Money laundering is the process by which the proceeds of
crime are transferred through the financial system to conceal
their illicit origins and make the illegal profits appear to be legitimate funds. The laundering of these illicit assets is routinely linked to criminal acts that generate significant proceeds, such as drug trafficking, extortion, prostitution, and
people smuggling. Additionally, white-collar crimes, such as
fraud, insider trading, and tax evasion, are frequently associated with laundering schemes. In recent years, considerable
attention has also been devoted to deterring terrorist groups
from laundering illicit profits through banking and nonbanking institutions. Each of these groups has utilized financial institutions in the United States to launder illicit assets
and fund future criminal or terrorist acts. Moreover, the immense sum of illicit money laundered through U.S. financial
institutions, more than $100 billion annually, has the potential to damage the reputation of individual financial sectors,
such as the banking industry or brokerage houses, that depend upon the perception that financial transactions are conducted under the highest legal and ethical standards. Money
launderers also negatively affect communities by reducing tax
revenues, competing unfairly with legitimate businesses, and
diminishing the amount of funds devoted to economic development and social programs.
The Laundry Cycle
The conversion of illicit assets into seemingly legitimate funds
is known as the laundry cycle. The laundry cycle consists of
three distinct stages: (1) placement, the process of introducing
the illegal assets into the financial system through a series of
transactions, including deposits and wire transfers; (2) layering, the process of engaging in a series of conversions or
movements to distance the funds from their illicit origins; and
(3) integration, by which, after successfully completing the
placement and layering of illicit assets, the funds are reintroduced as legitimate earnings. Each stage may involve single or
multiple transactions. The most common technique for laundering illicit profits is a process known as “smurfing,” which
entails the structured placement of illicit funds into financial
institutions in amounts that are below the threshold levels for
recognizing suspicious or unusual deposits. Other widespread
forms of laundering include cross-border currency smuggling
and the funneling of illicit profits through loosely regulated
casinos. Money is also routinely laundered through brokerage
houses, jewelry dealers, automobile dealerships, and insurance
companies. Once the money is laundered, the assets are typically used to fund future criminal acts or purchase real estate,
luxury goods, and legitimate businesses.
Laundering Illicit Funds in the United States
The placement of illegal profits in legitimate ventures dates to
the beginning of the Republic, when individuals used illicit
earnings to purchase real estate, livestock, or high-priced
goods. Until the early twentieth century, enforcement efforts
were largely directed at traditional criminal offenses, such as
smuggling and theft, that generated modest amounts of illicit
income; little attention was devoted to the funds generated
from criminal acts. Although the eighteenth and nineteenth
centuries were replete with examples of schemes to place
criminal assets in U.S. financial institutions, no legislation
was passed to combat financial crimes, and the funds were
usually kept in banks and later reinvested in the economy
without fear of confiscation. This situation changed during
the Prohibition era, when law enforcement agencies showed
a growing concern over the immense sums of illegal assets
that funded sophisticated criminal enterprises. Throughout
the 1920s and 1930s, organized criminal groups led by crime
bosses, such as Mayer Lansky and Al Capone, routinely
avoided paying income taxes by investing illegal profits in legitimate businesses. The illicit profits earned through prostitution, drug trafficking, and the production and distribution
of alcohol were invested in legitimate, cash-based businesses,
such as clothes laundries and restaurants. Thus, the illicit
earnings were commingled with the licit revenues received
from seemingly legitimate businesses. The first known usage
of the expression money laundering by American enforcement and regulatory agencies occurred during the Watergate
scandal in the 1970s, but money laundering was not criminalized in the United States until the passage of the Money
Laundering Control Act of 1986.
Early Efforts to Combat Money Laundering
The continued growth of organized crime in the United
States throughout the twentieth century demanded action
from the U.S. government. In an effort to tackle the rising
number of criminal gangs, including East Coast mob families, Congress passed three pieces of legislation from the mid-
1950s until the early 1960s to combat illicit finance schemes.
