Areas to consider when numbering an investigation are:. Criminal Investigation is also active in the development of criteria for identifying potential fraud referrals from the Repeat Non-filers Project. This initiative examines the specific market segments of repeat non-filers and establishes a tracking system to better evaluate subsequent compliance efforts. The following actions should be taken:. Criminal Tax Counsel should be contacted when drafting responses to frivolous correspondence. All frivolous correspondence is being forwarded to Ogden for processing in accordance with the procedures set forth in IRM 4.
Generally, upon receipt of frivolous correspondence, the frivolous return program unit will send letter SC Publication If the individual fails to heed this advice, no further letters are sent. When an individual files a frivolous return, the frivolous correspondence unit will send the individual letter SC admonishing the individual that the information they have sent is frivolous and their position has no basis in law. The centralization of the Frivolous Return Program at the Ogden Compliance Campus did not occur until FY , therefore the handling of frivolous correspondence may not have been handled consistently during the IRS reorganization.
The Frivolous Filer Unit generally does not maintain copies of most frivolous correspondence received, due to the sheer volume of documents. The illegal source income program encompasses a broad range of illegal activity, exclusive of those investigations meeting the criteria of the narcotics program. These priority areas include:. Bankruptcy -- investigations involving embezzlement, abuse, misappropriation, or deception in bankruptcy proceedings. Financial Institution Fraud -- investigations involving fraud against or related to a bank, credit union, savings bank, check cashing business, thrift, stockbroker, or related regulatory agency.
Entitlement and Subsidy Fraud -- investigations involving embezzlement, abuse, misappropriation, or deception in various government sponsored programs. Health Care Fraud -- investigations involving embezzlement, abuse, misappropriation, or deception by or from the health care industry provider, supplier, or broker. Insurance Fraud -- investigations involving embezzlement, abuse, misappropriation, or deception against the insurance industry that is not related to health care insurance. Public Corruption -- investigations involving violations of the public trust by government officials or employees.
Telemarketing Fraud -- investigations involving the use of telephonic or wire communications to fraudulently promote, solicit, or market products or services. These investigations may be investigated as part of an organized crime strike force See IRM 9. Identity theft violations should only be utilized when it enhances the overall investigative strategy. Investigations may involve violations of any or all of the criminal statutes within the jurisdiction of CI, including money laundering and currency crimes. The criminal provisions relating to bankruptcy fraud were enacted to preserve honest administration in bankruptcy proceedings and ensure the distribution to creditors of as much of the bankrupt's estate as possible.
There are special disclosure provisions for a bankruptcy investigation, see IRM Preferably, bankruptcy fraud will be charged in conjunction with violations of the tax, money laundering, or currency statutes within CI's statutory jurisdiction. In instances where prosecution of these offenses is not practicable, prosecution can be recommended for bankruptcy fraud alone.
Investigation selection is critical in accomplishing program goals. The following should be carefully weighed in selecting bankruptcy investigations:. IRS generated fraud referrals should receive priority a successful fraud referral program is essential to meeting mutual compliance goals. Emphasis should be placed on egregious high impact investigations, the estimated tax liability should materially exceed the LEM criteria see LEM 9.
The estimated loss due to bankruptcy fraud should equal or exceed a base offense level 14 of the US Sentencing Guidelines. The investigations selected should further the goals of CI's bankruptcy fraud program, the employment tax initiative, and the fraud referral program. In bankruptcy fraud investigations, collection function records should be researched for potentially false Forms A, Forms B or offers in compromise. Criminal Investigation's compliance effort in financial institution fraud is designed to address criminal violations involving fraud relative to banks, savings and loan associations, credit unions, and other financial institutions such as check-cashing businesses, stockbrokers, and thrifts.
Criminal tax, money laundering and currency investigations make major contributions to the Federal government's effort to combat the various fraudulent schemes being committed against financial institutions. For CI, these investigations focus on unreported income or the illegal laundering of income obtained by violators operating inside and outside the financial institution. This group is comprised of regulatory and law enforcement agencies that either regulate financial institutions or investigate frauds committed against these institutions.
