Civil Society Welcomes U.S. Anti-Money Laundering Review

November 14th, 2012

Coalition of NGOs Urges Treasury to Address Beneficial Ownership Issues, Expand List of Predicate Offenses, Require Enhanced Due Diligence for All PEPs
Transparency Groups Originally Requested AML Review in September 2011

“Enforcement Must Be a Priority”

WASHINGTON, DC – The Financial Accountability and Corporate Transparency (FACT) Coalition1 welcomed news that the U.S. Department of the Treasury will be leading a government task force to review the nation’s antiquated anti-money laundering (AML) regulations.  The FACT Coalition—an alliance of more than 60 prominent anti-corruption, transparency, small business, and global development groups—originally called on the Treasury Department in September 2011 to undertake such a review.

“We are pleased the Administration recognizes that there are holes in the current regulatory regime that need to be addressed in a comprehensive manner,” said Heather Lowe, legal counsel and director of government affairs at Global Financial Integrity (GFI), a member of the FACT Coalition.  “A piece-meal approach to reform simply won’t cut it.”

The Coalition members recommend that the task force identify and make recommendations to close gaps in the current AML framework, including requiring financial institutions to identify the true, human, beneficial owner of all accounts and to perform enhanced due diligence on all politically exposed persons (PEPs), and expanding the list of predicate offenses for money laundering to include any felony under U.S. law, whether committed domestically or abroad. The review should also assess how well banks are managing money laundering risk and the extent to which the regulators are enforcing U.S. laws to prevent money laundering.

“How can U.S. banks not know who their true, human clients are?” noted Stefanie Ostfeld, policy advisor for FACT Coalition member Global Witness. “When a bank does not identify the beneficial owner of an account, it cannot meaningfully assess risk, and this leaves the U.S. financial system wide open to the laundering of the proceeds of corruption, drug trafficking and organized crime.”

“It is a huge loophole to only require additional scrutiny on private banking accounts of politically exposed persons (PEPs) with assets over $1 million,” added Ms. Ostfeld. “$900,000 can bankroll a lot of mischief.”

“The U.S. is only one of a few OECD countries that still has a limited, specific list of crimes that can be underlying crimes for a money laundering case, and that list is even shorter when the crime creating the money to be laundered is committed abroad,” said Ms. Lowe of GFI.  “Most countries take the approach that any crime—or the equivalent any U.S. felony—can be a predicate offense for money laundering.  The U.S. should adopt such an approach and bring itself in line with international practice.”

Finally, the groups noted that even if AML regulations are improved, it remains crucial to ensure that they are being adequately enforced.  In their 2011 letter to the U.S. Treasury Department, the FACT Coalition highlighted a recent study by the UK’s Financial Services Authority (FSA), which found three-quarters of British banks were “not doing proper customer due diligence” with the regulator also “admitting it is likely that British banks harbor corrupt funds.”  The letter continued to state, “There is no evidence to suggest that the situation in other financial centers, including the U.S., would be any different from what the FSA found in the U.K.”

Money laundering scandals at HSBC Bank USA, JPMorgan Chase, and Citibank within the past 12 months suggest U.S.-based banks are still not adequately complying with the current AML regulations.

“Even if our nation’s money laundering regulations are improved, until the punishment impacts a bank’s bottom line and senior bankers are directly held accountable, banks are not going to change their behavior and seriously tackle dirty money,” explained Ms. Ostfeld.



Stefanie Ostfeld
Policy Advisor
Global Witness

Clark Gascoigne
Communications Director
Global Financial Integrity
202-293-0740 x222

Nicole Tichon
Executive Director
Tax Justice Network USA

Notes to Editors:

  1. The FACT Coalition consists of: Action Aid USA, Americans for Democratic Action, American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), American Federation of State, County and Municipal Employees (AFSCME), American Sustainable Business Council, Arizona Public Interest Research Group, Business and Investors Against Tax Haven Abuse, Business for Shared Prosperity, California/Venezuela Region – Religious Sisters of Charity, California Public Interest Research Group, Campaign for America’s Future, Citizen Action / Illinois, Citizens for Tax Justice, Dean Baker, Co-Director, Center for Economic and Policy Research, John Schmitt, Senior Economist, Center for Economic and Policy Research, Eileen Appelbaum, Senior Economist, Center for Economic and Policy Research, Colorado Public Interest Research Group, Connecticut Public Interest Research Group, EarthRights International, EG Justice, Florida Public Interest Research Group, Firedoglake, Friends of the Earth, Georgia Public Interest Research Group, Global Financial Integrity, Global Witness, Government Accountability Project, Illinois Public Interest Research Group, Institute for Policy Studies –Program on Inequality and the Common Good, Iowa Citizen Action Network, Iowa Citizens for Community Improvement, Iowa Farmers Union, JPIC Ministry – Missionary Oblates, Iowa Public Interest Research Group, Jubilee USA Network, Leadership Conference of Women Religious, The Main Street Alliance, Maryland Public Interest Research Group, Massachusetts Public Interest Research Group, Michigan Public Interest Research Group, Missouri Public Interest Research Group, Move to Amend – Iowa Chapter, New Hampshire Public Interest Research Group, New Jersey Public Interest Research Group, New Mexico Public Interest Research Group, New Rules for Global Finance, Ohio Public Interest Research Group, North Carolina Public Interest Research Group OMB Watch,, Oregon Public Interest Research Group, Pacific Environment, Pennsylvania Public Interest Research Group, Project On Government Oversight (POGO), Public Citizen, Sargent Shriver National Center on Poverty Law, Service Employees International Union (SEIU), SEIU Local 668, Pittsburgh, PA, Tax Justice Network USA, The South Carolina Small Business Chamber of Commerce, Texas Public Interest Research Group, Washington Public Interest Research Group, Wisconsin Public Interest Research Group, UFCW Local 23, Western PA, U.S. Public Interest Research Group, U.S. UNCUT, and Wealth for the Common Good.  Click here to read more about the Financial Accountability and Corporate Transparency (FACT) coalition.
  2. Click here to read, “U.S. Treasury to lead review of anti-money laundering rules,” Reuters, November 12, 2012.
  3. Click here to read coverage of the FACT Coalition’s 2011 letter to the Treasury Department, “Anti-Corruption Coalition Requests US AML Review,” The Wall Street Journal (Blog), September 14, 2011.
  4. Click here to download the FACT Coalition’s 2011 letter to the Treasury Department.


Written by FACT Coalition

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