The first was the Laundering of Monetary Instruments Act of
1956. This law criminalized the act of knowingly transferring
unlawfully obtained assets through financial institutions; further, the act of concealing or disguising the source or ownership of illicit funds also became a crime. One year later, Congress passed the Monetary Transactions in Property Derived
from Specified Unlawful Activity Act of 1957, which established penalties for “attempts to engage in a monetary transaction in criminally derived property that is of a value greater
than $10,000.” The law also set penalties for violating the
statute: For funneling illicit proceeds through financial institutions, these penalties included (1) a fine of $500,000 or imprisonment for up to ten years, or (2) a fine and imprisonment. The third major piece of legislation to combat money
laundering was the Prohibition of Unlicensed Money Transmitting Businesses Act of 1960; it would be the last measure
of its type enacted for a decade. This law was designed to assure oversight of the numerous money transmitter businesses
in the United States, including many that failed to register
with state governments. The act mandated registration but
did not address other regulatory issues, such as recordkeeping requirements. Ultimately, it had little effect because
prosecutors had to prove the defendant knew that the money
transmitter was unlicensed, that state law required a license,
and that the operation of an unlicensed business was a criminal offense.
The U.S. Response to the Narcotics-Trafficking Boom
The first major effort by the United States to curtail the
laundering of illicit assets occurred in 1970 with the passage
of the Bank Secrecy Act (BSA). The BSA was enacted for two
reasons: first, to improve detection and investigation of tax
violations, including white-collar crimes, and second, to respond to reports that organized criminal groups that oversaw lucrative narcotics-trafficking routes were transporting
large amounts of currency across U.S. borders. In an effort to
curtail bulk cash smuggling, the BSA was designed to create
a paper trail for large currency transactions and establish
stringent regulatory reporting standards. Most important,
the law directed financial institutions to introduce recordkeeping requirements. And through the new currency transaction report (CTR) regime, the statute required such institutions to notify the Internal Revenue Service of any
individual who withdrew or deposited more than $10,000 in
a single day.
Soon after the passage of the BSA, the momentum to combat illicit finance schemes waned. The Watergate scandal,
economic concerns, and the growing enmity between the
United States and the Soviet Union effectively overshadowed
additional efforts against money laundering for more than a
decade. However, by the mid-1980s, the substantial rise in
narcotics trafficking caused immense concern over the
mounting number of illicit finance schemes and resulted in a
sustained effort by Congress to construct a comprehensive
regime to tackle money laundering. With the introduction of
the Money Laundering Control Act of 1986 (MLCA) as a part
of the Anti–Drug Abuse Act of 1986, Congress enacted
sweeping changes to curtail the structured deposits, or
smurfing, of illicit assets. Most important, the legislation
criminalized money laundering and established three new
criminal offenses for money-laundering activities through
banking or nonbanking institutions. The new offenses included knowingly helping to launder money from a criminal
activity, engaging in a transaction of more than $10,000 that
involved property from a criminal activity, and structuring
transactions to avoid BSA reporting. Moreover, the statute established strict penalties for convicted launderers, including
imprisonment for a maximum of 20 years and fines up to
$500,000 or two times the amount laundered. The law also
granted the Internal Revenue Service the power to seize property involved in the breach of money-laundering laws. Finally, the legislation bolstered regulatory and enforcement efforts by mandating the reporting of suspicious or unusual
transactions through the submission of a suspicious activity
report (SAR). The form was designed to specifically report
instances of structured deposits in U.S. financial institutions.
The MLCA was the first important statute passed to combat money laundering in over a decade. The new legislation,
however, lacked instruments to promote international cooperation in the fight against money laundering. After a debate
on the deficiencies of the MLCA, Congress passed the
Anti–Drug Abuse Act of 1988, which reinforced efforts to
fight money laundering in several ways, especially through
the establishment of channels to facilitate cooperation with
foreign regulatory and enforcement agencies. The statute
granted the Department of the Treasury the right to negotiate bilateral international agreements to promote the exchange of information related to illicit finance schemes. The
new law also significantly increased civil, criminal, and forfeiture sanctions for laundering crimes, and it authorized the
forfeiture of “any property, real or personal, involved in a
transaction or attempted transaction in violation of laws.”
Additionally, the legislation increased the criminal penalty
for tax evasion when the funds at issue were connected with
criminal activity.
The growing narcotics trade in the Americas and Asia in
the 1980s demonstrated that crime had become global, and
criminal groups were routinely utilizing rapid advances in
technology and the globalization of the financial services industry to launder illicit assets. Changes in banking activities
necessitated increased cooperation between the United States
and foreign jurisdictions in order to monitor illegal cash
flows. The Crime Control Act, which was passed by Congress
in 1990, enhanced enforcement efforts by permitting federal
banking agencies (such as the Federal Reserve Board and the
Federal Deposit Insurance Corporation) to request the assistance of a foreign banking authority in conducting any investigation, examination, or enforcement action. The United
States also signed a large number of mutual legal assistance
treaties (MLATs), which are negotiated by the Department of
State in cooperation with the Department of Justice to facilitate cooperation in criminal matters, including money laundering and asset forfeiture. The MLATs are designed to promote the exchange of evidence and information in criminal
matters and are extremely useful as a means of obtaining
banking and other financial records. International assistance
was further extended with the passage of the Federal Deposit
Insurance Corporation Improvement Act of 1991, which permitted U.S. authorities to disclose information obtained in
the course of exercising their supervisory or examination authority to foreign bank regulatory officials.