This group also seeks to improve the coordination and exchange of information between agencies involved in the investigation and prosecution of financial institution fraud cases. See IRM 1. Entitlement is a legal right to benefits, income, or property, which may not be abridged without due process. In some instances, in order to establish the entitlement, citizenship is not required, only residency in the United States. Various Federal agencies manage entitlement programs, which may be administered through corresponding or related state agencies. The applicant must usually comply with any procedural restrictions or qualifications.
The award of assistance is not discretionary. Accordingly, proof of entitlement to an economic benefit does not include proving the validity of the doctrines or beliefs of the applicant. Most Federal agencies have their own Office of Inspector General OIG , which oversees and investigates civil misuse and criminal abuse of their respective entitlement programs. Criminal Investigation's involvement in entitlement fraud is based on fraudulent undue economic enrichment from these programs.
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Criminal Investigation may investigate these economic crimes with or without the respective OIG's assistance. The respective agency's OIG can provide valuable information regarding their entitlement program requirements and qualifications. The cost of health care, especially Medicare and Medicaid, has focused attention on the fraud and abuse taking place in the health care industry. Many health care insurers operate independently without compatible data processing systems. This limits cooperative efforts among insurers and contributes to the problem of health care fraud.
So, a fraudulent scheme discovered in one jurisdiction may well continue to operate undetected in other jurisdictions. Headquarters keeps apprised of changes in the health care industry and of significant investigations through participation in the National Health Care Anti-Fraud Association and various fraud working groups.
Traditionally, processing health care claims and disbursing funds to health care providers is cumbersome and paper intensive. Innovative methods to process and pay claims electronically to reduce costs and increase productivity at the Federal, state, and private insurance levels have facilitated fraud, making it difficult for Federal officials to detect. During the course of an investigation involving health care, patient records are often sought by special agents. While there is no recognized privilege in this area, the physician-patient privilege must be addressed.
This also applies to patient records for psychotherapy-related matters. The privilege is determined on a case-by-case basis, depending on the judicial district and circuit involved. Criminal Tax Counsel advice should be sought when patient records are to be requested. The use of the money laundering and forfeiture statutes in health care fraud prosecutions presents unique issues, because health care fraud investigations often involve health care providers that conduct on a substantial amount of legitimate business.
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In such investigations, the legitimate and illegitimate funds are often deposited into the same account. Special agents do not need to trace the origin of all funds deposited into a bank account to determine exactly which funds were used for what transaction. However, every effort should be made to trace the flow of illegal funds in financial transactions as closely as possible. In such investigations, the special agent should make an effort to carefully trace the flow of the SUA proceeds in the proposed money laundering transactions.
Medicare and Medicaid account for nearly one-third of the nation's health care spending.
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Medicare is the Federally funded program designed to provide health care insurance to the aged, blind, and disabled. Medicaid is a joint Federal and state-funded health care program that provides subsidized payments for medical services for persons unable to afford them. The states administer the Medicaid program, even though it is funded on a basis between the Federal government and the states.
Medical insurance plans make payments to medical providers on a fee-for-service basis, a capitated basis, or a blend of fee-for-service and capitated basis. The major difference between a fee-for-service and a capitated plan managed care usually by a health maintenance organization HMO is the delivery of and payment for services. In a fee-for-service, profits increase with increased submission of billings for services. Capitated payments are based on a per-patient rate. The medical provider in a capitated HMO plan reaps profits if the cost of services for a patient is less than the allocated payment per patient.
The under utilization of services is a significant consideration in the capitated system, while over utilization of services i. There has been a trend toward managed care, or HMOs, in the health care industry. Healthy patients are selecting less costly HMOs versus he traditional fee-for-service plans. Investigators have to concentrate on vulnerable areas of fraud, particularly with the knowledge that the under utilization of services is a concern in this particular industry and provides the opportunity for kickbacks to keep referrals for service to a minimum.
Criminal Investigation's Insurance Fraud Program addresses criminal tax and money laundering violations relative to insurance claims and other frauds perpetrated against insurance companies exclusive of medical or health care fraud investigations. Specifically, investigations in this program involve property or casualty insurance, staged or caused accident insurance claims, reinsurance, premium diversion including Multiple Employer Welfare Arrangements , and worker's compensation insurance. The McCarran-Ferguson Act of reserves regulation of the insurance industry to the states.
