The 2020 National Illicit Finance Strategy

The US department of Treasury has announced it’s updated strategy to combat money laundering and the financing of terrorism which outlines the top financial threats. One of the main updates stating the use of new technologies by criminals to launder money, sell illegal substances and commit cyber crime - all hidden by using encrypted messaging tools and using alternative digital currencies that are difficult to track. The report noted the abundant instances of these crimes despite the authorities’ attempts to catch criminals in the act.

The Wall Street Journal reported that an administration official stated: “These are all vulnerabilities that reflect certain gaps in law…that need to be addressed. We are, over the coming year, going to work on a bipartisan basis with Congress and with the private sector to undertake mitigation measures across the full spectrum of the topics that are covered in our strategy.”

The Strategy for 2020 focuses on three priorities:
1) Increasing the transparency of organisations’ financial processes and closing gaps in the Anti-Money Laundering and Combating the Financing of Terrorism legal framework. At present, companies are not required to state beneficial ownership when the company is formed therefore, many companies hide certain assets and activities by misemploying legal bodies.
2) Improving the efficiency and effectiveness of the U.S. Anti-Money Laundering and Combating the Financing of Terrorism regulatory and supervisory framework for financial institutions. Although the Financial Crimes Enforcement Network passed the law that beneficial parties need to identify and verify themselves as owners of legal entity customers upon opening accounts and verifying themselves periodically thereafter, the US treasury department does not hold the right to request this information - a gap that needs to be addressed.
3) Enhancing the current Anti-Money Laundering and Combating the Financing of Terrorism functionality. There currently very few anti-money-laundering conditions imposed upon some financial institutions and gatekeeper professions resulting in companies that are not subject to federal governance and therefore not ensuring the application of anti-money-laundering standards despite its implementation in 2016. The lack of governance has led to many criminals taking full advantage.

The report noted the following trends from 2019/2020 that are on the rise:

• Business Email Compromise Schemes in which criminals pose as high level executives of companies requesting a wire transfer or lump sums of money from one company bank account to another. BEC schemes are the common form of cybercrime.
• Extortion letters detailing threats and intimidation that demand money in exchange for keeping a person’s secret or their safety. Fraud that preys on the gullibility of elders, romance fraud, fake identity fraud, account seizures, and mortgage and bank fraud cases are common instances and are increasing.
• The use of money mules to exchange cash in fraud, drug and human trafficking so that the criminals cannot be associated with the deposit. The money mule coulf be an unsuspecting victim or a participant of the crime that deposit and layer the cash on behalf of the criminals.
• Healthcare fraud is also on the rise and involves both gangs of criminals and corrupt healthcare professionals who scam Medicare and Medical aid.