A Deep Dive Into Treasury’s Latest Money Laundering Risk Assessment Findings
Discover the latest insights on combating money laundering in the U.S., including the rise of sophisticated fraud schemes, drug trafficking challenges, and evolving cybercrime threats.
Issuing Organization
The U.S. Department of the Treasury issued the “2024 National Money Laundering Risk Assessment” in February 2024. This pivotal document outlines the current threats, vulnerabilities, and risks associated with money laundering activities within the United States, emphasizing the comprehensive efforts and strategies deployed to combat these illicit activities.
Purpose of the Report
The report aims to identify the most significant money laundering threats, vulnerabilities and risks the United States faces. It underscores the U.S.’s susceptibility to laundering illicit proceeds due to its large economy and the global dominance of the U.S. dollar. The assessment is instrumental for governmental and private sector entities to enhance their understanding and mitigation strategies against money laundering.
Target Audience
The intended readers are policymakers, law enforcement agencies, financial institutions, and other stakeholders who actively participate in the fight against money laundering. This assessment is crucial for these groups to understand the evolving landscape of money laundering threats and to adapt their strategies accordingly.
Key Points and Statistics
Major Threats
- Fraud: Investment and healthcare fraud are the top crimes generating illicit proceeds. Investment fraud notably surged to $3.3 billion in losses in 2022.
- Drug Trafficking: The Sinaloa Cartel and the Cartel Jalisco Nueva Generación are highlighted for their sophisticated operations in trafficking fentanyl and other drugs.
- Cybercrime: Notable increases in ransomware attacks, particularly from groups in Russia and the DPRK, pose significant threats.
- Professional Money Laundering: The emergence of Chinese Money Laundering Organizations and the persistent use of money mules are growing concerns.
Cash and Currency Seizures
- Inbound Seizures: For CY 2023, 1,480 seizures totaled $18 million.
- Outbound Seizures: In CY 2023, there were 1,010 outbound seizures, totaling approximately $53 million, with Detroit International Airport, Chicago O’Hare International Airport, and the Port of Fort Lauderdale primary exit points.
Cash Consolidation and Movement
- Domestic Routes: Illicit cash proceeds from crimes, particularly from states like California, Colorado, Georgia, and Texas, are noted for their movement and consolidation, with a notable shift in bill denomination conversions to border states.
Use of Prepaid Cards
- Growth and Use: The transaction volume on prepaid cards has grown by 9.6% annually from 2018 to 2021, reaching a total value of $610 billion in 2021. These cards are commonly used for cross-border funds transfer and by criminals for their ease of use and anonymity.
Money Orders
- Suspicious Activity Reports (SARs): In 2023, FinCEN received 396,763 SARs related to transactions utilizing money orders, highlighting their use in laundering schemes.
Virtual Assets
- The assessment details the flux in the virtual asset ecosystem, focusing on VASPs’ AML/CFT obligations under the BSA. Despite the market volatility, the persistent operation of hundreds of VASPs and traditional financial institutions’ adoption of virtual assets are noteworthy.
- Compliance Issues: A significant concern is the inconsistent compliance with domestic and international AML/CFT obligations among VASPs, leading to vulnerabilities exploited for money laundering.
- Obfuscation Tools: Mixers, anonymity-enhancing cryptocurrencies, and other obfuscation methods complicate tracing illicit funds.
- Regulatory Actions: Highlighted case examples include major enforcement actions against VASPs like Binance and Bittrex for non-compliance with AML/CFT and sanctions laws.
- Decentralized Finance (DeFi): The unique challenges posed by DeFi services are emphasized, particularly the need for compliance with BSA requirements to mitigate illicit activities.
Conclusive Interpretation and Key Takeaways
The assessment underscores the critical need for continuous adaptation and enhancement of anti-money laundering (AML) strategies to address both traditional and emerging threats. It calls for increased vigilance, improved regulatory frameworks, and enhanced collaboration between the public and private sectors to combat money laundering activities effectively.
Most Surprising Aspect
The startling increase in investment fraud, resulting in losses of $3.3 billion in 2022, is a pivotal discovery. Investment fraud deceives investors by providing false information, often resulting in significant financial losses. This surge reflects the fraudsters’ growing ability to navigate and exploit the complexities of the financial system and highlights an urgent need for more sophisticated detection and prevention strategies. Enhancing these mechanisms protects investors and ensures the integrity of the financial markets.
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