As a result, the Federal oversight role of the insurance industry is limited. Regulation of solvency requirements; licensing of insurance companies, agents and brokers; setting policy forms and rates; resolving consumer complaints; and imposing administrative sanctions are just some of the responsibilities of the state authority in the insurance industry. These are generally handled by a state insurance commissioner or department that may have limited resources or lack jurisdiction to effectively confront and prosecute some of the sophisticated fraudulent schemes that have multi-state or international off-shore operations.
There have been reports by Congress, private organizations, and industry groups that over the last few years insurance company insolvencies are a growing threat to the health of the industry and that fraud is a contributing factor. As there are essentially no Federal agencies or laws regulating the insurance industry, CI plays a role in the investigation of tax and money laundering violations associated with insurance fraud. The primary Federal statutes available to prosecutors to combat insurance fraud are mail and wire fraud and violations of the interstate transportation, money laundering, and tax statutes.
As regulated by the states, there are requirements for reserves of assets that are actuarially determined to insure that funds are available to cover the claims that occur relative to the types of policies written. Once policies are written that encumber the current level of reserves, additional policies can only be written if additional reserves are obtained through operating profits, returns on investments, or the amount of liability against current reserves is reduced.
As a result, the reinsurance industry has emerged as a method for insurance companies to write more insurance policies when current reserves have reached their limit. Reinsurance treaties are simply insurance policies taken out by an insurance company that will pay the principal insurance company for a certain type of claim. Also, some unscrupulous reinsurance companies have used phony letters of credit or other fraudulent assets to qualify for business. Foreign reinsurers have, for the most part, been beyond the reach of state regulators, especially if the reinsurers are domiciled in countries where regulation is weak.
Reinsurance frauds are surfacing in many parts of the country and have grown significantly. Frauds involving reinsurance usually have international implications and often involve foreign and domestic trusts. The large amount of money involved in employee plan trust funds and tax exempt organizations provides both a temptation and an opportunity for fraud.
The traditional criminal and civil provisions of Title 26 will apply to violations in these areas. The only significant difference may be that instead of a tax deficiency, the element of damage to the government may be established by showing a tax benefit, such as attempting to make taxable income non-taxable or taxable contributions tax deductible.
While the Department of Labor DOL is primarily responsible for the Employee Retirement Income Security Act enforcement, the IRS has significant involvement, since qualified employee plans receive favored tax treatment via the deduction of the contribution by the employer, tax exemption for the related trust, and the deferral of income by the employee. The Tax Reform Act of and other tax laws subsequently enacted establish new and more stringent requirements:. These information reports and returns are used to determine whether the submitting organization continues to qualify for favored tax treatment and to report any taxes for which it may be liable.
Like the application forms, these reports and returns are subscribed under the penalty of perjury. If not, the information item or PI will be closed and all applicable information will be forwarded to the appropriate operating division in accordance with established procedures see IRM 9. Criminal Investigation's transmittal memorandum to the other operating division with the open case will advise the operating division that information CI obtained is being referred for association with their open case.
No suggestions, guidance, or direction is to be provided by CI as to actions to be taken by the receiving operating division. This is a precaution against the use, or perceived use, of this provision for developing a criminal investigation under the guise of a civil proceeding.
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This section makes it a felony for anyone to willfully subscribe to a return or other document made subject to penalties of perjury, which is not believed to be true and correct as to every material matter. Forms filed with the IRS in connection with employee plans and exempt organizations contain a declaration that they are made subject to the penalties of perjury. Additionally, the declaration includes a statement that supporting documents are certified as being true and correct and this certification is subject to the same penalty.
To prove tax evasion, the government must show a tax deficiency, affirmative acts to evade assessment or payment of tax, and willfulness. Criminal Investigation participates in numerous investigations involving individuals who have violated the public trust. The subjects of these investigations are persons from all levels of government - local, county, state, Federal, and foreign.
Public corruption investigations involve a variety of offenses including bribery, extortion, embezzlement, kickbacks, money laundering, and tax fraud. Criminal Investigation generally investigates the tax and money laundering aspects in conjunction with other law enforcement agencies. Telemarketing fraud is one of the largest segments of consumer fraud. The development of advanced telecommunication networks expanded the abilities of telemarketers, and a corresponding increase in complaints alleging fraudulent schemes has been reported in all 50 states.
