U.S. failing to curb money laundering by shell companies: task force report

Thu Dec 1, 2016 9:43am EST
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By Joel Schectman and Brett Wolf

WASHINGTON (Reuters) - The United States received failing scores for its efforts to prevent the laundering of criminal proceeds by shell companies, accountants and real estate agents, the Financial Action Task Force (FATF) said in a report released Thursday.

Overall, the United States had “robust” anti-money laundering efforts, scoring as highly effective at countering terrorism financing, said FATF, an international organization that sets global standards for fighting illicit finance.

But the United States did not do enough to rein in corporate secrecy, presenting “serious gaps” in law enforcement efforts that leave the financial system “vulnerable” to dirty money, the report said.

In its first evaluation of the United States in ten years, FATF scored Washington non-compliant - the lowest possible score - on its ability to determine the true owners of shell companies, sometimes used by money launderers to hide illegal proceeds.

FATF also gave Washington a failing score for its minimal monitoring of non-financial industries sometimes used in money laundering, such as law firms and realtors.

For example, unlike banks, real estate agents in the United States are not required to notify authorities if they suspect a customer is trying to move dirty money through property.

FATF criticized many of these shortcomings in its last evaluation of the United States in 2006, raising concerns about why Washington had still not acted.

“The U.S. views itself as a standard setter among nations,” said Ross Delston, a Washington-based anti-money laundering attorney. “But in key areas, it fails to measure up to international standards, which opens the doors to Panama papers-type transactions and schemes to hide money.”   Continued...

U.S. dollar notes are seen in this November 7, 2016 picture illustration. REUTERS/Dado Ruvic/Illustration/File Photo