International cooperation has been strongly promoted at
all levels of the U.S. government, and the United States has
often taken a leadership role in international efforts devoted
to combating money laundering. For example, the United
States is a signatory to the 1988 UN Convention against Illicit
Traffic in Narcotic Drugs and Psychotropic Substances (Vienna Convention), which calls on nations to criminalize
money laundering; assure that bank secrecy is not a barrier to
criminal investigations; and promote the removal of legislative impediments to investigation, prosecution, and international cooperation. The United States is also a member of the
Financial Aid Task Force (FATF), which was created at the
economic summit of the major industrialized countries in
1989. The FATF is an intergovernmental body that develops
and promotes national legislative and regulatory reforms to
combat money laundering. Composed of representatives
from 29 countries, the FATF has compiled and issued 40 recommendations to assist states in tackling money-laundering
schemes, specifically addressing record-keeping requirements, the mandatory reporting of suspicious or large financial transactions, the identification of beneficial ownership,
and the elimination of anonymous accounts. The United
States has also promoted the need for conventions and declarations designed to unite the global financial centers in the
fight against laundering schemes. As a result, U.S. financial
institutions adhere to the nonbinding 1988 Basil Declaration,
which encourages all banks to ensure that persons conducting business with their institutions are properly identified, illicit transactions are discouraged, and cooperation with law
enforcement agencies in financial investigations is achieved
with alacrity.
The U.S. Response to the BCCI Scandal
Domestic efforts to assure adequate oversight of U.S. financial transactions were proven to be largely inadequate with
the uncovering of the Bank of Credit and Commerce International (BCCI) scandal in 1991. BCCI was a Pakistanimanaged, Middle East–financed international private bank
with branches in over 70 countries, including the United
States, and assets of over $20 billion. Investigators were
shocked at the number of jurisdictions involved in the scandal (the United States among them) and the secrecy provisions that permitted BCCI to conduct a series of criminal acts
and funnel illicit profits through front companies in the Cayman Islands to U.S. and European banks. In response to the
BCCI revelations, Congress passed the Housing and Community Development Act of 1992, often referred to as the
Annunzio-Wylie Anti–Money Laundering Act. This statute
requires financial institutions and their employees to report
any suspicious transactions that may be relevant to a possible
violation of a law or regulation, and it specifically protects
those parties from any civil suits arising from the submission
of such reports. The legislation further mandates financial institutions to carry out programs to thwart money laundering
by addressing training and due diligence concerns, and it authorizes financial institutions to maintain stringent recordkeeping procedures. The statute also requires each financial
institution to designate a compliance officer and conduct
routine audits to assess the adequacy of in-house programs to
curb money laundering.
In addition, the statute strengthens penalties for depository institutions found guilty of money laundering. Under
the Annunzio-Wylie Anti–Money Laundering Act, the Federal Deposit Insurance Corporation and the Department of
the Treasury are granted the power to act as comptroller for
an insured depository institution that is found guilty of any
money-laundering offense or a criminal Bank Secrecy Act
violation. Upon receipt of written notification from the attorney general that a national bank or an agency of a foreign
bank has been found guilty of money laundering, a comptroller appointed by the U.S. government schedules a hearing to determine whether to revoke the bank’s charter. The
decision to terminate the charter is based on a set of factors,
including whether the senior executive officers had knowledge of the illicit activity and whether the bank had policies
and procedures in place to prevent money laundering; the
institution’s level of cooperation with agencies investigating
the alleged offense is also considered. Finally, to assure adequate cooperation between governmental agencies that investigate money-laundering offenses, the Annunzio-Wylie
Anti–Money Laundering Act established the BSA Advisory
Group, which includes representatives from the Treasury
and Justice Departments and the Office of National Drug
Control Policy, as well as other interested persons and financial institutions.
The last major statute on money laundering to be passed
before the turn of the century was the Money Laundering
Suppression Act of 1994. Until the passage of this measure,
criminals routinely utilized unregulated brokerage or securities firms to launder illicit assets. This act amended the BSA
by requiring nonbank financial institutions, such as brokerage firms, to submit to a series of reporting requirements.