Criminal Investigation is combating telemarketing fraud by conducting investigations of the major schemes in conjunction with multi-agency task forces. Criminal Investigation brings a financial expertise to these investigations that is critical to their success. The computer software for obtaining access to the FTC database is in the Document Manager packages to facilitate availability of the database by the field.
This statute may be utilized where a prize is promised upon payment of the related tax and makes it a crime for anyone to solicit payment for the sale or lease of an article and falsely state, orally or in writing, that any part of the payment, both sale or lease, is to pay Federal tax. Organized crime refers to self-perpetuating, structured, and disciplined associations of individuals who combine for the purpose of obtaining monetary or commercial gains or profits, either wholly or in part, by illegal means. These groups traditionally have a strong leader to whom group members and associates owe loyalty and to whom they pay a percentage of their profits.
These groups generally engage in illegal enterprises such as drug trafficking, gambling, loan sharking, extortion, theft, arson, labor racketeering, pornography, prostitution, white collar crimes of all descriptions, and money laundering. They usually employ extortion, bribery corruption and violence to achieve their objectives. Criminal Investigation, in conjunction with other Federal, state and local law enforcement agencies, pursues tax, currency, and money laundering investigations of organized crime groups.
For additional information see IRM 9. Identity theft should only be utilized when it enhances the overall investigative strategy. The issue is most likely to occur in the QRP area where individual identities are stolen with the intent to file false tax returns claiming tax refunds. In such investigations, the individuals who steal the identities may be different from the individuals who actually file the tax returns and ultimately obtain the false refunds.
In some instances, the investigation may be unable to develop sufficient evidence to sustain a criminal prosecution for substantive tax or conspiracy charges against the supplier of the false identities. The identity fraud must have a direct link to the substantive tax or the related conspiracy violation that is the focus of the criminal investigation. Therefore, it should be a rare exception that identity theft is charged without a companion substantive tax or related conspiracy violation.
The special agent should seek the advice of CT Counsel if forfeiture is being considered. If directly linked to substantive tax violations, prosecution recommendations will be reviewed in the same manner as traditional tax investigations to assure appropriate application and favorable prosecution potential. The money laundering laws criminalize activity involving the transacting of proceeds derived from " specified unlawful activity" in a subsequent financial transaction.
Note: Converting a pure tax administrative investigation to a money laundering investigation is contrary to DOJ policy. Schemes involving the submission of sight drafts, bills of exchange and other fictitious financial instruments to the IRS and other government agencies are a continuing problem. The Denver LDC will be responsible for analyzing bogus monetary instruments to identify potential schemes and trends. Fictitious obligations prosecution recommendations will be reviewed in the same manner as a traditional tax investigation to ensure appropriate application and favorable prosecution potential.
Criminal Investigation investigates leaders and other top echelon members of high-level drug trafficking organizations, including business and financial associates, and the orchestration of financial activities directing the transportation, distribution, and laundering of illegal drug proceeds. Narcotics Other — investigations involving financial activities of significant individuals or entities who direct the transportation, distribution, and laundering of illegal drug proceeds.
Money laundering and currency violations are discussed in IRM 9. Schemes are also detailed in subsection 9. The NMLS is the blueprint for the Federal government's comprehensive effort to aggressively combat money laundering.
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Money laundering techniques are not only employed by criminals to divert illicit funds into legitimate enterprises, but are often used to facilitate tax evasion by making possible the movement of untaxed funds through the world's financial systems. Money laundering and currency crimes are discussed in IRM 9. Criminal Investigation's mission is to identify and prosecute the most significant tax, currency, and money laundering offenders and to pursue the assets of those offenders both domestically and internationally.
Investigative efforts are designed to use the broad authority of the statutes criminal, tax, and forfeiture within CI's investigative jurisdiction.
Investigations may be developed and investigated through joint task force efforts. Assignment of special agents to strategic foreign posts to facilitate the development and use of information obtained in host foreign nations. Criminal Investigation, in support of the national effort to fight terrorism, provides financial investigative and devoted resources in support of terrorist task force initiatives and security demands. Criminal Investigation utilizes all violations within its jurisdiction to combat terrorism.
