Leveraging Anti-Money Laundering Tools to Disrupt Illicit Markets and Dismantle Illicit Networks

Stepping Up The Fight Against Money Laundering And Terrorist Financing (HP, 7/26/2017)

“Corrupt officials, tax cheats, and the financial backers of terrorism have one thing in common: they often exploit vulnerabilities in financial systems to facilitate their crimes.

Money laundering and terrorist financing can threaten a country’s economic and financial stability while funding violent and illegal acts. That is why many governments have stepped up the fight against such practices.

Measures against money laundering and the financing of terrorism, known by their acronym as AML/CFT, are designed to prevent the misuse of the financial system. They call for the detection, reporting, and confiscation of suspicious financial flows and for sanctioning of criminals.”

Leveraging Anti-Money Laundering Tools to Disrupt Illicit Trade and Illicit Financial Flows

Over the weekend, I came across the above Huffington Post article by Christine Lagarde, Managing Director, International Monetary Fund (IMF).  Ms. Lagarde outlines how the IMF is taking several pragmatic actions to help jurisdictions in combating money laundering and terrorist financing, and ways to partner across the international community to build stronger institutional and operational capacities.

Given the size of the global illegal economy, 8-15 percent of GDP, or several trillion dollars a year in criminal proceeds related to illicit markets around the world, the international community must unite in a more coordinated manner to aggressively fight money laundering and take the profit out of crime, away from today’s corrupt officials and criminal entrepreneurs.

I also agree that money laundering harms a country’s economic and financial stability.   It further taints supply chains, compromises markets, and corrodes the integrity of public and market institutions alike.

These are among the reasons that over the years that I have partnered with others to fight the pernicious effects of illicit trade.  Similarly, I have worked across sectors, borders, regions to disrupt the global web of corruption and criminality in source, transit, and consumer markets in the fight against illicit trade.

In a recent article related to the illegal wildlife trade, it was gratifying to see that some law enforcement partners recognize the importance of taking a holistic approach in investigating any illicit activity and probing into webs of corruption and criminality to expose a wider network of complicit and converging criminal actors.  For example, in Thailand, police discovered that an illicit trafficking network that was behind a “substantial racket to smuggle not only protected rosewood into China, but also elephant ivory and live pangolins.”

Too often few countries recognize or investigate the links between wildlife crime and money laundering: “Wildlife criminal cases very often start and end with the seizure, with limited investigation into the wider criminal network beyond the poacher or courier,” a recent report said. “As a result, there are major gaps in our understanding of the financial flows behind wildlife crime and inadequate measures are being undertaken to mitigate the risks of wildlife crime” and associated money laundering and other criminal activities.

The failure of many jurisdictions to recognize these crimes as transnational organised crimes and to employ the full range of law enforcement tools available — particularly financial investigations — is a short-sightedness for which we are paying a heavy price.

Cutting off the Financial Lifeblood to Illicit Trafficking Networks

Anti-Money laundering tools need to be leveraged smartly to disrupt criminalized markets and dismantle illicit networks.  As Celina Realuyo and Danielle Lindholm have noted in their Chapter in the book Convergence:  “Following the money trail has become a critical crosscutting component for countercrime, counternarcotics, and counterterrorism efforts against illicit networks.”  In the world of combating converging threats, cross-sectoral approaches are required to shut down illicit markets and put criminal entrepreneurs and illicit traffickers out of business. We must fully employ effective anti-money laundering and anti-corruption tools to have greater impact against today’s illicit networks.

Now is not the time to rest. We must push forward and begin countering illicit trade more robustly and the networks behind it.

We need greater attention and better coordination across sectors and across borders, to make sure enforcement strategies are maximizing impact.  Through dynamic public-private partnerships, the international community can target illicit threat landscapes around the world more holistically — leveraging intelligence, economic levers and sanctions, and multi-disciplinary approaches.

Many challenges also remain including how we coordinate efforts to lessen the vulnerabilities related to the internet and free trade zones (FTZ), as well as the role that illicit trade plays in trade-based money laundering (TBML).  In these new market frontiers, we must develop innovative and transformative technologies to pinpoint bad actors and “illicit financial hubs” and to take the fight to criminal adversaries where it hurts the most: their profits.

Cutting off the financial lifeblood to illicit trafficking networks begins a strategic process of disrupting the webs of corruption and criminality, and dismantling illicit markets that are increasingly threatening our collective security and stability.


Learn more about the FATF Recommendations and the UN Convention on Transnational Organized Crime (UNTOC) and UN Convention Against Corruption (UNCAC)

Financial Action Task Force (FATF)

The Financial Action Task Force (FATF) is an inter-governmental body that sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. Learn more about the FATF Recommendations for the combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction.

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