identify and
dismantle international drug trafficking organizations.
Current Money Laundering Trends
Drug traffickers use various methods to launder their profits both inside and outside of the
United States. Presently, some of the more common laundering methods include: the
Black Market Peso Exchange, cash smuggling (couriers or bulk cash shipments), gold
purchases, structured deposits to or withdrawals from bank accounts, purchase of
monetary instruments (cashier's checks, money order, traveler's checks, etc.), wire
transfers, and forms of underground banking, particularly the Hawala system.
DEA Response to Money Laundering
Highway interdiction programs, such as Operations Pipeline and Convoy, that stop the
bulk movement of illicit funds are highly effective impediments to money laundering. The
DEA has also launched major operations specifically targeting the money-laundering
capabilities of major trafficking organizations. For example, Operation Juno out of the
Atlanta Field Division provided money and financial services to launder drug proceeds
obtained from around the world. Operation Juno would arrange to sell U.S. dollars
obtained from selling narcotics for pesos via the Colombian Black Market Peso Exchange.
This operation concluded in December of 1999 with the arrest of 40 individuals, $10
million in seizures, seizure of 3,601 kilograms of cocaine, and 106 grams of hashish oil,
and civil seizure warrants of 59 domestic bank accounts. This was a significant strike
against the black market peso system. This was the first instance Colombian authorities
were able to seize this volume of trafficker accounts based on information obtained from a
joint investigation with U.S. law enforcement agencies.
source: United States Drug Enforcement Administration
The International Monetary Fund estimates money laundering, the process drug
traffickers use to introduce the proceeds gained through the sale or distribution of
controlled substances into the legitimate financial market, to amount to between 2 and 5
percent of the world's Gross Domestic Product, about $600 billion annually. Money
laundering allows the true source of the funds gained through the sale and distribution of
drugs to be concealed and converts the funds into assets that appear to have a legitimate
legal source. The need to launder conspicuously large amounts of small-denomination
bills renders the traffickers vulnerable to law enforcement interdiction. Tracking and
intercepting this illegal flow of drug money is an important tool used to identify and
dismantle international drug trafficking organizations.
Current Money Laundering Trends
Drug traffickers use various methods to launder their profits both inside and outside of the
United States. Presently, some of the more common laundering methods include: the
Black Market Peso Exchange, cash smuggling (couriers or bulk cash shipments), gold
purchases, structured deposits to or withdrawals from bank accounts, purchase of
monetary instruments (cashier's checks, money order, traveler's checks, etc.), wire
transfers, and forms of underground banking, particularly the Hawala system.
DEA Response to Money Laundering
Highway interdiction programs, such as Operations Pipeline and Convoy, that stop the
bulk movement of illicit funds are highly effective impediments to money laundering. The
DEA has also launched major operations specifically targeting the money-laundering
capabilities of major trafficking organizations. For example, Operation Juno out of the
Atlanta Field Division provided money and financial services to launder drug proceeds
obtained from around the world. Operation Juno would arrange to sell U.S. dollars
obtained from selling narcotics for pesos via the Colombian Black Market Peso Exchange.
This operation concluded in December of 1999 with the arrest of 40 individuals, $10
million in seizures, seizure of 3,601 kilograms of cocaine, and 106 grams of hashish oil,
and civil seizure warrants of 59 domestic bank accounts. This was a significant strike
against the black market peso system. This was the first instance Colombian authorities
were able to seize this volume of trafficker accounts based on information obtained from a
joint investigation with U.S. law enforcement agencies.
source: United States Drug Enforcement Administration
| Money Laundering |
THE FIGHT AGAINST
MONEY LAUNDERING
Money laundering allows crime to pay by permitting criminals to
hide and legitimize proceeds derived from illegal activities.
According to one recent estimate, worldwide money laundering
activity amounts to roughly $1 trillion a year. These illicit funds
allow criminals to finance a range of additional criminal activities.
MONEY LAUNDERING
Money laundering allows crime to pay by permitting criminals to
hide and legitimize proceeds derived from illegal activities.
According to one recent estimate, worldwide money laundering
activity amounts to roughly $1 trillion a year. These illicit funds
allow criminals to finance a range of additional criminal activities.
Moreover, money laundering abets corruption, distorts economic decision-making, aggravates social ills, and
threatens the integrity of financial institutions.
Money launderers now have access to the speed and ease of modern electronic finance. Given the staggering
volume of this crime, broad international cooperation between law enforcement and regulatory agencies is essential
in order to identify the source of illegal proceeds, trace the funds to specific criminal activities, and confiscate
criminals' financial assets.
This issue of Economic Perspectives gives some idea of the scope of the problem as well as the way agencies of the
U.S. government are cooperating with each other, the private sector, and foreign governments to contain this
scourge.
