Anti-Money Laundering

Rampant corruption among individuals and governments around the world and newspaper headlines filled with reports of individuals facing changes of fraud, tax evasion and other offenses, and all of this aided and abetted by banks like HSBC, Standard Chartered, and Wachovia underscore the fact that the current approach to combating money laundering is failing and that we need a clear, strong, and comprehensive approach to fixing it.

Recent studies have revealed that the U.S. is a favored place for incorporating shell companies used to hide stolen assets, dodge taxes, defraud Medicare, evade sanctions, launder drug money and sell illegal weapons around the world.

To stop banks and bankers from accepting suspect funds, we need to change the incentive structure. Senior bankers must be held liable for getting it wrong and banks should risk substantial fines that are more than the “cost of doing business” when they break the law. We need legislation that will strengthen the legal and regulatory framework for holding executives and other bank employees individually liable for money laundering schemes.

We can further strengthen the U.S. anti-money laundering regime by designating all felonies—including tax offenses—as potential crimes that can lead to a money laundering charge (known as “predicate offenses”). Currently, U.S. law follows a haphazard piecemeal approach under which only certain crimes can lead to money laundering charges—for instance, “securities fraud” is on the list of predicate offenses but “insider trading” is not.

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Legislation: