Congress to Considers Anti-Money Laundering/ Countering the Financing of Terrorism (AML/CFT) Options for Better FinCen Transparency and Accountability

ORLANDO, FLORIDA / AGILITYPR.NEWS / September 12, 2023 / Congress to Considers Anti-Money Laundering/ Countering the Financing of Terrorism (AML/CFT) Options for Better FinCen Transparency and Accountability

Call to Action: Congress must consider policy regarding the operational independence for Financial Intelligence Units (FIUs), with a specific focus on the U.S. Financial Crimes Enforcement Network (FinCEN) and its role in combating money laundering and terrorist financing. FIUs are agencies that receive reports of suspicious transactions from financial institutions and other persons and entities, analyze them, and disseminate the resulting intelligence to local law-enforcement agencies and FIUs to combat money laundering. As government agencies, FIUs must retain sufficient independence to accomplish their objectives without undue interference or influence.

Stat/ Fact: The United States is a leader in the fight against money laundering and the financing of terrorism. Up to $300 billion is laundered in the US annually, with AML compliance costing US firms up to $25.3 billion per year. 

Analogy: “Effective anti-money laundering and combating the financing of terrorism regimes are essential to protect the integrity of markets and of the global financial framework as they help mitigate the factors that facilitate financial abuse.” - Min Zhu, Former Deputy Managing Director of the International Monetary Fund (IMF)

Here are some key takeaways from this overview as Congress and the public interest considers new policy considerations in the fight against money laundering and financing of terrorism:

1. FIU Operational Independence: FIUs are government entities responsible for handling sensitive financial information related to money laundering, terrorist financing, sanctions evasion, and other illicit financial activities. Maintaining operational independence is crucial to ensure that their work is unbiased and free from undue influence or interference.
2. FATF Recommendations: The Financial Action Task Force (FATF) recommends that FIUs maintain operational independence to carry out their responsibilities effectively. This includes having the authority to analyze, request, and disseminate information independently, access adequate resources, and be free from political, government, or industry influence.
3. Role of Congress: Congress plays a significant role in shaping the policies and operations of FinCEN. It establishes FinCEN's legal framework, authorizes its activities, and provides funding through appropriations acts. Congressional oversight ensures accountability and can influence FinCEN's operational independence.
4. FIU Best Practices: FATF provides a set of best practices for FIUs, emphasizing their autonomy, access to resources, and the ability to operate independently from political and industry influences. Even when housed within larger agencies, FIUs' core functions should remain distinct.
5. FIU Assessments: Countries undergo mutual evaluations based on FATF standards to assess their compliance with FIU-related recommendations. As of August 2023, the United States and many other jurisdictions were rated as compliant or largely compliant with FATF Recommendation 29.
6. Challenges to Operational Independence: Common challenges to FIU operational independence include political influence in leadership appointments, difficulties accessing budgetary resources, and resource decisions requiring higher-level approvals. Diminished operational independence can compromise effectiveness and confidentiality.
7. FinCEN: FinCEN is the U.S. FIU responsible for enforcing anti-money laundering and counter-terrorism financing regulations. It operates within the U.S. Department of the Treasury and handles sensitive financial information, such as Suspicious Activity Reports (SARs), with strict confidentiality. FinCen's mission is to enhance U.S. national security, deter and detect criminal activity, and safeguard financial systems from abuse by promoting transparency in the U.S. and international financial systems. These priorities include corruption, cybercrime, terrorist financing, fraud, transnational criminal organization activity, drug trafficking organization activity, human trafficking and human smuggling, and proliferation financing.
8. Opportunities for Congress: Congress has various opportunities to influence FinCEN's operational independence, such as through legislation, oversight hearings, appropriations, and access to SARs. Bills may direct FinCEN's actions, and hearings provide a platform for accountability. Appropriations decisions impact funding levels, and congressional access to SARs is subject to regulatory considerations.

This information provides a detailed overview of the role of FIUs, particularly FinCEN, in the context of AML/CFT efforts, and highlights the critical importance of maintaining operational independence to effectively combat financial crimes. Stay tuned as the Administration and Congress and the Administration come together to reach both new policy considerations and a funding agreement for the current fiscal year (FY) that delivers for the protection of the American people.