2/3)J.WINER,DAS, CONG.TESTIMONY ON

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PART 2 OF 3: COMBATING MONEY LAUNDERING
TESTIMONY BEFORE US HOUSE COMMITTEE ON BANKING AND FINANCIAL SERVICES
JUNE 11, 1998. JONATHAN WINER, DEPUTY ASSISTANT SECRETARY
BUREAU FOR INTERNATIONAL NARCOTICS AND LAW ENFORCEMENT AFFAIRS

Current Global Trends in Money Laundering 

Several general observations can be made regarding the current
Characteristics of money laundering: 

One, drawn from the two most recent Financial Action Task Force (FATF)
typologies exercises, is that the global nature of the money laundering
phenomenon has rendered geographic borders increasingly irrelevant.
Launderers tend to move their activity to jurisdictions where there are
few or weak money laundering countermeasures. 

Two, a number of traditional money laundering techniques, such as
smurfing and the use of offshore businesses, continue to be prominent
methods for hiding the proceeds of crime. 

Three, while changes continue to be observed in usage of various
traditional money laundering methods, there is a growing trend of money
launderers moving away from the banking sector to the non-bank financial
institution sector. In the non-bank financial sector, the use of bureaux
de change (currency exchange houses) and money remittance businesses
(such as wire transfer Companies) to dispose of criminal proceeds remain
among the most often cited threats. 

Four, there is also a continuing increase in the amount of criminal cash
being smuggled out of countries for placement into financial systems
abroad. In many European and other countries there are no cross-border
controls on the movement of cash, and it is relatively simple for
launderers to take large sums of cash by road to neighboring countries.
As with drugs, law enforcement officials believe that while passengers
are carrying large amounts of cash on their persons, an even greater
amount of cash is probably being hidden in cargo shipments. This trend
of cash smuggling appears to be mostly attributable to the success of
anti-money laundering measures in banks and other financial
institutions. 

Finally, the most noticeable trend is the increase in the use by money
launderers of non-financial businesses or professions related to banking
institutions. Money launderers are increasingly receiving the assistance
of professional facilitators such as accountants, notaries, lawyers,
real estate agents, and agents for the purchase and sale of luxury
items, precious metals, and even consumer durables, textiles, and other
products involved in the import-export trade who utilize a variety of
vehicles to mask the origin and ownership of tainted funds. The use of
shell companies, usually incorporated in offshore jurisdictions, is a
common technique. Laundering of accounts held by relatives or friends is
also popular. 

The Administration's Anti-Money Laundering Activities 

On October 21, 1995, President Clinton signed Presidential Decision
Directive 42 (PDD-42) which specifically addresses the nation's fight
against international crime. <**TEXTS-ABRIDGED**> Significant
achievements since President Clinton signed PDD-42 include: 

 --  Improved internal coordination of international crime fighting
efforts across a broad range of federal agencies and programs.
Administration  officials have developed strategic approaches to combat
international  crime on bilateral, regional, and global bases. These
approaches combine  training with aggressive enforcement that
investigates, prosecutes, and  disrupts major criminal groups. Federal
agencies continued to identify money laundering centers that have
important implications for U.S. national security and where expanded
cooperation would significantly strengthen global anti-money laundering
efforts. Several of these centers  have been approached by the United
States in an effort to increase cooperation bilaterally as well as
multilaterally and to reduce the threat posed by money laundering. As a
result, several of these centers have significantly strengthened their
anti-money laundering regimes and reduced the incidence of money
laundering in their regions. 

  -- Increased and more effectively targeted assistance and training in
the anti-money laundering field. In addition, federal agencies have
sought  better ways of collecting, analyzing, and sharing intelligence
globally  regarding money laundering and other financial crimes.
Bilateral and  multilateral initiatives to stop criminals from moving
funds throughout the  international financial system have been launched
in tandem with other nations. 

  -- Strengthening of multilateral efforts against international crime
through increased emphasis in such forums as the Financial Action Task
Force (FATF), the Caribbean Financial Action Task Force (CFATF), the
Asia-Pacific Group on Money Laundering (APG), the Council of Europe, 
the European Union (EU), the UN, the Organization of American States
(OAS), and the G-8. 

 --  Engagement of other countries in unprecedented bilateral law
enforcement cooperation, with increasing acceptance both of the "nowhere
to hide"  principle and the critical importance of attacking money
laundering. The  United States has worked with more than a dozen
countries especially  vulnerable to money laundering to encourage them
to address their  deficiencies. The United States uses a two-pronged
approach of assistance with anti-money laundering programs and warnings
about  consequences of failing to take action. 

