INTERNATIONAL ENFORCEMENT LANDSCAPE

In conjunction with the substantive content on this page, refer also to:

• Treaties, Conventions, Agreements & Principles
• Anti-Corruption Supra National
• Sanctions Compliance International Resource

Efforts to Combat Financial Crimes at the International Level

It is not possible to effectively combat Money Laundering and Terrorism Financing solely with efforts at the domestic/national level.  Due to the interconnectedness of global banking and finance, illicit funds can move from one national border—governed by one set of regulations, to another country governed by different set of regulations.  The funds can skip hop across jurisdictions to another side of the globe. 

As such, international cooperation, mechanisms, capabilities and institutions are required to coordinate investigations and prosecutions of financial crimes, such as money laundering and corruption, in order to serve proper justice and to repatriate the funds to the jurisdiction of origin.

Prevalent International Regulatory mechanisms on combating financial crimes include:

Mutual Legal Assistance Treaties (MLATs):

Mutual Legal Assistance Treaties are treaty instruments between two countries, negotiated by and entered into force by the participating treaty countries.  MLATs are very effective tools in investigating and prosecuting money laundering and terrorism financing crimes, especially when combined, if applicable, with extradition treaties.  MLATs allow generally for the exchange of evidence and information in criminal matters and proceedings related to criminal matters. In money laundering cases, MLATs can be extremely useful to obtain banking and other financial records from treaty partners.  MLATs are different in characteristics and functions compared to multilateral organizations which are institutions serving broader mandates and are comprised of multiple member states.

World Map of MLATs currently in existence.

United Nations Treaties, Conventions and Agreements

Despite its effectiveness, the limitation of MLATs is that it is available only to treaty parties.  As such, larger institutional mechanisms are required to combat transnational crimes that involve multiple countries or even just two countries not bound by MLAT treaty mechanisms.  Multilateral organizations founded by member nations in order to coordinate transnational efforts—cooperative or coercive, in pursuit of public goods and other humanitarian goals also provide robust mechanisms to combat financial crimes.  Most prominent in this regard are several binding Conventions on money laundering, terrorism financing, corruption and sanctions entered into by countries around the world under United Nations’ platform and coordination for international action and cooperation as summarized below.

United Nations

As a community of nations, the United Nations is an integral part in global anti-money laundering and counterterrorism efforts.  Nation States also assume responsibilities and obligations, as signatories of the United Nations and other Treaties and Conventions promulgated and signed under its auspices. 

Treaties, Agreements, Conventions & Principles Page <link to the page> contains information on the relevant UN Treaties, Conventions and Agreements currently in force in the global fight against money laundering and counterterrorism financing.  Some of the Key Treaties in this regard include:

• Vienna Convention- The 1988 United Nations Convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances:
  • This is the first international legal instrument to embody the money-laundering aspect of this new strategy and is also the first international convention which criminalizes money-laundering.
• Palermo Convention- United Nations Convention against Transnational Organized Crime
  • Adopted by General Assembly resolution 55/25 of 15 November 2000, this is the main international instrument in the fight against transnational organized crime.
  • The Convention is further supplemented by three Protocols, which target specific areas and manifestations of organized crime: the Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children; the Protocol against the Smuggling of Migrants by Land, Sea and Air; and the Protocol against the Illicit Manufacturing of and Trafficking in Firearms, their Parts and Components and Ammunition.
• UN Convention Against Corruption (UNCAC)
• Palermo Convention and UNCAC widen the scope of the money-laundering offence by stating that it should not only apply to the proceeds of illicit drug trafficking, but should also cover the proceeds of all serious crimes.
• Palermo Convention and UNCAC urge States to create a comprehensive domestic supervisory and regulatory regime for banks and non-bank financial institutions, including natural and legal persons, as well as any entities particularly susceptible to being involved in a money-laundering scheme.
  • The Conventions also call for the establishment of Financial Intelligence Units (FIUs).
• International Convention for the Suppression of the Financing of Terrorism
  • requires Member States to take measures to protect their financial systems from being misused by persons planning or engaged in terrorist activities.

