Issues Regarding the Task Force

Money Laundering

Action Item: Require that predicate offenses for a money laundering charge are harmonized at the most restrictive level and codified.

Background: Under current U.S. law it is legal for American banks to accept the proceeds resulting from handling stolen property, customs crimes, counterfeiting, and trafficking in stolen property when those crimes occur outside US borders. American banks are also permitted to accept deposits that are derived from sex and arms trafficking, racketeering and dozens of other crimes that, if they were committed in the U.S., would be predicate crimes for a money laundering offense. Indeed, the United States was found partially non-compliant with international anti money laundering standards in the most recent Financial Action Task Force peer review.

While predicate crimes for a money laundering charge — when the crime is committed outside a nation’s borders — are more restrictive in European nations they are by no means universal. Corrupt officials, criminals, tax evaders and terrorist organizations can easily transmit the proceeds of illegal activity to the safety of the western banking system by simply conducting legal arbitrage.

It is estimated that some $900 billion in illicit funds are funneled out of developing countries each year. This depletion of capital undermines the ability of poor countries to build their economies and become productive and vibrant participants in the world economy. Porous anti-money laundering regimes in countries where illicit funds are most likely laundered contribute to illicit flows.

Taking this step will be an important contribution to the growing debate on the degree to which money obtained from crime is permitted to cross international boarders and enter the banking systems of OECD countries.

G-20 Jurisdiction: Working Group 1 (Enhancing sound regulation and strengthening transparency) and Working Group 2 (Reinforcing international cooperation and promoting integrity in financial markets).

Executing Authority: Financial Action Task Force.

Benefit: Requiring that predicate offenses for a money laundering charge are harmonized and codified within the OECD will create a bolstered defense against money laundering. The ultimate goal is to see that best practices are embraced by nations that have relatively weak anti-money laundering regimes and that a universal set of standards is adopted by all OECD countries to curb the flow of illicit capital.

Money Laundering in the News

July 13, 2011

Senators Introduce Bill to Stop Offshore Tax Havens

WASHINGTON, DC – Sen. Carl Levin, D-Mich., and several other senators have introduced a bill to close offshore tax loopholes and strengthen offshore tax enforcement.

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June 8, 2011

More Asset Searches Lead to ‘Front Men’

WASHINGTON – A recent spate of legal cases offers a preview of how anticorruption officials could pursue ill-gotten assets of toppled leaders in places like Egypt and Tunisia: Increasingly, prosecutors are going after not only corrupt politicians, but the lawyers and other professionals who may have helped them move cash.

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June 8, 2011

Anti-Money Laundering Risk Revolution Planned by Government

LONDON – The government is proposing to scrap more than two dozen criminal penalties underlying anti-money laundering procedures to encourage business to adopt a risk-based approach.

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April 3, 2011

How a big US bank laundered billions from Mexico’s murderous drug gangs

As the violence spread, billions of dollars of cartel cash began to seep into the global financial system. But a special investigation by the Observer reveals how the increasingly frantic warnings of one London whistleblower were ignored

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April 1, 2011

Vatican anti-money laundering law goes into effect; people bringing $14K inside must declare

VATICAN CITY — The Vatican issued a new rule Friday requiring anyone bringing €10,000 ($14,000) or more into Vatican City to declare it, the latest initiative by the Holy See to come into compliance with international finance norms.

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