-- Ambassador Wendy Chamberlin, Principal Deputy Assistant Secretary
Bureau for International Narcotics and Law Enforcement Affairs, U.S. Department of State
threatens the integrity of financial institutions.
Money launderers now have access to the speed and ease of modern electronic finance. Given the staggering
volume of this crime, broad international cooperation between law enforcement and regulatory agencies is essential
in order to identify the source of illegal proceeds, trace the funds to specific criminal activities, and confiscate
criminals' financial assets.
This issue of Economic Perspectives gives some idea of the scope of the problem as well as the way agencies of the
U.S. government are cooperating with each other, the private sector, and foreign governments to contain this
scourge.
-- Ambassador Wendy Chamberlin, Principal Deputy Assistant Secretary
Bureau for International Narcotics and Law Enforcement Affairs, U.S. Department of State
THE FIGHT AGAINST MONEY LAUNDERING
FOCUS
THE CONSEQUENCES OF MONEY LAUNDERING AND FINANCIAL CRIME
By John McDowell, Senior Policy Adviser, and Gary Novis, Program Analyst, Bureau of International Narcotics and Law Enforcement
Affairs, U.S. Department of State
Money laundering distorts business decisions, increases the risk of bank failures, and takes control of economic policy away from the
government. International cooperation is necessary to keep money launderers in check.
INTERNATIONAL STANDARDS AND COOPERATION IN THE FIGHT AGAINST MONEY LAUNDERING
By Joseph Myers, Acting Deputy Assistant Secretary, Enforcement Policy, U.S. Department of the Treasury
Member countries of the Financial Action Task Force and similar regional groups have achieved good international cooperation, but
they need to do much more.
MONEY LAUNDERING ENFORCEMENT: FOLLOWING THE MONEY
By Lester M. Joseph, Assistant Chief, Asset Forfeiture and Money Laundering Section, U.S. Department of Justice
Just as often as U.S. law enforcement agencies succeed in frustrating money laundering schemes, they are frustrated by the
complexities of foreign jurisdictions and outright lack of foreign cooperation.
ACHIEVING A SUSTAINED RESPONSE TO MONEY LAUNDERING
By Steven L. Peterson, Acting Office Director, Crime Programs, Bureau of International Narcotics and Law Enforcement, U.S.
Department of State
To attack money laundering a national government needs to have legal, financial, and law enforcement infrastructure in place.
Several U.S. government agencies provide training to foreign governments for building this infrastructure.
COMMENTARY
UNDERSTANDING THE WASH CYCLE
By Paul Bauer, Economic Adviser, and Rhoda Ullmann, Research Assistant, Federal Reserve Bank of Cleveland
Laundering entails three basic steps to blend dirty money in with trillions of dollars exchanged in legitimate business activity. A
number of U.S. laws require banks and bank regulators to interrupt these schemes.
U.S. BANKING: AN INDUSTRY'S VIEW ON MONEY LAUNDERING
By Anne T. Vitale, Esq.
U.S. banks conduct vigorous programs to prevent money-laundering abuse of their business. Most important for the success of such
programs is the demonstration of commitment from senior management.
CORRESPONDENT BANKING: A GATEWAY FOR MONEY LAUNDERING
By Linda Gustitus, Elise Bean, and Robert Roach, Democratic Staff, Permanent Subcommittee on Investigations, Committee on
Governmental Affairs, U.S. Senate
By allowing high-risk foreign banks and their criminal clients access to correspondent bank accounts, U.S. banks are facilitating crime
and undermining the U.S. financial system.
FACTS AND FIGURES
THE FINANCIAL ACTION TASK FORCE ON MONEY LAUNDERING
MONEY LAUNDERING COMPARATIVE TABLE OF COUNTRIES/JURISDICTIONS OF CONCERN
INFORMATION RESOURCES
KEY CONTACTS AND INTERNET SITES
ADDITIONAL READINGS ON MONEY LAUNDERING
FOCUS
THE CONSEQUENCES OF MONEY LAUNDERING AND FINANCIAL CRIME
By John McDowell, Senior Policy Adviser, and Gary Novis, Program Analyst, Bureau of International Narcotics and Law Enforcement
Affairs, U.S. Department of State
Money laundering distorts business decisions, increases the risk of bank failures, and takes control of economic policy away from the
government. International cooperation is necessary to keep money launderers in check.
INTERNATIONAL STANDARDS AND COOPERATION IN THE FIGHT AGAINST MONEY LAUNDERING
By Joseph Myers, Acting Deputy Assistant Secretary, Enforcement Policy, U.S. Department of the Treasury
Member countries of the Financial Action Task Force and similar regional groups have achieved good international cooperation, but
they need to do much more.
