Basic Facts about Money Laundering and FinCEN
Why is it important?
With few exceptions, criminals are motivated by one thing—profit. Greeddrives the criminal, and the end result is that illegally-gained money must be introducedinto a nation's legitimate financial systems. In just the United States alone,estimates of the amount of drug profits moving through the financial systems havebeen as high as $100 billion.
Money laundering involves disguising assets so they can be used withoutdetection of the illegal activity that produced them. This process has devastatingsocial and economic consequences. For one thing, money laundering provides thefuel for drug dealers, terrorists, arms dealers, and other criminals to operate andexpand their operations. Criminals manipulate financial systems in the UnitedStates and abroad to further a wide range of illicit activities. Left unchecked,money laundering can erode the integrity of our nation's and the world'sfinancial institutions.
Why do we need financial investigations?
Financial investigations are essential if we are to beat criminals at their trade.Following the money leads to the top leadership of criminal organizations. Butfinancial investigations are extremely complex and often difficult to carry out. First, it takes many years of working in the financial industry to understand all its intricacies.Second, no single agency possesses a sufficiently broad or cross-jurisdictionalfocus and information base to track financial movements. Finally, the sheersize, variety, and pace of change of the financial sector make financial investigationseven more difficult. The tools of the money launderer range from complexfinancial transactions, carried out through webs of wire transfers and networks ofshell companies, to old-fashioned, if increasingly inventive, currency smuggling. Assoon as law enforcement learns the intricacies of a new laundering technique andtakes action to disrupt the activity, the launderers replace the scheme with yetanother, more sophisticated method.
How has Treasury addressed the problem?
The Treasury has designated FinCEN as one of the primary agencies toformulate, oversee and implement policies to prevent and detect money laundering.It serves as the link among law enforcement, financial and regulatory communities.FinCEN accomplishes these objectives in several ways. It uses the Bank SecrecyAct (BSA) to implement comprehensive programs that go beyond currency to allfinancial activity and requires reporting and recordkeeping by banks and otherfinancial institutions to preserve a financial trail for investigators to follow as theytrack criminals and their assets. The BSA also requires reporting of large and/orsuspicious transactions that could trigger investigations.
FinCEN provides case support to its law enforcement customers—federal,state, local and international investigators—in the form of information and intelligenceanalyses. This information assists law enforcement in building investigationsand developing new strategies to combat money laundering. Just as importantly,these reports form the core of information which is provided to FinCEN’s othercustomers—the financial and regulatory communities—who can integrate thisinformation into their compliance and regulatory programs. From these and otherintelligence sources, FinCEN will produce advisories and other publications.
FinCEN’s unique staffing both reflects and sustains its mission. The majorityof its 200 employees are permanent FinCEN personnel, including intelligenceanalysts, as well as specialists in the financial industry and computer field. Inaddition, about 40 long-term detailees are assigned to FinCEN from 21 differentregulatory and law enforcement agencies.
The Bank Secrecy Act (BSA), Pub. L. 91-508, as amended, codified at 12U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 U.S.C. 5311-5330, authorizes theSecretary of the Treasury, inter alia, to issue regulations requiring financial institutions tokeep records and file reports that are determined to have a high degree of usefulness incriminal, tax, and regulatory matters, and to implement counter-money launderingprograms and compliance procedures. Regulations implementing Title II of the BSA(codified at 31 U.S.C. 5311-5330), appear at 31 CFR Part 103. The authority of theSecretary to administer the BSA has been delegated to the Director of FinCEN.