Anti-Money Laundering and Countering the Financing of Terrorism

Money laundering is the process of making the proceeds of criminal activity appear to have been legally obtained. According to the IMF and World Bank, criminals launder an estimated two to nearly four trillion dollars each year.

Among those who seek to disguise the illegal proceeds of their crimes are drug traffickers, terrorists, corrupt public officials, and organized criminal groups. Introducing illegally obtained funds into the stream of legitimate commerce and finance allows criminals to profit from their illegal activity, taints the international financial system, and erodes public trust in the integrity of the system.

Some criminals use the financial system to support terrorists or acts of terrorism. Terrorist financiers and other criminals use the formal financial system, new payment methods such as bitcoin and Ripple, traditional methods of value transfer such as hawala*, trade based money-laundering, and cash couriers, particularly in countries with non-existent or weak national anti-money laundering/countering the financing of terrorism (AML/CFT) tools.

AML/CFT tools can:

  • Expose the infrastructure of criminal organizations, webs of corruption, and conspiracies to commit terror acts
  • Provide authorities with roadmaps to those who facilitate criminal and illicit activities
  • Lead to the recovery and forfeiture of unlawfully-acquired assets
  • Support broad and effective deterrence efforts against a wide range of criminal activities, including the financing of terrorism.

Only a comprehensive anti-money laundering regime which draws on such tools can prevent those that finance terrorism from succeeding.

INL has an important role in creating these capabilities and connections on a global basis.

INL’s Role: INL works in global and regional forums to negotiate, assess, and promote effective implementation of international standards. In addition, INL cooperates directly with foreign countries to help national authorities adopt, implement, and strengthen their AML/CFT regimes, as well as pursue legal cases, obtain convictions, and confiscate the proceeds of crime.

In addition to leading AML efforts, INL supports the State Department’s Bureau of Economic and Business Affairs (EB) and Bureau of Counterterrorism (CT) in their work related to countering the financing of terrorism.

Policy Development and Capacity Building: INL represents the U.S. Department of State in multilateral processes and organizations, such as the Financial Action Task Force (FATF) and related regional bodies that develop and evaluate the implementation of international AML/CFT standards. INL also develops, funds, and implements technical assistance projects to build AML/CFT capacity in foreign countries in response to traditional and emerging threats, such as kidnapping for ransom, wildlife trafficking, exploitation of the gaming industry, and misuse of non-bank financial products including hawala and other unconventional and emerging payment methods.

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*- In the system of hawala, funds are paid to an agent who then instructs a remote associate to pay the amount to the final recipient, but no physical form of money changes hands during the transfer.