The U.S. Treasury Department ("Treasury") published its first National Illicit Finance Strategy (the "strategy") to help both the public and private sectors understand and address terrorist financing ("TF"), proliferation financing ("PF") and money laundering.

The strategy reviews the strengths of U.S. counter-illicit finance efforts and identifies opportunities for improvement. The document highlights the role that enforcement measures, including sanctions, prosecutions and asset forfeiture, play in combating illicit finance. The strategy also states that Treasury is exploring ways to modernize the anti-money laundering regime to address the highest-risk areas for illicit finance activities. The strategy draws upon three risk assessments:

  • The 2018 National Money Laundering Risk Assessment: This update to the 2015 National Money Laundering Risk Assessment found that the risk posed by cash or virtual currency in money laundering activity was mostly mitigated in the U.S. by transaction recordkeeping and reporting requirements. However, trade remains a vehicle for money laundering because of "knowingly complicit" or "willfully blind" merchants, lawyers, accountants, company registration agents and real estate agencies. Examples described in the risk assessment include professional money launderers who actively seek out banks and money services businesses with weak internal controls or "corruptible staff." Treasury also noted the risk posed by shell companies or other legal entities that are used to hide the identity of an ultimate beneficial owner. Treasury stated that this risk is mitigated by FinCEN's Customer Due Diligence Rule, which requires financial institutions to identify the beneficial owners of legal entities.
  • The 2018 National Terrorist Financing Risk Assessment: This risk assessment updated an earlier assessment from 2015 and warned that U.S. charitable organizations involved in high-risk areas such as Afghanistan, Pakistan, Somalia, Syria and Yemen face a greater risk of TF abuse. Treasury also noted that although some virtual currencies have been used for TF, "virtual currencies do not currently present a significant TF risk."
  • The 2018 National Proliferation Financing Risk Assessment: This risk assessment, which is the first of its kind, stated that the current U.S. regulatory framework and approach to combating PF activity is largely successful. However, the assessment noted, a manageable level of residual risk remains due to the role of the U.S. dollar in cross-border trade.

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