  -- Effective use of International Emergency Economic Powers Act
(IEEPA) authority to block Colombian cartel assets in the United States
and  prevent U.S. entities from trading with the identified individuals
and  businesses. Thus, sanctions have been imposed under IEEPA,
attacking the finances, companies, and individuals owned or controlled
by the Cali cartel as well as other Colombian drug cartels, freezing
their assets in the United States, identifying their front companies and
barring Americans from doing business with them. As of June 10, 1998,
over the past 21/2  years, the Administration has identified 154
businesses and 297 individuals to be directly involved with illegal
raffickers and their so-called legitimate business fronts for a total of
451 individuals and businesses that have been subjected to these IEEPA
sanctions. As part of the PDD-42 process, an interagency group reviews
whether measures can be taken against other international criminals. 

 --  Revocation of U.S. visas of international criminals and corrupt
officials to prevent them from coming to the United States to do
business. 

<***TEXTS-ABRIDGED***>

Treaties and Agreements 

Mutual Legal Assistance Treaties (MLATs) allow generally for the
exchange of evidence and information in criminal and related matters. In
money laundering and asset forfeiture cases, they can be extremely
useful as a means of exchanging banking and other financial records with
our treaty partners. MLATs, which are negotiated by the Department of
State in cooperation with the Department of Justice, are in force with
the following countries: Argentina, the Bahamas, Canada, Hungary, Italy,
Jamaica, Mexico, Morocco, the Netherlands, Panama, the Philippines,
Spain, South Korea, Switzerland, Thailand, Turkey, the United Kingdom,
the United Kingdom with respect to its Caribbean dependent territories
(the Cayman Islands, Anguilla, the British Virgin Islands, Montserrat,
and the Turks and Caicos Islands), and Uruguay. MLATs have been signed
but not yet brought into force with another 21 governments: Antigua and
Barbuda, Australia, Austria, Barbados, Belgium, Brazil, Colombia, the
Czech Republic, Dominica, Grenada, Hong Kong, Israel, Latvia, Lithuania,
Luxembourg, Nigeria, Poland, St. Kitts and Nevis, St. Lucia, Trinidad
and Tobago, and Venezuela. The United States is actively engaged in
negotiating additional MLATs around the world. The United States has
also signed the Organization of American States' MLAT. 

In addition, the United States has entered into executive agreements on
forfeiture cooperation, including: (1) an agreement with the United
Kingdom providing for forfeiture assistance and asset sharing in
narcotics cases, and (2) a forfeiture cooperation and asset sharing
agreement with the Netherlands. The United States has asset sharing
agreements with Canada, Colombia, Ecuador, Mexico, and the United
Kingdom on behalf of Anguilla, the British Virgin Islands, the Cayman
Islands, Montserrat, and Turks and Caicos. 

Financial Information Exchange Agreements (FIEAs) facilitate the
exchange of currency transaction information between the U.S. Treasury
Department and other governments' finance ministries. The United States
has FIEAs with Colombia, Ecuador, Mexico, Panama, Paraguay, Peru, and
Venezuela. FinCEN has a Memorandum of Understanding or an exchange of
letters in place to facilitate exchange of information with the FIUs of
the following countries: Argentina, Australia, Belgium, France,
Slovenia, Spain, and the United Kingdom. 

The United States has Customs Mutual Assistance Agreements (CMAAs) with
the European Community and with the following countries: Argentina,
Australia, Austria, Belarus, Belgium, Canada, Cyprus, the Czech
Republic, Denmark, Finland, France, Germany, Greece, Hungary, Italy,
Japan, Korea, Mexico, Mongolia, New Zealand, Norway, Poland, Portugal,
the Russian Federation, Slovakia, Spain, Sweden, Ukraine, the United
Kingdom, and Yugoslavia. (The U.S. view is that the Socialist Federal
Republic of Yugoslavia (SFRY) has dissolved and that the successors that
formerly made up the SFRY--Bosnia and Herzegovina, Croatia, the Former
Yugoslav Republic of Macedonia, Slovenia, and the Federal Republic of
Yugoslavia (Serbia and Montenegro)--continue to be bound by the
agreement with the SFRY at the time of dissolution.) The United States
has also concluded CMAAs which are not yet in force with the following
countries: Honduras, Ireland, Kazakhstan, the Netherlands, Turkey,
and Venezuela. In addition, the United States has non-binding CMAAs with
both Hong Kong and the United Kingdom. All of these agreements are
patterned after a World Customs Organization Model CMAA. Since
assistance can be provided under these agreements in the enforcement of
any laws related to customs, the USCS uses these agreements to assist in
the gathering of information and evidence for criminal and civil cases
involving trade fraud, smuggling, violations of export control laws, and
most recently, in the growing effort to combat narcotics trafficking and
money laundering. 

<****TEXTS-ABRIDGED*****>
MULTILATERAL ACTIVITIES 

/END PART 2
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