U.S. Treasury warns banks to beware proceeds of foreign corruption

The U.S. Treasury Department’s anti-money laundering unit on Tuesday warned financial institutions to be on the look-out for the proceeds of foreign corruption and the “financial facilitators” who help move such funds. An advisory issued by the Financial Crimes Enforcement Network, or FinCEN, said corruption can fuel human rights abuses and political and economic destabilization.

It reiterated banks’ obligations to report suspicious activity related to so-called Politically Exposed Persons (PEPs) and their associates. “Theft and other bad acts committed by corrupt senior foreign political figures undermine democratic institutions, destabilize economies, and erode societal foundations,” FinCEN Director Kenneth A.

Blanco said in a statement that accompanied the advisory. “FinCEN is committed to continuing its fight against corruption and those who use the U.S. financial system to further their nefarious activities at the expense of innocent people.” FinCEN reminded U.S. financial institutions that they “may expose themselves to risks by holding the accounts of these corrupt individuals directly or indirectly through correspondent banking relationships.”

The advisory includes examples of ways corrupt leaders have laundered ill-gotten gains as well as “red flags” that might signal illicit money flows. It said the initiative was an effort to “further assist U.S. financial institutions’ effort to insulate themselves from corruption and protect the U.S. financial system from foreign PEP facilitators’ illicit use.” From the use of shell companies to “use of third parties when it is not normal business practice,” FinCEN’s advisory highlighted a variety of corruption-related money laundering schemes.

The advisory linked corruption to human rights abuses, which it said can have a broad harmful impact. “Corrupt senior foreign political figures, their subordinates and facilitators, through their corrupt actions, often contribute directly or indirectly to human rights abuses, which have a devastating impact on individual citizens and societies, undermining markets and economic development and creating instability in a region,” it said. (By Brett Wolf, Regulatory Intelligence, St. Louis)

Produced by Thomson Reuters Accelus Regulatory Intelligence 15-Jun-2018

Published 13-Jun-2018 by Brett Wolf, Regulatory Intelligence

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