These firms, however, remained loosely regulated and failed
to institute self-policing measures to combat moneylaundering schemes. As a result, organized criminal groups
continued to launder illicit proceeds until the passage of the
Money Laundering Abatement and Anti-Terrorist Financing
Act of 2001, which mandated stringent reporting requirements for security firms and brokerage houses.
The Criminal Response to U.S. Efforts to Combat
Money Laundering
In response to the nearly decade-long strengthening of the
U.S. financial sector, criminal groups devised a series of new
schemes to avoid increasingly rigorous reporting requirements. Instead of directly challenging the capabilities of U.S.
financial institutions in combating money laundering, criminal networks began to deposit illicit proceeds abroad and
transfer the assets to the United States through a series of wire
transfers. Especially problematic was their use of offshore financial centers, including a number of jurisdictions in the
Caribbean and South Pacific. These centers are composed of
institutions that restrict access to the offshore sector to nonresidents. Most of the offshore banking institutions lack
stringent regulatory regimes, and they provide clients with
anonymous accounts for the placement of assets. The offshore nonbanking institutions, such as insurance agencies
and security brokers, are particularly troubling because they
lack even the most rudimentary oversight mechanisms.
Throughout the 1990s, the offshore sector was a safe haven
for the deposit of criminal assets and a desirable location for
individuals determined to evade home-country tax regimes.
On countless occasions, funds from offshore zones were later
transferred through U.S. financial institutions.
Another means utilized throughout the 1990s to avoid
money-laundering oversight mechanisms was the highly successful Black Market Peso Exchange System (BMPE), a tradebased regime that depends on commercial traffic between the
United States and Colombia to launder profits from the sale
of illegal drugs in America. The process begins when a
Colombian drug organization sells narcotics in the United
States in exchange for U.S. currency. That currency is sold to
a Colombian black market peso broker’s agent in the United
States. Once the dollars are delivered to the U.S.-based agent,
the peso broker in Colombia deposits the agreed upon equivalent in Colombian pesos into the organization’s account in
Colombia. The Colombian broker now has a pool of laundered dollars to sell to Colombian importers. These importers then use the dollars to purchase goods, either from
the United States or from other markets, that are transported
to Colombia. Law enforcement agencies estimate that the
black market peso exchange launders between $3 billion and
$6 billion annually.
Another area of concern is the routine passage of illicit
funds through wire transfer services. The enormous volume
of financial transactions conducted through U.S. banking
and nonbanking institutions routinely facilitates moneylaundering schemes and hinders effective regulation of banking activities. Every day, in fact, the U.S. financial system
handles more than 700,000 wire transfers, valued at over
$2 trillion. Determining which of these transactions might be
related to money laundering creates an immense problem for
both private-sector institutions and law enforcement or regulatory agencies. The massive amount of funds transferred
through U.S. financial institutions provided a means to cloak
the transfer of billions of illicit dollars in the late 1990s via a
number of U.S. banks, including the Bank of New York. The
so-called Bank of New York scandal demonstrated that launderers could move tens of billions of dollars through a couple
of computers housed at an unregistered money-transmission
business that had full access to the Bank of New York’s international wire transfer services.
White-collar criminals also routinely use wire transfer
services provided by offshore financial institutions. After an
extensive investigation, the Federal Reserve and its chair, Alan
Greenspan, concluded that the offshore location of Long
Term Capital Management, a hedge fund based in the Cayman Islands, had prevented U.S. regulators from realizing
that the entity had accumulated leverage amounting to more
than $1 trillion and used U.S. banks to finance the huge risks
involved in the hedge fund. The collapse of Long Term Capital Management resulted in increased pressure on offshore
zones from U.S. regulatory bodies. Most of the jurisdictions
responded by increasing oversight of wire transfers to the
United States and other global financial centers.
With the increased attention on traditional banking
mechanisms such as wire transfers, the laundering of illicit
funds was expanded to nonregulated sectors throughout the
1990s. For instance, alternative remittance, or underground,
banking systems emerged as new means to avoid attracting
the attention of regulatory and law enforcement personnel in
the United States. The very nature of the alternative remittance system makes it extremely difficult to monitor and
track the flow of money. One example is the hawala system,
which, in its simplest form, consists of two persons in distant
locations communicating by phone, fax, or e-mail. No
money is exchanged between the hawala brokers themselves,
only between the brokers and the customers, and the broker
does not maintain records of the transactions. The
anonymity and secrecy of the remittance transactions facilitates the transfer of illicit funds linked to a variety of criminal activities, including money laundering, corruption of
government officials, and tax evasion. In 2001 the use of
hawala was linked by U.S. law enforcement agencies to a
number of terrorist financing schemes.