These violations include, tax, money laundering and currency violations. Criminal Investigation special agents assigned to the JTTF utilize their unique financial investigative skills to investigate terrorist financing and combat international terrorism see IRM 9. Every terrorism investigation must be classified under fraud scheme code Domestic Terrorism or International Terrorism. The illegal activity code of Terrorism should be used in addition to the appropriate terrorism fraud scheme code. The USA Patriot Act: a amended the Right to Financial Privacy Act, allowing CI to obtain financial institution information and records relative to terrorism in certain circumstances by a "Special Procedures Request" as opposed to obtaining them via subpoena or court order, and b created a Patriot Act Section request for obtaining account and transaction information relating to terrorism or money laundering see IRM 9.
Home IRM Part9 9. Part 9. Criminal Investigation Chapter 5. Investigative Process Section 3. Criminal Investigation Strategies. Also introduced in this section are the Money Laundering and Terrorism strategies. Compliance Strategy. Income Tax Investigations. Employment Taxes. Employment Tax Schemes.
Employment Tax Investigations. The SAC may furnish suggestions to the other operating divisions for future collection action in: any referral which was declined by CI an investigation in which CI declined prosecution but where the taxpayer's actions might result in more favorable circumstances for a prosecution recommendation at a later date.
Excise Tax. Excise taxes can be based upon any of the following factors: selling price of merchandise or facilities services sold or used number of units manufactured, etc. Note: The preceding excise taxes on alcohol, tobacco, and firearms are not under the jurisdiction of CI.
Fuel Excise Tax. Wagering Excise Tax. Abusive Tax Schemes. The benefits of using parallel proceedings against promoters of abusive tax schemes are: An injunction usually stops the promotion much earlier than possible through criminal enforcement alone.
Federal, state, local, and Native American tribal governments communities and social institutions. Gaming Investigations. Refund Fraud Investigations. Fraud Detection Center. Sources of Refund Fraud Investigations. Potential Violations. False Claims Violations. Identity Fraud Violations. Potential Forfeiture Provision. Indicators of Refund Fraud. The most important task of the FATF is to assess compliance with international standards through a consistent process for each member jurisdiction.
It continually develops methodological guidelines for evaluations to ensure each of the assessments follow a harmonized methodology. The evaluation process includes the preparation of questionnaires that are sent to the authorities of each country in advance so that evaluators are familiar with the established procedures prior to their Mutual Evaluation. During the country visit, consultations are conducted with national authorities, and also with relevant financial and non-financial private sector agencies and associated professionals.
The FATF completed the third round of compliance assessments for each of its 34 member jurisdictions in , though some members remain under a follow-up procedure. In practice, the definition of a list of non-cooperating countries allowed more than twenty jurisdictions to receive FATF support and significantly improve their financial crime prevention schemes. One of its important contributions has been the revision and adoption of a new set of Recommendations, which were approved in February following a joint process of consultation with the FATF-Style Regional Bodies and other international observers.
These new Recommendations place a special emphasis on creating transparency, preventing corruption and managing the risks of new and emerging threats to financial sector stability. Of particular relevance given the current global state of affairs is the challenge of combating terrorist financing. Most anti-money laundering and counter-terrorist financing strategies have been mainstreamed throughout the new Recommendations, replacing the need for a set of Special Recommendations; however, Section c applies a specific focus to combat the financing of terrorism and the proliferation of weapons of mass destruction.
The Recommendations Chart 3 are set to be applied uniformly in the upcoming fourth round of Mutual Evaluations, that will be conducted in two jointly re-enforcing components: a Technical Compliance Assessment to measure the level of conformity with the revised standards, and an Effectiveness Assessment, which will rely on the judgment of the assessors, taking into account national context and the effective level of risk Financial Action Task Force, a.
The assessment of a country will result in two sets of ratings: "Technical Compliance" which ranges from Compliant to Non-Compliant, and "Effectiveness" from High to Low. Chart 3 Cont. Their geographical distribution allows them to perform the important job of identifying risks and emerging typologies, 22 sometimes identifying ones that are regionally specific Caribbean Financial Action Task Force, ; Financial Action Task Force of South America, ; Another important contribution of the FSRBS has been supporting countries in the drafting of laws and regulations that comply with international standards.
