U.S. Department of State
1996 International Narcotics Control Strategy Report, March 1997

United States Department of State

Bureau for International Narcotics and Law Enforcement Affairs

FINANCIAL CRIMES AND MONEY LAUNDERING

THE YEAR IN REVIEW

There were a number of significant developments in the money laundering sphere in 1996:

United States agencies began implementing the Presidential Decision Directive announced in October 1995. US agencies drew upon numerous data sources, including the INCSR, reports from investigative and regulatory agencies, and from posts abroad, to assess which money laundering and/or financial crime situations affected US national security interests -- including drug trafficking but also contraband smuggling, arms sales, terrorist financing, sanctions violations and sales of weapons of mass destruction. Where deemed necessary, teams of US officials visited governments to secure agreements on actions to be taken.

There was demonstrable progress by several Western Hemisphere governments on actions taken in accord with the agreements on standards and objectives reached through the communique issued at the conclusion of the Summit of the Americas Ministerial Conference on Money Laundering in December 1995, which established an action plan for the 34 governments of this Hemisphere.

There has been continued progress by the Financial Action Task Force (FATF), including the beginning of the second round of mutual evaluations of each of its 26 members. FATF also demonstrated the political will to admonish its own members for shortcomings, notably Turkey and Greece. FATF also approved proposals to update its universally-accepted 40 recommendations to reflect new typologies and methodologies. In addition, evaluations of members of the Caribbean FATF were begun; there was further enhancement of the Asian outreach program; a common forum for major international bankers and government policy makers was organized; and an international conference of financial intelligence units in 1995 led to the establishment of a significant number of such units around the world in 1996.

In 1997, a potentially high-impact initiative external relations program begun by FATF in 1992-93 resulted in agreements with the Council of Europe, the Offshore Group of Banking Supervisors, as well as the CFATF, to secure evaluation by outside experts of many of the governments which FATF and these other groups had worked with to determine whether the majority of financial center countries were adhering to the international consensus on money laundering laws.

The year saw increased cooperation with foreign governments on major money laundering cases; as well as an increase in asset sharing with cooperative governments and an increase in the number of governments with whom the US has mutual legal assistance agreements.

As in 1995, additional financial center governments, adopted broad, new anti-money laundering policies and/or laws, while a number of governments were in the final stages of presenting/adopting new legislation.

However, as discussed more fully in the section on New Concerns, there were negative aspects to 1996, including the further penetration of financial systems around the world by organized crime groups; the use of new drug transit routes across ever more remote countries, most of which have no or few anti-money laundering laws, which may attract crime proceeds to still more easily-manipulated financial systems; the differential between the levels of compliance with international anti-money laundering standards by Asia's rapidly expanding financial centers in non-FATF member countries, as well as in Latin America, compared to the financial centers in the USA, Canada and Western Europe; and the near-polarity of interests by banking/industrial groups and criminal money laundering groups in achieving the fastest possible system for the international transfers of payments.