Download - Threat finance and financial intelligence
Threat Finance and Financial Intelligence Some Facts and Figures
December 2012
• Terrorism and crime are business opera:ons, requiring a number of inputs in order to successfully plan and execute criminal acts.
• Due to the illicit nature of these actors’ opera:ons, funding for such ac:vi:es must be disguised so as not to reveal either its source or intended use.
• According to the U.N. Office on Drugs and Crime, illicit cash flows were es:mated to account for 2-‐5% of the global GDP, amoun:ng to US$800 billion to US$2 trillion per year.
The problem space
• Threat finance – The means and methods used by organiza:ons to finance illicit opera:ons
and ac:vi:es that pose a threat to U.S. na:onal security and global financial stability
• Financial intelligence – The means and methods used by legi:mate actors and authori:es to
discover, disrupt, and deter the financing of threats to U.S. na:onal security and global financial stability
• Money laundering – The process by which proceeds of crime are concealed and made to appear
legi:mately sources. – The target of An:-‐Money Laundering (AML) and Counter Threat Finance
(CTF) policies and regula:ons
Defining the concepts
• Foreign Terrorist Organiza4ons (FTOs) • Drug cartels and narco4cs traffickers
• Human traffickers
• Transna4onal Organized Crime (TOC)
• Weapons of Mass Destruc4on (WMD) proliferators
• Emerging actors and crimes: – Cyber crime – Iden:ty-‐related crimes – Cultural property trafficking environmental crimes – Organ trafficking – Piracy
The actors
• Money laundering is the underlying method of threat finance. The “laundry cycle” has three phases:
– Placement • The point at which the proceeds of crime enter the conven:onal financial system. At this stage, the money is s:ll directly associated with the crime (“dirty money”).
– Layering • Disperses the funds in order to obscure the sources of proceeds and the individuals involved in the opera:on.
– Integra4on • At this stage, the funds have been “washed” (no longer directly associated with the crime) and withdrawn from the financial system for use by the actor once again.
The methods
The methods, con:nued…
• Typologies vary between actors, but common sources of funds and laundering methods include:
– Counterfei:ng – Extor:on – Fraud – Kidnapping – Tax evasion – Not-‐for-‐profit (NFP) or shell organiza:ons – Direct dona:ons from (un)knowing individuals
• In nearly all cases, a shell organiza4on is involved at some stage in the laundering opera4on.
• Laundered proceeds are frequently routed through jurisdic4ons that have inadequate AML prac4ces, or bank secrecy laws that hinder coopera4on with AML inves4ga4ons.
• Bank Secrecy Act (1970) • Money Laundering Control Act (1986)
• An:-‐Drug Abuse Act (1988) • Annunzio-‐Wylie Money Laundering Suppression Act (1992)
• Money Laundering Suppression Act (1994)
• Money Laundering and Financial Crimes Strategy Act (1998)
• USA PATRIOT (Uni:ng and Strengthening America by Providing Appropriate Tools to Restrict, Intercept and Obstruct Terrorism) Act of 2001
Significant U.S. CTF/AML policies
• Interna4onal
– Financial Ac:on Task Force (FATF) – The Egmont Group of Financial Intelligence Units (FIUs) – United Na:ons Office on Drugs and Crime (UNODC) – Organisa:on for Economic Co-‐opera:on and Development (OECD)
• Domes4c – U.S. Department of the Treasury – U.S. Department of Jus:ce – Federal Bureau of Inves:ga:on – Financial Crimes Enforcement Network (FinCEN)
Organiza:ons in CTF/AML
• The above list is not exhaus4ve
– Numerous interna:onal organiza:ons are involved in countering money laundering and transna:onal crime.
– Frequently, private industry is beher-‐placed to iden:fy suspicious transac:ons and monitor trends in financial ac:vi:es.
– The domes:c policies of individual na:ons and voluntary prac:ces undertaken by private industry are equally instrumental in CTF/AML efforts.
Organiza:ons in CTF/AML