As in the case of the FATF, their most important task is to conduct Mutual Evaluations for member jurisdictions in order to identify potential weaknesses in their national protection schemes, and to support countries in finding appropriate mechanisms to address them. Some jurisdictions also participate directly as members of the FATF. Since then, the Egmont Group has met formally on an annual basis, and today operates with the support of a Technical Secretariat based in Canada. This has allowed the Group to establish formal procedures for operational information exchange, the promotion of best practices and training.
Currently, there are countries with FIUS recognized by the Egmont Group, who been divided into five working groups. One of the most important results has been the negotiation of bilateral agreements to exchange information among members, which allows for the tracking of international money laundering or the financing of terrorism.
The Wolfsberg Group emerged as an initiative of eleven global banks 25 for the purpose of elaborating policy standards aimed at preventing money laundering and the financing of terrorism in the financial services industry, taking into consideration the characteristics of the business and looking to mitigate the impact of these threats on productivity.
The Group derives its name, from the place of its first meeting, at the Wolfsberg Castle in Switzerland, where they met to draft procedural guidelines for the prevention of money laundering through private banking operations. In the Wolfsberg Group issued its statement against corruption and a subsequent document in , which identifies some of the measures that financial institutions can take to prevent bribery and fraud. In addition, the Group is currently working with the Society for Worldwide Interbank Financial Telecommunication SWIFT 26 membership and regulatory bodies to incorporate preventative measures in swift messages to protect the global system of payments Wolfsberg Group, In the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances Vienna Convention was adopted, which incorporated a call for the criminalization of money laundering.
This convention also called for the criminalization of money laundering, and focused on issues of mutual legal assistance, international cooperation, joint research among countries and extradition. In late September the United Nations Security Council adopted Resolution which provided a primary legal basis for the prevention of the financing of terrorism at the international level.
This resolution entered into force in April At the same time, the Security Council also created the Counter-Terrorism Committee responsible for monitoring the implementation of this resolution by UN members States. In September the United Nations Global Counter-Terrorism Strategy was adopted, including a call for Member States to fully implement the comprehensive international standards embodied in the forty Recommendations of the FATF on money laundering and the nine Special Recommendations on the financing of terrorism.
Consistent with that recognition, the FATF follows up on the issued resolutions and produces corresponding implementation guides. The CICTE Secretariat has initiated a series of technical assistance and capacity building initiatives to support the region in the prevention and elimination of terrorism, including targeted programs on border and financial controls, the protection of critical infrastructure, crisis management programs and the drafting of national polices in coordination with international, regional and sub-regional institutions and relevant private sector actors.
Since , recognizing the risk imposed by money laundering and the financing of terrorism on the integrity and stability of the financial system, the IMF has incorporated an assessment of countries' regulations and compliance with FATF recommendations in their FSAP reports. At the same time, it incorporates the IMF'S compliance assessments into their broader financial system assessments. The WB also provides support for the design of appropriate legal norms and regulations to ensure that they are adjusted to international standards International Monetary Fund and World Bank, Under the Action Plan to Prevent Money Laundering and the Financing of Terrorism, the WB has initiated a staff training program to prepare officers to adequately address these issues with countries.
The Asian Development Bank ADB based its strategy for the prevention of money laundering and the financing of terrorism on their programs to support the financial sectors of countries in the region, linking sector loan disbursements to the requirement that some decisions or policies supporting the development of laws to regulate these issues are adopted. The Anti-Money Laundering and Financing of Terrorism Policy approved by the Board of the Asian Development Bank incorporates the following elements: 1 support member countries in their efforts to establish effective legal and institutional frameworks for the prevention of money laundering and the financing of terrorism; 2 increase coordination and collaboration with other agencies and international organizations; 3 strengthen internal controls to safeguard the resources of the Asian Development Bank; and 4 strengthen staff capacities in these areas, according to the policy review in April Asian Development Bank, The resolution also emphasizes the need for risk mitigation to ensure that the Bank's resources are used for their intended purposes by Member States.
Current situation and new challenges for regulation and supervision in Latin America and the Caribbean. In all cases three rounds of Mutual Evaluations have been completed with satisfactory progress, as most countries have made significant efforts to prevent the risk of money laundering and the financing of terrorism.
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Today no country in Latin America and the Caribbean remains on the FATF list of countries with a high risk of money laundering or terrorist financing. Globally, Iran and the Democratic People's Republic of Korea North Korea remain on this list, with particular concern for their failure to combat the financing of terrorism and money laundering, noting the serious threats these pose to international financial system security.