The Financial Action Task Force on money laundering (FATF)

This is the key body which was established by the G-7 Summit in Paris in 1989 to develop a coordinated international response to combat money laundering. One of the first tasks of the FATF was to:

• The Forty Recommendations on money laundering which set out the measures national governments should take to implement effective anti-money laundering program. 
• In addition FATF also developed 9 Special Recommendations on related to the Combatting of Terrorism Financing. 

FATF is tasked with the responsibility of examining money laundering techniques and trends, reviewing the action which had already been taken at a national or international level, and setting out the measures that still needed to be taken to combat money laundering.  FATF evaluates the adherence of the member countries to these recommendations and special recommendations by performing Mutual Evaluations, which also includes evaluation of MLATs.

FATF Style Regional Bodies: There are also eight FATF-style regional bodies that, in conjunction with the FATF, constitute an affiliated global network to combat money laundering and the financing of terrorism.

Go to this page <link to FATF, Central Banks and Other Standard Setting Organizations> for more

Enforcement Mechanism

1. MLAT provisions for noncompliance
2. UN sanctions and/or censure
3. FATF watch list, NCCT, gray and black list
4. Voluntary action by national governments, public and private organizations

 

Principles and Standard Setting Organizations, including those that provide technical assistance:

In addition, there are several international organizations providing guidelines and principles with respect to AML/CFT, including cooperative organizations founded for the purpose of cooperation, efficiency and to enhance competence and expertise in combating money laundering and terrorism financing.

• The Wolfsberg Global Standards is promoted by The Wolfsberg Group— an association of thirteen global banks which aims to develop frameworks and guidance for the management of financial crime risks, particularly with respect to Know Your Customer, Anti-Money Laundering and Counter Terrorist Financing policies
• Bank for International Settlements (BIS)— Established on 17 May 1930, the Bank for International Settlements (BIS) is the world's oldest international financial organisation. The BIS has 60 member central banks, representing countries from around the world that together make up about 95% of world GDP.  BIS Basel Committee provides guidelines on anti-money laundering and countering terrorist financing with a "General guide to account opening"
• United Nations Office on Drugs and Crime (UNODC)— UNODC is a global leader in the fight against illicit drugs and international crime. Established in 1997 through a merger between the United Nations Drug Control Programme and the Centre for International Crime Prevention, UNODC operates in all regions of the world through an extensive network of field offices. 
• For the purposes of money laundering UNODC operates the International Money Laundering Information Network (IMoLIN), which is an Internet-based network assisting governments, organizations and individuals in the fight against illicit financial flows, money laundering and the financing of terrorism. IMoLIN has been developed with the cooperation of the
• International Monetary Fund (IMF)<link>— helps shape domestic and international AML/CFT policies with its broad experience in exercising surveillance over members’ economic systems, conducting financial sector assessments, and providing capacity development to its member countries.
• World Bank Financial Integrity— Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) initiatives, along with World Bank’s asset-disclosure tools, offer innovative avenues for fighting crime and addressing such development issues as corruption, financial inclusion, the ease of doing business, stolen asset recovery, and illicit financial flows. The team also houses the Stolen Asset Recovery Initiative (StAR), a partnership between the World Bank Group and the United Nations Office on Drugs and Crime (UNODC).

Special Note on United States of America:

In global anti-money laundering and counterterrorism efforts, USA plays a unique and vital role in several ways:

• An unprecedented, national priority and commitment to fight terrorism and money laundering after the attacks of September 11, 2001;
• The unparalleled resource and capacity at USA’s disposal, which it is able to deploy towards in this regard;

Despite being a nation state, the USA is in a position to prescribe and enforce anti money laundering, counter-terrorism and sanctions measure that it enacts (however, in accordance with its own international obligations including obligations it has undertaken as a signatory to UN treaties).  So in some arenas the USA, in effect, appears as if it is an international regulator.  This is due to:

• USAs’ status as the lynchpin of global commerce and economy, most notably the status of the US dollar as a global reserve currency which gives USA unmatched in regulating or at least influencing what happens outside its border worldwide, by controlling how the US dollar is used.