Strategy Provides Roadmap to Close Loopholes Exploited by Criminals and Illicit Actors
Recommendations Include Increasing Transparency, Leveraging Partnerships, and Addressing Technological Risks
WASHINGTON – Today, the U.S. Department of the Treasury issued the 2022 National Strategy for Combatting Terrorist and Other Illicit Financing (2022 Strategy), which identifies measures to increase transparency in the U.S. financial system and strengthen the U.S. anti-money laundering/counter the financing of terrorism (AML/CFT) framework. The 2022 Strategy, prepared pursuant to Sections 261 and 262 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), addresses the key risks from the 2022 National Money Laundering, Terrorist Financing, and Proliferation Financing risk assessments and reflects the complex challenges posed by a world remade by the Covid-19 pandemic, the increasing digitization of financial services, and rising levels of corruption and fraud.
“Illicit finance is a major national security threat and nowhere is that more apparent than in Russia’s war against Ukraine, supported by decades of corruption by Russian elites,” said Assistant Secretary of the Treasury for Terrorist Financing and Financial Crimes Elizabeth Rosenberg. “We need to close loopholes, work efficiently with international partners, and leverage new technologies to tackle the risks posed by corruption, an increase in domestic violent extremism, and the abuse of virtual assets. Strengthening safeguards against money laundering and terrorist financing here in the U.S. will keep the international financial system strong.”
The 2022 risk assessments highlighted the illicit finance risk posed by the abuse of legal entities, the complicity of professionals that misuse their positions or businesses, small-sum funding of domestic violent extremism networks, the effective use of front and shell companies in proliferation finance, and the exploitation of the digital economy. The 2022 Strategy reflects the commitment of the Biden-Harris Administration to protect the U.S. financial system from the national security threats enabled by illicit finance, especially corruption.
To accomplish this, the 2022 Strategy identifies four priorities and fourteen supporting actions that will guide U.S. government efforts to effectively address the most significant illicit finance threats and risks to the U.S. financial system.
The four priority recommendations:
- Close legal and regulatory gaps in the U.S. AML/CFT framework that illicit actors exploit to anonymously access the U.S. financial system through the use of shell companies and all-cash real estate purchases;
- Continue to make the U.S. AML/CFT regulatory framework for financial institutions more efficient and effective by providing clear compliance guidance, sharing information appropriately, and fully funding supervision and enforcement;
- Enhance the operational effectiveness of law enforcement, other U.S. government agencies, and international partnerships in combating illicit finance so illicit actors can’t find safe havens for their operations, and
- Enable the benefits of technological innovation while mitigating risks, staying ahead of new avenues for abuse presented by virtual assets and other new financial products, services, and activities.
The 2022 Strategy identifies several avenues for taking action or continuing work already in progress, including legislative and regulatory action underway to enhance transparency in company formation and real estate purchases, applying AML/CFT requirements to previously uncovered financial institutions, professions, and sectors to fill gaps and reduce exemptions, clarifying the application of certain regulatory requirements to virtual asset activities, increased public awareness campaigns, more public-private partnerships to foster innovation, and collaboration with foreign partners on illicit finance issues.
In line with the recommendations of this Strategy, on May 8th, Treasury for the first time prohibited U.S. persons from providing accounting, trust and corporate formation, or management consulting services to any person located in the Russian Federation, and identified those services sectors as eligible for sanctions in the future.
The 2022 Strategy, along with the 2022 National Risk Assessments, will assist financial institutions in assessing the illicit finance risk exposure of their businesses and support the construction and maintenance of a risk-based approach to countering illicit finance for government agencies and policymakers. Treasury’s Office of Terrorist Financing and Financial Crimes prepared the 2022 Strategy, in consultation with office and bureaus in the Treasury Department, and the agencies, bureaus, and departments of the federal government that also have roles in combating illicit finance.