Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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7/19/2006 Mutual Evaluation Report Finds U.S. Deficient in Non-Financial Sector Efforts

The Financial Action Task Force has released a 309-page Mutual Evaluation Report on U.S. anti-money laundering and counter-terrorist financing measures in place as of May 2006.  The evaluation team consisted of the Executive Secretary of the FATF and representatives from the Netherlands, the UK, Malaysia, Australia, Switzerland, and Belgium.  U.S. anti-money laundering and anti-terrorist financing rules and procedures were compared against the FATF’s 40 Recommendations and its 9 Special Recommendations, and the U.S. was found to be Compliant or Largely Complaint in most categories.  However, in two categories the U.S. was Partially Compliant and in four categories it was Non-Compliant. Some recommendations  (“Accountants, lawyers, real estate agents, and [Trust and Company Service Providers] should … be required to implement adequate internal controls (i.e. AML Programs)”) will encounter (and when previously suggested have encountered) resistance, while others (“devote more resources to abuse” within the non-profit sector) will not be as controversial.  The Mutual Evaluation is worth reading in part because of the access that the evaluation team had to personnel of U.S. agencies involved in AML and counter-terrorism efforts, who were often candid about resource limitations. The Mutual Evaluation Report will be the subject of extensive analysis in the October Monitor.

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