MONEY LAUNDERING ENFORCEMENT: FOLLOWING THE MONEY
By Lester M. Joseph, Assistant Chief, Asset Forfeiture and Money Laundering Section, U.S. Department of Justice
Just as often as U.S. law enforcement agencies succeed in frustrating money laundering schemes, they are frustrated by the
complexities of foreign jurisdictions and outright lack of foreign cooperation.
ACHIEVING A SUSTAINED RESPONSE TO MONEY LAUNDERING
By Steven L. Peterson, Acting Office Director, Crime Programs, Bureau of International Narcotics and Law Enforcement, U.S.
Department of State
To attack money laundering a national government needs to have legal, financial, and law enforcement infrastructure in place.
Several U.S. government agencies provide training to foreign governments for building this infrastructure.
COMMENTARY
UNDERSTANDING THE WASH CYCLE
By Paul Bauer, Economic Adviser, and Rhoda Ullmann, Research Assistant, Federal Reserve Bank of Cleveland
Laundering entails three basic steps to blend dirty money in with trillions of dollars exchanged in legitimate business activity. A
number of U.S. laws require banks and bank regulators to interrupt these schemes.
U.S. BANKING: AN INDUSTRY'S VIEW ON MONEY LAUNDERING
By Anne T. Vitale, Esq.
U.S. banks conduct vigorous programs to prevent money-laundering abuse of their business. Most important for the success of such
programs is the demonstration of commitment from senior management.
CORRESPONDENT BANKING: A GATEWAY FOR MONEY LAUNDERING
By Linda Gustitus, Elise Bean, and Robert Roach, Democratic Staff, Permanent Subcommittee on Investigations, Committee on
Governmental Affairs, U.S. Senate
By allowing high-risk foreign banks and their criminal clients access to correspondent bank accounts, U.S. banks are facilitating crime
and undermining the U.S. financial system.
FACTS AND FIGURES
THE FINANCIAL ACTION TASK FORCE ON MONEY LAUNDERING
MONEY LAUNDERING COMPARATIVE TABLE OF COUNTRIES/JURISDICTIONS OF CONCERN
INFORMATION RESOURCES
KEY CONTACTS AND INTERNET SITES
ADDITIONAL READINGS ON MONEY LAUNDERING
The International Money Laundering Information Network (IMoLIN), an Internet-based network assisting governments,
organizations and individuals in the fight against money laundering. IMoLIN has been developed with the cooperation of the world's
leading anti-money laundering organizations . Included herein is a database on legislation and regulation throughout the world
(AMLID), an electronic library, and a calendar of events in the anti-money laundering field. Please be advised that certain aspects of
IMoLIN are secured and therefore not available for public use.
organizations and individuals in the fight against money laundering. IMoLIN has been developed with the cooperation of the world's
leading anti-money laundering organizations . Included herein is a database on legislation and regulation throughout the world
(AMLID), an electronic library, and a calendar of events in the anti-money laundering field. Please be advised that certain aspects of
IMoLIN are secured and therefore not available for public use.
The International Money Laundering Information Network (IMoLIN), a one-stop AML/CFT research resource, was established
in 1998 by the United Nations on behalf of a partnership of international organizations involved in anti-money laundering. The
Anti-Money Laundering Unit (AMLU) of the United Nations Office on Drugs and Crime (UNODC) now administers and maintains
IMoLIN on behalf of the Asia Pacific Group on Money Laundering (APG), the Caribbean Financial Action Task Force (CFATF),
Commonwealth Secretariat, the Council of Europe - MONEYVAL, the Eastern and Southern Africa Anti-Money Laundering Group
(ESAAMLG), the EuroAsian Group (EAG), the Financial Action Task Force (FATF), Financial Action Task Force on Money
Laundering in South America (GAFISUD), Interpol, and the Organization of American States (OAS/CICAD). In the first half of 2004,
AMLU relaunched IMoLIN, after completing an extensive renovation of the site's 'look and feel' and its content, in collaboration with
UNODC's IT Section.
This multi-faceted website serves the global anti-money laundering community by providing information about national money
laundering laws and regulations and contacts for inter-country assistance. Inter alia, it identifies areas for improvement in domestic
laws, countermeasures and international co-operation. Policy practitioners, lawyers and law enforcement officers all regularly use
IMoLIN as a key reference point in their daily work. The information on IMoLIN is freely available to all Internet users, with the
exception of AMLID, which is a secure database.
