AML / CFT : US proposals to strengthen money laundering laws

Extract from strategy document - 25 July 2011. Verbatim.

Strategy to Combat Transnational Organized Crime: Protect the Financial System and Strategic Markets Against Transnational Organized Crime

Transnational criminals are now more entrepreneurial and sophisticated, and their growing infiltration of licit commerce and economic activity fundamentally threatens the free markets and financial systems that are critical to the stability and efficiency of the global economy. TOC threatens free markets because it disregards the laws and norms that legitimate businesses respect, thereby reaping an unfair competi- tive advantage. By eroding market integrity, quality, and competitiveness and using financial systems to move, conceal, and increase illicit funds, transnational criminals exploit and undermine not only the interests of the United States but also those of all countries promoting the rule of law.

By carefully following strategic and emerging markets for indicators of criminal interest, the United States can detect, disrupt, and reduce the economic power of TOC. To do so, the United States will work with our international partners to deter or sever crime-state alliances, raise awareness to alert businesses that may be unwitting facilitators for criminal enterprises, and continue to develop appropriate safeguards to protect the legitimate flow of trade and investment. By targeting criminal assets and opportunities, the United States and its allies can markedly reduce the profitability, growth, and evolution of TOC networks.

However, some TOC activity is inherently harder to detect and deter. The United States will place special emphasis on IPR violations and cybercrimes due to their particular impact on the economy and consumer health and safety. The United States remains intent on improving the transparency of the international financial system, including an effort to expose vulnerabilities that could be exploited by terrorist and other illicit financial networks. At the same time, the United States will enhance and apply our financial tools and sanctions more effectively to close those vulnerabilities, disrupt and dismantle illicit financial networks, and apply pressure on the state entities that directly or indirectly support TOC. We will continue to monitor TOC infiltration of the global economy to better protect the financial system and freeze the assets of criminal networks under expanded Presidential sanctions authorities and/or seize them under existing forfeiture laws.

Actions

1. Implement a new Executive Order to prohibit the transactions and block the assets under U.S. jurisdiction of TOC networks and their associates that threaten critical U.S. interests.
2. Prevent or disrupt criminal involvement in emerging and strategic markets.
3. Increase awareness and provide incentives and alternatives for the private sector to reduce facilita- tion of TOC.
4. Develop a mechanism that would make unclassified data on TOC available to private sector partners.
5. Implement the Administration’s joint strategic plan on intellectual property enforcement to target, investigate, and prosecute intellectual property crimes committed by TOC.
6. Enhance domestic and foreign capabilities to combat the increasing involvement of TOC networks in cybercrime and build international capacity to forensically exploit and judicially process digital evidence.
7. Use authorities under the USA PATRIOT Act to designate foreign jurisdictions, institutions, or classes of transactions as ‘‘primary money-laundering concerns,” allowing for the introduction of various restrictive measures on financial dealings by U.S. persons with those entities.
8. Identify foreign kleptocrats who have corrupt relationships with TOC networks and target their assets for freezing, forfeiture, and repatriation to victimized governments.
9. Work with Congress to enact legislation to require disclosure of beneficial ownership information of legal entities at the time of company formation in order to enhance transparency for law enforce- ment and other purposes.
10. Support the work of the Financial Action Task Force, which sets and enforces global standards to combat both money laundering and the financing of terrorism.

The Mogilevich Organization

Semion Mogilevich is wanted by the United States for fraud, racketeering, and money laundering and was recently added to the FBI’s Ten Most Wanted fugitives list. Mogilevich and several members of his crimi- nal organization were charged in 2003 in the Eastern District of Pennsylvania in a 45-count racketeering indictment with involvement in a sophisticated securities fraud and money-laundering scheme, in which they allegedly used a Pennsylvania company, YBM Magnex, to defraud investors of more than $150 million. Even after that indictment—and being placed on the FBI’s Ten Most Wanted list—Mogilevich has contin- ued to expand his criminal empire. Mogilevich was arrested by Russian police on tax charges in January 2008 and was released pending trial in July 2009. Other members of his organization remain at large.