However, despite Ecuador's high-level political commitment to the FATF and GAFISUD, the country has not made sufficient progress in implementing its action plan, and certain strategic deficiencies remain, particularly with respect to procedures for identifying and freezing terrorist assets.
This does not mean, however, that deficiencies do not still exist in some countries in their effective implementation of the Recommendations. Based on the results of their third Round Mutual Evaluations, these countries would require support in their efforts to combat money laundering and the financing of terrorism Guayana and Panama were also listed as jurisdictions with strategic deficiencies. II and R. III, and R. Chart 4 Cont. In order to fortify countries' efforts, particular attention should be applied to their compliance rates with Core and Key Recommendations. The real test for many countries will be in their upcoming fourth Round Mutual Evaluations, which will stress not only the existence of national laws and regulations, but also their application and effectiveness.
That is to say, the majority of countries in the region face shortcomings in compliance with Core FATF regulations. With regard to compliance with the ten Key Recommendations, overall, the region failed to perform better. Performance was again particularly troubling in Argentina, Guyana and St.
This is particularly true when there are deficiencies in the implementation of Recommendations 5 and With respect to Recommendation 5 on customer due diligence, only Panama and Peru were rated as Largely Compliant with the FATF Regulation, while more than one-third of all countries in the region were rated Non-Compliant with this critical recommendation. In the case of Panama, this is the result of an agreed working plan to leave the gray list of non-compliant countries.
When viewed together, compliance with Recommendations 5 and 23, serve as central pillars of a country's financial system and strategy to combat money laundering and the financing of terrorism. Lucia, St. Additionally, the emergence of new forms of money laundering and the financing of terrorism requires that policies and countries' regulatory frameworks be periodically reviewed in order to reflect recent developments.
One of the biggest regional challenges is the emergence of new forms of money laundering that rely on advanced technological platforms or innovations, including remittance payments by cell phones, and the proliferation of web-based international financial services, the use of pre-paid credit cards, and the proliferation of non-banking correspondents. Moreover, in countries that lack adequate regulation, there is a risk that non-governmental organizations and trusts are used for money laundering. It is also noteworthy that there are still some Latin American and Caribbean countries that do not meet most of the Key and Special Recommendations to counter the financing of terrorism and weapons of mass destruction.
Emerging threats in this regard often stem from the operations of transnational organized crime groups, including drug trafficking networks. Advances in online technology also pose new risks for the financing of terrorist organizations, rogue criminal regimes and breakaway nations. As highlighted previously, notwithstanding certain advances, such as the success of Panama in being removed from the gray list in February , there remains significant room for improvement with regard to legal compliance and implementation. The Panama Papers prove that the next challenge for the region in terms of anti-money laundering and counter-terrorist financing efforts will be during the upcoming fourth Round Mutual Evaluations, which will measure countries' continued application of international norms, as well as their performance with respect to the revised FATF Regulations adopted in that underline effectiveness of the approved legislation.
With the emergence of new international issues and threats to financial system stability, Latin America and the Caribbean countries together as a region will have to strengthen multi-lateral cooperation and improve their capacities to jointly address these risks. Given the country's importance in the region, as well as its integration into the global economic system through trade relationships and economic cooperation, Mexico provides a particularly relevant case study of a country's efforts to combat money laundering and the financing of terrorism.
Of particular concern was Mexico's performance with respect to the Core and Key Recommendations, where the country was rated Partially Compliant or Non-Compliant with nine of the sixteen Recommendations. II and SR. Notably, Mexico was identified as having strategic deficiencies in national approaches to the criminalization of money laundering and in practices and regulations, with respect to "know-your-client" customer due diligence principles.
I and SR. V, while one was rated Non-Compliant SR. III, which refers to targeted financial sanctions related to the financing of terrorism. Given these important deficits in Mexico's strategy against money laundering and the financing of terrorism, the FATF Plenary decided in October , that the country should be placed under the regular follow-up procedure, with periodic monitoring reports to be produced by national authorities outlining recent reforms and efforts to address the identified shortcoming in compliance.