The key features of the IMoLIN system are:
--the Anti-Money Laundering International Database (AMLID) , a compendium of analyses of anti-money laundering laws and
regulations, including two general classes of money laundering control measures (domestic laws and international cooperation) as
well as information about national contacts and authorities. AMLID is a secure, multi-lingual database and is an important reference
tool for law enforcement officers involved in cross-jurisdictional work. The AMLID questionnaire was updated to reflect new money
laundering trends and standards, and takes into account provisions related to terrorist financing and other current standards, such
as the revised FATF 40 + 9 Recommendations. In addition, the revised AMLID questionnaire now includes a Conventions
Framework section. This new section gives an overview of the status of a country or territory to the international conventions
applicable to anti-money laundering/countering the financing of terrorism (AML/CFT) as well as the status of a country or territory to
bi-lateral/multi-lateral treaties or agreements on mutual legal assistance in criminal matters and extradition. In April 2005, AMLU
initiated the second round of analysis utilizing the recently revised questionnaire and on 27 February 2006, UNODC launched the
AMLID 2nd Round of Legal Analysis;
--the reference section that contains details of the UN's latest research, abstracts of the best new research from governments and
international organizations and a bibliography;
--a click-on map that takes users to regional lists of national legislation .Eventually, this section will contain the full text or links to the
full text of all national anti-money laundering/countering the financing of terrorism (AML/CFT) legislation and regulations throughout
the world. The database now contains legislation from some 163 jurisdictions and, since January 2005, more than 250
new/amended AML/CFT legislation and regulations were collected to be included in the database;
--International Norms and Standards: model laws for common law and civil law systems, standards, conventions and legal instruments
;
--a worldwide calendar of events that lists current training events and conferences at national, regional and international level; and,
--a links section that includes links to the websites of related regional organizations active in the field of AML/CFT and financial
intelligence units ( FIUs ).
in 1998 by the United Nations on behalf of a partnership of international organizations involved in anti-money laundering. The
Anti-Money Laundering Unit (AMLU) of the United Nations Office on Drugs and Crime (UNODC) now administers and maintains
IMoLIN on behalf of the Asia Pacific Group on Money Laundering (APG), the Caribbean Financial Action Task Force (CFATF),
Commonwealth Secretariat, the Council of Europe - MONEYVAL, the Eastern and Southern Africa Anti-Money Laundering Group
(ESAAMLG), the EuroAsian Group (EAG), the Financial Action Task Force (FATF), Financial Action Task Force on Money
Laundering in South America (GAFISUD), Interpol, and the Organization of American States (OAS/CICAD). In the first half of 2004,
AMLU relaunched IMoLIN, after completing an extensive renovation of the site's 'look and feel' and its content, in collaboration with
UNODC's IT Section.
This multi-faceted website serves the global anti-money laundering community by providing information about national money
laundering laws and regulations and contacts for inter-country assistance. Inter alia, it identifies areas for improvement in domestic
laws, countermeasures and international co-operation. Policy practitioners, lawyers and law enforcement officers all regularly use
IMoLIN as a key reference point in their daily work. The information on IMoLIN is freely available to all Internet users, with the
exception of AMLID, which is a secure database.
The key features of the IMoLIN system are:
--the Anti-Money Laundering International Database (AMLID) , a compendium of analyses of anti-money laundering laws and
regulations, including two general classes of money laundering control measures (domestic laws and international cooperation) as
well as information about national contacts and authorities. AMLID is a secure, multi-lingual database and is an important reference
tool for law enforcement officers involved in cross-jurisdictional work. The AMLID questionnaire was updated to reflect new money
laundering trends and standards, and takes into account provisions related to terrorist financing and other current standards, such
as the revised FATF 40 + 9 Recommendations. In addition, the revised AMLID questionnaire now includes a Conventions
Framework section. This new section gives an overview of the status of a country or territory to the international conventions
applicable to anti-money laundering/countering the financing of terrorism (AML/CFT) as well as the status of a country or territory to
bi-lateral/multi-lateral treaties or agreements on mutual legal assistance in criminal matters and extradition. In April 2005, AMLU
initiated the second round of analysis utilizing the recently revised questionnaire and on 27 February 2006, UNODC launched the
AMLID 2nd Round of Legal Analysis;
--the reference section that contains details of the UN's latest research, abstracts of the best new research from governments and
international organizations and a bibliography;
--a click-on map that takes users to regional lists of national legislation .Eventually, this section will contain the full text or links to the
full text of all national anti-money laundering/countering the financing of terrorism (AML/CFT) legislation and regulations throughout
the world. The database now contains legislation from some 163 jurisdictions and, since January 2005, more than 250
new/amended AML/CFT legislation and regulations were collected to be included in the database;
--International Norms and Standards: model laws for common law and civil law systems, standards, conventions and legal instruments
;
--a worldwide calendar of events that lists current training events and conferences at national, regional and international level; and,
--a links section that includes links to the websites of related regional organizations active in the field of AML/CFT and financial
intelligence units ( FIUs ).
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