NCJ Number
194829
Journal
Journal of Financial Crime Volume: 9 Issue: 3 Dated: February 2002 Pages: 212-216
Date Published
February 2002
Length
5 pages
Annotation
After describing the significance of money laundering in the operations of organized crime, this paper reviews the U.S. Government's response to it, the effectiveness of the responses, and future challenges.
Abstract
The international criminal organizations that move billions of dollars worth of drugs around the world do not want to deal with the problems associated with smuggling enormous quantities of high-volume, high-density cash. Instead, they seek to disguise their weighty ill-gotten gains as quickly as possible through money laundering. Money laundering threatens the integrity of financial institutions and is also the life-blood of violent criminal and terrorist enterprises. It is an essential activity for organized crime. The central importance of money laundering to drug trafficking is illustrated by the example of the so-called Colombian black market peso exchange, as efforts to legitimize cash by Colombian drug cartels are called. To avoid detection, the cartels have developed a number of money laundering systems that subvert financial-transaction reporting requirements and manipulate facets of the economy unrelated to the traditional financial services industry. The manner in which the United States addresses hidden wealth depends on the specific circumstances that have caused its owner to seek concealment. Under Feral law, compliance with regulatory requirements is gained mainly through self-governance by the financial services industry along with regulatory oversight and outreach training programs provided by law enforcement and regulatory agencies. In fact, government investigators now find greater utility in uncovering illegal financial activity in the suspicious activity reports filed by the banks than the currency transaction reports. Special anti-money laundering operations have been conducted in specific regions where the problem is acute. As the banking industry's awareness and scrutiny of the placement of bulk cash increased during the late 1980's and early 1990's, drug and money laundering organizations shifted their activities to less monitored money service businesses, such as money remittance companies, wire transmitters, and sellers of monetary instruments. Then, as regulatory and law enforcement scrutiny of these money service businesses increased during the late 1990's, drug and money laundering organizations changed again. Now a predominant laundering method is the smuggling of bulk cash to Mexico, where it can be either shipped on to Colombia or placed into the less monitored Mexican banking system. Future challenges are to strengthen international compliance with multilateral agreements; to help nations threatened by money laundering develop adequate regulatory and law enforcement institutions; and enhance and integrate U.S. law enforcement operations to counter the increasing sophistication of drug traffickers in using digital telephony, high-tech communications, and encryption devices. 9 references