December 2, 2022


What GAO Discovered

Federal businesses and others have reported that cash laundering methods utilized by transnational prison organizations and terrorist teams embrace subtle methods akin to phony commerce transactions or buy and resale of actual property or artwork. Such methods can contain the providers {of professional} cash laundering networks or service suppliers in reputable professions, akin to complicit attorneys or accountants. For instance, attorneys or accountants can create shell firms (entities with no enterprise operations) to assist criminals launder illicit proceeds. Transnational prison organizations and terrorist teams additionally proceed to smuggle money in bulk or transmit cash electronically throughout borders.

Federal efforts to fight trafficking and cash laundering incorporate a number of collaborative and information-sharing mechanisms and embrace the personal sector.

  • Legislation enforcement businesses collaborate by activity forces wherein they share info and analytical assets to assist within the investigation and prosecution of drug and different trafficking-related crimes.
  • Federal businesses share intelligence with international counterparts. For instance, the Monetary Crimes Enforcement Community (FinCEN), a bureau of the Division of the Treasury, shares info with greater than 160 worldwide monetary intelligence businesses.
  • FinCEN collaborates with regulation enforcement businesses to share info with monetary establishments on “pink flags” for trafficking, which establishments can use to establish and report suspicious transactions (see field beneath).
  • FinCEN additionally coordinates a voluntary program that permits monetary establishments to share info with each other to higher establish and report suspicious actions that could be associated to cash laundering or different illicit financing.

Examples of Human Trafficking “Crimson Flag” Indicators Offered to Monetary Establishments

  • Involvement of a 3rd get together who speaks for the client, insists on being current for transactions, or acts aggressively towards the client.
  • Frequent buyer transactions from totally different U.S. geographical areas.
  • Transactions which might be inconsistent with a buyer’s anticipated exercise.
  • Buyer accounts that share a phone quantity or different identifiers with escort company web sites or business intercourse commercials.
  • Frequent sending or receipt of funds by way of cryptocurrency to or from web addresses related to illicit exercise.

Supply: GAO evaluation of Monetary Crimes Enforcement Community info. | GAO-22-104807

These mechanisms assist deal with a number of the challenges concerned in combatting trafficking and cash laundering, which embrace the more and more subtle methods of prison and terrorist teams and the fragmentation of accountability for anti-trafficking efforts amongst many federal businesses.

Why GAO Did This Examine

FinCEN recognized trafficking exercise of transnational prison organizations and terrorist teams as among the many most important illicit finance threats going through the USA in its 2021 Anti-Cash Laundering and Countering the Financing of Terrorism Nationwide Priorities. Congress included a provision within the Nationwide Protection Authorization Act for Fiscal 12 months 2021 for GAO to overview trafficking and associated cash laundering and federal efforts to fight them.

Amongst its aims, this report describes what is understood in regards to the cash laundering methods of transnational prison organizations and terrorists and information-sharing efforts amongst federal businesses to fight trafficking.

GAO reviewed documentation from Treasury and different federal businesses, worldwide and nonprofit organizations targeted on trafficking or cash laundering, scholarly journals, and prior GAO work. GAO examined federal steerage to monetary establishments and interviewed federal company officers; consultants in trafficking, cash laundering, and use of information know-how; and representatives of commerce teams for attorneys and accountants. GAO additionally interviewed 5 teams of monetary establishment representatives about figuring out trafficking-related suspicious actions.

For extra info, contact Michael E. Clements at (202) 512-8678 or clementsm@gao.gov.



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