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 16, 2010
WASHINGTON (Reuters) – A U.S. grand jury indicted on Thursday a Swiss lawyer accused of aiding a man identified as having an account at London-based HSBC Holdings Plc (HSBA.L) evade taxes, the latest in a widening probe into foreign banks that might have helped U.S. clients avoid paying tax.
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May 10, 2010
WASHINGTON – The former ABN AMRO Bank N.V., now named the Royal Bank of Scotland N.V., has agreed to forfeit $500 million to the United States in connection with a conspiracy to defraud the United States, to violate the International Emergency Economic Powers Act (IEEPA) and to violate the Trading with the Enemy Act (TWEA), as well as a violation of the Bank Secrecy Act (BSA), announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Ronald C. Machen Jr., for the District of Columbia.
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May 6, 2010
WASHINGTON – The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today designated Colombian money launderers Maria Mercedes Jimenez Urrego and Jorge Enrique Jimenez Urrego as drug kingpins due to their significant roles in international narcotics trafficking on behalf of drug trafficking organizations, including the Fuerzas Armadas Revolucionarias de Colombia (FARC). OFAC also today named 17 other individuals and 12 entities as Specially Designated Narcotics Traffickers (SDNTs). Today’s action, OFAC’s 13th against the FARC and its support networks, was taken pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act), which prohibits U.S. persons from conducting financial or commercial transactions with these individuals and entities, and freezes any assets the designees may have under U.S. jurisdiction.
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May 4, 2010
U.S. DOJ–A federal court in Jackson, Miss., has ruled in favor of the United States involving a businessman’s attempt to use a KPMG- marketed tax shelter to avoid paying income tax on approximately $18 million in capital gains. According to the opinion, in 2001, J. Kelley Williams of Jackson became aware that he would have $18 million in capital gains from one of his investments. His KPMG accountant suggested that he use a marketed tax shelter strategy by the name of “Family Office Customized” or “FOCUS” to avoid paying tax on that gain. The tax shelter involved a series of preplanned steps using foreign currency straddles and a three-tiered partnership structure to create sham losses.
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