Money Laundering: Regulatory Oversight of Offshore Private Banking Activities

• NCJ Number: 176416
• Author(s): T E Cross; R DeMarcus; K A Wong; E E Aquino; J R Pena; G Brostrom
• Date Published: 1998
• Length: 33 pages
• Corporate Author: US Government Accountability Office
• Sale Source: US Government Accountability Office; NCJRS Photocopy Services
• Language: English
• Country: United States of America

Annotation

The U.S. General Accounting Office (GAO) reviewed the regulatory oversight of offshore private banking activities and specifically addressed regulatory oversight procedures, deficiencies in offshore private banking activities and corrective actions taken by banks, barriers to regulatory oversight of offshore private banking activities, and banking industry views on regulatory access to documentation.

Abstract

To conduct the review, the GAO looked at examination manuals, relevant agency documents, and examination reports that covered efforts of banks to counter money laundering efforts. The GAO also interviewed U.S. regulators and conducted a limited bank survey and spoke with officials from key offshore jurisdictions, international bank supervisory groups, and international money laundering task forces. The GAO determined Federal banking regulators may review bank efforts to prevent or detect money laundering in their offshore private banking activities during compliance or Bank Secrecy Act examinations, safety and soundness examinations, or targeted examinations of private banking activities. The most common deficiency related to offshore private banking involved lack of documentation on beneficial owners of private investment companies (PICs) and other offshore entities that maintain U.S. accounts. Secrecy laws that restricted access to banking information or that prohibited site examinations of U.S. bank branches in offshore jurisdictions were key barriers to U.S. oversight of offshore private banking activities. When bank officials were asked to provide documentation on beneficial owners of PICs and other offshore entities that maintained U.S. accounts, they expressed a common concern regarding perceived inconsistencies within and among Federal banking regulators about requests for access to beneficial owner documentation. Bank officials were also concerned about customer confidentiality, the violation of offshore secrecy laws, and the loss of business to other financial institutions not subject to the same documentation requirements. Most banks had started taking actions to correct deficiencies but improvements were still needed. The GAO review concluded the impact of activities by offshore jurisdictions to combat money laundering remains uncertain. Supplemental information on the GAO review of offshore private banking activities is appended. 3 tables