Financial Crime World

Comprehensive Guide to Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT)

Introduction

Anti-money laundering (AML) and countering the financing of terrorism (CFT) are critical components of financial regulation, aimed at preventing illicit activities such as money laundering, terrorist financing, and other financial crimes. This guide provides a comprehensive resource for financial institutions, law enforcement agencies, and regulatory bodies to stay informed about AML/CFT regulations and best practices.

Key Organizations and Resources

FinCEN: The Financial Crimes Enforcement Network (FinCEN)

  • FinCEN is responsible for administering the Bank Secrecy Act (BSA) and serving as the U.S. Financial Intelligence Unit.
  • FinCEN has the authority to issue BSA regulations, examine financial institutions for compliance, and pursue enforcement actions for AML/CFT-related violations.

OFAC: The Office of Foreign Assets Control

  • OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals.
  • OFAC’s primary goal is to implement these sanctions through regulations that restrict transactions involving blocked persons, countries, or entities.

National Strategies and Risk Assessments

The National Strategy for Combating Terrorist and Other Illicit Financing outlines efforts to combat illicit finance threats and risks identified in three national risk assessments:

  • The strategy emphasizes the importance of international cooperation, information sharing, and capacity building to prevent terrorist financing and other illicit activities.
  • It also highlights the need for effective implementation of AML/CFT regulations and standards.

Reporting Terrorist Activity

Banking organizations are asked to voluntarily report suspicious transactions related to terrorist activity to law enforcement using FinCEN’s Financial Institutions Hotline. This hotline allows financial institutions to submit reports of suspicious transactions that may be indicative of money laundering or other illicit activities.

International Organizations and Resources

  • Financial Action Task Force (FATF): FATF develops standards and promotes effective implementation of legal, regulatory, and operational measures for combating money laundering, terrorist financing, and other related threats to the integrity of the international financial system.
  • Basel Committee on Banking Supervision (BCBS): The BCBS is an international committee that aims to promote banking supervision and regulation globally.
  • Wolfsberg Group: The Wolfsberg Group is a private association of 12 global banks that aims to develop common risk management policies and procedures.

Resources for Financial Institutions

FinCEN’s High Intensity Financial Crime Areas program

This program concentrates law enforcement efforts at the federal, state, and local level to combat money laundering in high intensity money laundering zones.

International Narcotics Control Strategy Report

A country-by-country report that describes efforts to attack all aspects of the international drug trade, chemical control, money laundering, and financial crimes.

Resources for Law Enforcement and Regulatory Agencies

  • FDIC’s Supervisory Insights — Summer 2017 article: An article on the Bank Secrecy Act: A Supervisory Update.
  • OFAC Compliance Hotline: A user-friendly online platform that allows users to submit questions about how to comply with OFAC sanctions.
  • FinCEN Year in Review for Fiscal Year 2022: A report intended to help stakeholders gain insight into both FinCEN’s efforts to support law enforcement and national security agencies, and how financial information filed pursuant to the BSA is used.

This comprehensive guide provides a valuable resource for financial institutions, law enforcement agencies, and regulatory bodies to stay informed about AML/CFT regulations and best practices.