The U.S. is falling short when it comes to effectively investigating and prosecuting money laundering and terrorist financing by shell companies, real estate agents and investment advisers, among others, according to a new report from the Financial Action Task Force (FATF).
In a press release highlighting the new report, the FATF said that, while the U.S. has a well-developed and robust anti-money laundering and counterterrorist financing system, it has “serious gaps” that impede timely access to beneficial ownership information.
According to the FATF, which is an international organization that sets global standards for fighting fraud, the U.S. dollar’s dominance around the globe and the large volume of daily transactions through its banks expose the country to a lot of money laundering and terrorist financing risks, both of which the U.S. has a “significant level of understanding of.” The FATF said terrorism and its financing are given the highest priority, and the U.S. is “highly effective” in that area.
“It proactively and aggressively investigates, prosecutes and convicts individuals for terrorist financing and can capture any form of material support. The U.S. appears to have kept terrorist funds out of its financial system to a large extent by effectively implementing targeted financial sanctions. Proliferation financing is also a high priority for the U.S., and it has effectively frozen large volumes of assets through its sanctions programs.”
But the FAFT also found that mitigating risk through the regulatory framework is less well-developed in the U.S. and has “significant gaps,” including minimal coverage of investment advisers, lawyers, accountants, real estate agents, trust and company service providers (other than trust companies).
“While the U.S. placed a strong supervisory focus on the casino sector in recent years, the lack of comprehensive AML/CFT supervision for other designated nonfinancial businesses and professions is a significant supervisory gap,” contends the FATF. “Serious gaps in the legal framework prevent access to accurate beneficial ownership information in a timely manner. Fundamental improvements are needed in these areas.”
The FATF also gave the U.S. a low score on its ability to determine the true owners of shell companies.