Since the results of the Mutual Evaluation, Mexico has focused on building a comprehensive legal and institutional anti-money laundering and counter-terrorist financing framework. The country has issued or amended several laws and regulations aimed at criminalizing money laundering and the financing of terrorism.
Efforts have also been made to improve the prevention of money laundering in the country, through enhanced coordination among national authorities, including law enforcement and judicial officials, as well as with international expert groups and international organizations. In addition, all designated non-financial businesses and professions DNFBPS and other risky businesses and professions were incorporated by law into the anti-money laundering and counter-terrorism financing regime. Efforts to combat terrorist financing were also strengthened through the establishment of an asset freezing regime for known or suspected terrorists.
Coupled with programs to enhance the judicial process and expedite investigations, prosecutions and convictions, Mexico has adopted an integrated approach in order to protect the long-term stability of the financial system. As Chart 6 illustrates, Mexico enacted a multi-dimensional national plan to overcome shortcomings in its anti-money laundering and counter-terrorist financing strategy.
The national strategy rests on four pillars: 1 information and organization; 2 enhancing the regulatory framework; 3 risk-based supervision and effective banking procedures; and 4 transparency and accountability, which combined serve to enhance national efforts to comply with the FATF Recommendations.
Concrete lines of action for various institutional partners, as well as the banking sector have also been identified to public-private cooperation efforts. Source: Financial Action Task Force b. Mexico's first follow-up report to the FATF was issued in October , with the second and third issued in October , and , respectively. The Fourth Follow-up Report, issued in February , illustrated concrete progress in some areas of compliance, but the country was deemed to have shown insufficient progress with regard to some Key Recommendations. At this phase, Mexico entered into a process of Targeted Enhanced Follow-up.
In February , Mexico submitted its 7 th Follow-up Report to the FATF, as well as its application for removal from the Follow-Up procedure, having identified sufficient progress in addressing the gaps in national compliance, particularly with respect to the Core and Key Recommendations that had been rated Partially Compliant in the third Round Mutual Evaluation Chart 7. As this chart illustrates, Mexico has managed to make strides in addressing the shortcomings of national anti-money laundering and counter-terrorist financing programs. One of Mexico's major successes in compliance is its improved performance with respect to Recommendation 1, focusing on the criminalization of money laundering.
The Federal Criminal Code was amended to address technical shortcomings in the definition and operation of money laundering. In addition, long-term measures were enacted to raise the effectiveness and efficiency of the national criminal system. The country has recently focused on pursuing the prosecution of high-profile money laundering cases, thus raising the effectiveness of the new legislation. These reports are usually available through Google News and on Lexis-Nexis. FP Twitterati , ICP on YouTube. Support this work by buying this book.
Click on cover for secure site orders. Bank Beat. How to Contact Us. The plaintiffs, all US citizens, have filed the lawsuit in court in New York. Bank Audi 2. Bank of Beirut 3. Byblos Bank 7. Fransabank 8. Boustani is a Lebanese citizen who worked for an Abu Dhabi-based contractor of the Mozambican companies. When the guarantees were revealed in , foreign donors, including the International Monetary Fund IMF , cut off support for Mozambique. See Inner City Press' first exclusive report here. Inner City Press is continuing its exclusive series on some of the CEFC connections in and through the UN that should have been identified in the audit that Guterres corruptly refused to begin, with his conflict of interest.
Today we consider that Guterres' - and Ban's - lead spokesman Stephane Dujarric has family links to Gulbenkian.
And here's Stephane Dujarric's Tokyo- and Temple-based brother Robert Dujarric praising and appearing at Gulbenkian - audio here , program here. We'll have more on this. Botnaru reappears again with CEFC, here. Inner City Press has asked Guterres and his spokespeople, among many other questions, "Beyond the 37 questions from Inner City Press you refused to answer last week, still set forth below for promised answer, this is a request, given that Peter Thomson is the SG's rep on Oceans that you describe in detail Thomson's meeting with now disappeared Ye Jianming of CEFC, name which UN DSS officials were with him and what reports they filed, what their duties were; what was seen by those accompanying Thomson, at least two of whom are still in the UN one is with China.
Typically, Guterres and his spokespeople did not answer. What did they see during Thomson's meeting with now-known briber Ye Jianming? We'll have more on this: the UN should be answering these questions, now.