In an effort to curtail abuses of wire services and the offshore sector, black market peso schemes, and the rise of alternative remittance systems, the U.S. government initiated a
comprehensive plan to assure adequate oversight of U.S. institutions; it also devised long-range plans to combat the
growing number of illicit finance schemes. On October 15,
1998, Congress passed the Money Laundering and Financial
Crimes Strategy Act. The legislation called upon the president, acting in consultation with the secretary of the treasury
and the attorney general, to develop a national strategy for
combating money laundering and related financial crimes.
The first national strategy was to be sent to Congress in 1999
and updated annually.
The U.S. Response to International
Terrorism Financing
After the terrorist attacks on the United States on September
11, 2001, the government launched a series of significant initiatives to thwart money laundering and terrorist financing.
Like criminal networks, terrorist groups commingle illicit
revenues with legitimate funds drawn from the profits of
commercial enterprises, as well as charitable donations from
witting and unwitting sympathizers. Although tracking terrorist financial transactions is more difficult than following
the money trails of mainstream criminal groups, both terror-
448 Money Laundering
ists and conventional criminals use similar methods to launder assets through U.S. financial institutions.
In an effort to curtail terrorist finance passing through financial institutions located in the United States, President
George W. Bush signed into law on October 26, 2001, the
most significant financial crimes legislation since the Bank
Secrecy Act of 1970. The new statute, known as the Money
Laundering Abatement and Anti-Terrorist Financing Act of
2001, contains substantial amendments to previous moneylaundering laws. Notably, Title III of the new measure—the
United and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of
2001, commonly known as the Patriot Act—includes comprehensive regulatory and enforcement provisions that affect
the daily operations of U.S. banking and nonbanking financial institutions.
The legislation mandates that U.S. financial institutions establish programs to thwart money laundering, and it expands
the reporting of SARs to brokers and dealers and a number of
other financial sectors. The Patriot Act requires every financial
institution, including such previously unregulated sectors as
hedge funds and commercial loan and finance companies, to
maintain programs of this type. Some 25 different categories
of financial institutions are required to develop internal policies, procedures, and controls; designate compliance officers;
conduct ongoing employee training programs; and perform
independent audit functions to test programs. The measure
also sets toughened standards for due diligence and for customer identification and verification, mandating extremely
intrusive obligations to identify the ownership of institutions
and assets deemed to be high-risk. High-risk accounts and
transactions subject to enhanced due diligence include most
offshore banks (other than those in a group of jurisdictions
approved by the U.S. Federal Reserve); accounts involving foreign senior political figures, families, and friends; and private
banking accounts defined as accounts or sets of accounts involving $1 million or more managed on behalf of identifiable
individuals or groups of individuals.
Other salient provisions of Title III of the Patriot Act include:
• Section 311, which gives the United States the
authority to apply graduated, proportionate measures
against a foreign jurisdiction, foreign financial
institution, type of transaction, or account that the
secretary of the Treasury determines to be a “primary
money laundering concern.”
• Section 313, which generally prohibits U.S. financial
institutions from maintaining a correspondent
account in the United States for a foreign shell bank,
that is, a foreign bank that does not have a physical
presence in any country. The provision also generally
requires financial institutions to take reasonable steps
to ensure that foreign banks with correspondent
accounts do not use those accounts to indirectly
provide banking services to a foreign shell bank.
• Section 319, which allows the secretary of the treasury
or the attorney general to subpoena records of a
foreign bank that maintains a correspondent account
in the United States. The subpoena can request any
records relating to the account, including records
located in a foreign country that involve the deposit of
funds into the foreign bank.
• Section 359, which brings informal banking systems,
such as hawalas, under the Bank Secrecy Act.
• Section 362, which requires the secretary of the
Treasury to establish a secure network to (1) allow
financial institutions to file Bank Secrecy Act reports
electronically through the secure network, and (2)
provide financial institutions with alerts regarding
suspicious activities.
• Section 1006, which amends the Immigration and
Nationality Act to exclude aliens engaged in or
seeking to engage in money laundering as described
in U.S. law or those that aid, abet, assist, or collude in
such activity. This section also requires the secretary
of state to establish a watch list identifying persons
worldwide who are known for or suspected of money
laundering.
