Financial Crime World

Risk Assessment Critical to Combating Illicit Finance in US, Reports Reveal

Introduction

March 1, 2022 - The US Department of the Treasury has released its 2022 National Risk Assessments (NRAs) on Money Laundering, Terrorist Financing, and Proliferation Financing. These reports highlight the most significant illicit finance threats facing the United States.

Key Findings

The NRAs identify key concerns, including:

  • Misuse of legal entities
  • Lack of transparency in certain real estate transactions
  • Complicit merchants and professionals
  • Pockets of weaknesses in compliance or supervision at some regulated US financial institutions

These reports also reveal that criminals continue to use a wide range of money laundering techniques to move and conceal illicit proceeds.

Importance of Risk Assessment

The assessments highlight the importance of risk assessment in finance, with the US vulnerable to all three forms of illicit finance due to its size and sophistication as well as the centrality of the US dollar in global trade. The reports also take into account changes to the illicit finance risk environment resulting from:

  • COVID-19 pandemic
  • Ransomware
  • Domestic violent extremism
  • Corruption
  • Increased digitization of payments and financial services
  • New anti-money laundering/counter-terrorism requirements

Quotes

According to Brian E. Nelson, Under Secretary for Terrorism and Financial Intelligence, “The National Risk Assessments underscore the US government’s commitment to protecting our economy and financial system from exploitation by criminal actors and national security threats.” He emphasized that understanding the current risk environment is crucial in guarding the integrity of the US financial system.

Funding Methods

The reports identify the largest amount of illicit proceeds laundered in or through the United States as coming from:

  • Fraud
  • Drug trafficking
  • Cybercrime
  • Human trafficking and smuggling
  • Corruption

The assessments also analyze funding methods that support domestic violent extremists, while highlighting the proliferation finance threats posed by countries such as:

  • North Korea
  • Iran
  • China
  • Russia

Conclusion

The Treasury Department’s Office of Terrorist Financing and Financial Crimes led the assessment process, coordinating with relevant agencies, regulators, and international partners. The department will release its 2022 National Strategy for Combating Terrorist and Other Illicit Finance in the coming weeks, which will include recommendations for addressing highlighted issues. The reports are available at treasury.gov.