Unknowns and LBA Priorities | Thomas Renard




Donald Rumsfeld passed away yesterday. When the definitive story of the 21st century is written, no man can play a more central role than Rumsfeld. The reason? He led America in its disastrous war in Iraq. Not only was the basis of the war an outright lie that Saddam Hussein possessed weapons of mass destruction, but the tactics used during the war and during the peace seriously damaged any hope for a long-term solution. Of course, there have been over 4,000 American war dead and 22,000 injured as well and the cost of over $ 1.92 trillion.

What were the direct results of the invasion of Iraq? Several come to mind; the loss of American prestige in the world, the inability to subdue the Taliban in neighboring Afghanistan, the loss of life for all involved, the unwarranted cost that led to the 2007-08 financial crisis and the destabilization of the whole region. Rumsfeld is the only US Secretary of Defense to have served two non-continuous terms under two different presidents. According to his New York Times (NYT) obituary, “1975 to 1977 under President Ford and 2001 to 2006 under President Bush. He was also the youngest, at 43, and the oldest, at 74, to hold the post ”. He resigned in disgrace in 2006, sullying what had been an exemplary career in public service until he led the United States to invade Iraq. As his obituary states, military experts “blamed his handling of the Iraq war, held him accountable for the mistreatment of prisoners and said he had alienated his colleagues and the public with his imperious style.” . Its epithet could well be the phrase “known unknowns” – or as he explained “things you think you know, that it turns out you don’t know”. It turns out there was a lot that Rumsfeld didn’t know.

I use that last sentence to introduce today’s topic of the Financial Crimes Enforcement Network (FinCEN) show, according to its Press release, “The top government-wide priorities for anti-money laundering and the financing of terrorism (AML / CFT) policy (the“ priorities ”)… The priorities identify and describe AML / CFT threats most important facing the United States today. “

Dylan Tokar said in the the Wall Street newspaper“The US Treasury Department on Wednesday released a set of national anti-money laundering priorities, citing corruption and cybercrime as areas where financial institutions should focus their compliance resources.” Yet I also see broader implications for non-financial institutions. FinCEN also issued two statements to provide guidance to the institutions covered on how to approach the priorities. The first is the Declaration on the issuance of national priorities for the fight against money laundering / the financing of terrorism (AML / CFT) (the “Declaration”) and the second is the National priorities in the fight against money laundering and the financing of terrorism (the priorities). They are both very important to the compliance professional.

According to the Priorities, they are, “in no particular order: (1) corruption; (2) cybercrime, including relevant cybersecurity and virtual currency considerations; (3) the financing of foreign and domestic terrorism; (4) fraud; (5) activity of transnational criminal organization; (6) activity of organizing drug trafficking; (7) trafficking in human beings and trafficking in human beings; and (8) proliferation financing. The establishment of these priorities is intended to assist all covered institutions in their efforts to meet their obligations under laws and regulations aimed at combating money laundering and terrorist financing. For US public companies, this means that the standards that currently apply or could apply to financial institutions will now be applied to non-financial institutions. You should be prepared to answer questions about your future compliance program for each of them. The Priorities set them out in more detail as follows.

  • Corruption. This priority builds on the National Security Study Memorandum released by President Biden on June 3, 2021, as corruption fuels instability and conflict and undermines economic growth, reducing global gross domestic product from 2 to 5%. In addition, “corruption undermines democratic institutions and underlies many global challenges of our time, including serious human rights violations, and has a disproportionate impact on the poor and most vulnerable. For all of these reasons, fighting corruption is a fundamental US national security interest. Tackling the money laundering risks associated with such corruption will strengthen anti-corruption efforts.
  • Cybercriminality. This priority is “broadly defined as any illegal activity involving a computer, other digital device or a computer network. Cybercrime includes common cybersecurity threats such as social engineering, software vulnerability exploits, and network attacks. Cybercrime is a significant illicit financial threat: the size, scope, speed, and accessibility of the U.S. financial system make covered institutions attractive targets for criminals, including terrorists and state actors. Here, “The Treasury is particularly concerned about financial crime linked to cybercrime, ransomware attacks and the misuse of virtual assets which exploit and undermine their innovative potential, including through the laundering of illicit proceeds “.
  • Financing of foreign and domestic terrorism. This priority includes both international and domestic terrorists. Both groups of groups focus “on accessible targets such as civilians, law enforcement and military, symbols or members of the US government, places of worship, shops and mass public gatherings. “. Their selection of these types of targets, in addition to the insular nature of “radicalization and mobilization to violence and their limited discussions with others, challenges law enforcement to detect and disrupt activity. EVDs before they happen ”.
  • Fraud. This priority states that “the crimes that generate the bulk of illicit proceeds in the United States are fraud, drug trafficking, human trafficking, human trafficking, organized crime and corruption. Of these, fraud – such as banking, consumer, healthcare, securities and investment fraud, and tax evasion – is believed to generate the largest share of illicit proceeds in the United States … Proceeds from fraudulent activities can be laundered through a variety of methods, including transfers through offshore legal entity accounts, accounts controlled by cyber actors, and money mules. “
  • Transnational criminal organization activity. This priority notes that “transnational criminal organizations operating in the United States, including drug trafficking organizations, are priority threats due to the link between crime and terrorism and their involvement in a wide range of illicit activities, including cybercrime, drug trafficking, fraud, wildlife trafficking. , human trafficking, human trafficking, theft of intellectual property, arms trafficking and corruption. The Treasury noted that a number of these groups operate in the United States and that Mexican and Russian TCOs operating in the United States remain priority threats. “
  • Organizing drug trafficking activity. This priority states that “illicit drugs continue to generate significant revenues for drug trafficking organizations… There has been a substantial increase in complex programs aimed at laundering the proceeds of the sale of narcotics by facilitating the exchange of drug products. cash from Mexican drug trafficking organizations to Chinese citizens residing in the United States, including the use of shell companies or couriers to deposit money from the sale of narcotics into the banking system. These programs allow drug trafficking organizations to repatriate proceeds to Mexico and bypass Chinese capital flight restrictions. “
  • Human trafficking and smuggling. Under this priority, “financial activities arising from human trafficking and smuggling may intersect with the formal financial system at any time during the process of trafficking or smuggling. “In addition,” human trafficking and smuggling networks use various mechanisms to move illicit proceeds, ranging from smuggling money by individual victims to sophisticated operations of smuggling money through networks. money laundering professionals and criminal organizations. Illicit proceeds from human trafficking may include income associated with logistics, such as accommodation and transport for victims, as well as income from exploitation of victims.
  • Financing proliferation. This priority says that “the main threat to proliferation funding comes from proliferation support networks. These networks of individuals and entities, such as commercial brokers and shell companies, seek to exploit the US financial system. “

The importance of these priorities to the compliance professional cannot be overstated. As the US government now identifies corruption as a national security issue, it will vigorously prosecute US companies that engage in bribery and corruption in violation of laws such as the Foreign Corrupt Practices Act (FCPA). But the work of the US government will be broader than just the FCPA to fight corruption. Every public and private non-financial institution in the United States should be prepared to put in place compliance programs for each of these priorities.

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