The United States also signed two important international
agreements after the September 11, 2001, attacks to assist in
the international effort to combat money-laundering offenses. In October 2001 the United States agreed to adhere to
the newly adopted UN Security Council Resolution 1373
(UNSCR 1373), a binding document that requires all UN
member states to:
• Criminalize the use or collection of funds intended or
known to be intended for terrorism;
• Immediately freeze funds, assets, or economic
resources of persons who commit, attempt to commit,
or facilitate terrorist acts and entities owned or
controlled by them;
• Prohibit nationals or persons within their territories
from aiding or providing any aid to persons and
entities involved in terrorism;
• Refrain from providing any form of support to
entities or persons involved in terrorism;
• Deny safe haven to (1) those who finance, plan,
support, or commit terrorist acts, and (2) individuals
who themselves provide safe havens for such persons.
Moreover, each UN member state is required to submit
progress reports, providing information as to how it has implemented UNSCR 1373.
In another effort to support the international fight against
financial crimes, the United States pledged to implement the
Eight Special FATF Recommendations to combat terrorist finance. The recommendations require FATF members to:
• Ratify and implement the 1999 UN International
Convention for the Suppression of the Financing of
Terrorism and UNSCR 1373.
• Criminalize the financing of terrorism, terrorist acts,
and terrorist organizations and ensure that such
Money Laundering 449
offenses are designated as money-laundering predicate
offenses.
• Implement measures to freeze, without delay, funds or
other assets of terrorists, those who finance terrorism,
and terrorist organizations in accordance with the UN
resolutions relating to the prevention and suppression
of the financing of terrorist acts.
• Subject financial institutions or other businesses or
entities to obligations designed to combat money
laundering.
• Offer another country, on the basis of a treaty,
arrangement, or other mechanism for mutual legal
assistance or information exchange, the greatest
possible measure of assistance in connection with
criminal, civil enforcement, and administrative
investigations, inquiries, and proceedings relating to
the financing of terrorism, terrorist acts, and terrorist
organizations.
• Take measures to ensure that persons or legal entities,
including agents, that provide a service for the
transmission of money or value, including
transmission through an informal money or value
transfer system or network, be licensed or registered
and subject to all the FATF recommendations that
apply to banks and nonbank financial institutions.
• Require financial institutions, including money
remitters, to include accurate and meaningful
originator information (name, address, and account
number) on funds transfers and related messages that
are sent. Further, the information should remain with
the transfer or related message through the payment
chain.
• Review the adequacy of laws and regulations that
relate to entities that can be abused for the financing
of terrorism. Nonprofit organizations are particularly
vulnerable, and countries should ensure that such
organizations could not be misused by terrorist
organizations posing as legitimate entities.
Conclusion
Generally, the U.S. provisions regarding money-laundering
offenses and forfeiture are sound and are actively used. After
the passage of a series of statutes in this regard, criminal networks increasingly relied on nonbanking institutions to launder illicit profits. The effectiveness of U.S. policy in establishing a regime to combat money laundering is evidenced by the
fact that fees charged by criminals to assist in moneylaundering schemes have risen dramatically since 1985. These
fees totaled 6 percent before 1986, but the increased risk involved with laundering illicit assets thereafter resulted in fees
of more than 25 percent. Nevertheless, launderers are employing increasingly sophisticated schemes to place criminal
assets in U.S. financial institutions. The immense size and sophistication of the financial service sector in the United States
continue to provide enormous opportunity for criminal and
terrorist groups to pass funds through U.S. banking and nonbanking institutions.
The attacks on the United States in September 2001 resulted in massive changes in terms of the efforts undertaken
to tackle the money-laundering problem. Investigations into
a number of terrorist acts have established a clear link between illicit finance schemes and the funding of attacks on
civilian populations across the globe. Consequently, the
United States strengthened legislation related to money laundering and increased the oversight of nonbanking institutions. Although the legislative amendments were initiated by
terrorist attacks in the United States, improved oversight of
U.S. financial institutions will also result in an increase in
asset seizures and arrests of individuals engaged in organized
criminal activity and white-collar crimes.
Since the mid-1950s, legislation has been designed to curtail criminal activities and assure U.S. citizens that domestic
financial transactions are based on the highest ethical standards. For the foreseeable future, legislative and law enforcement efforts will focus on the urgent need to prevent illicit
funds from entering the United States to underwrite attacks
on American citizens.
—Trifin J. Roule
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