Government Report Outlines Money Laundering Trends.

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Author: Wodele, Greta

Banking

Criminals and terrorists are taking advantage of new financial services such as online payments and prepaid consumer cards to move vast amounts of dirty money worldwide, according to a government assessment of money laundering threats issued today. The analysis, the first government-wide study of money laundering in the United States, found nine areas of the U.S. financial sector that criminals and terrorists exploit to transfer billions of dollars in illicit funds. The list includes banks, insurance companies, casinos, online payments, money orders, wire transfers and prepaid consumer cards. The report was released through the Treasury Department but the assessment was conducted by several agencies, including the Treasury, Justice and Homeland Security departments, Federal Reserve and the Postal Service.

Bush administration officials said today that as law enforcement agencies crack down on traditional money laundering tactics, violators look to new financial services that do not require identification, like money orders from Western Union and the U.S. Postal Service. In a review of suspicious activity reports from 2002-04, money service businesses were cited in more than 73 percent of the reports filed. An alternative to cash and money orders is prepaid consumer cards, which officials found are used to smuggle physical cash. For example, law enforcement officials have found drug dealers load large amounts of cash onto prepaid cards and send the cards to their drug suppliers outside the country. The drug suppliers then use the cards to withdraw money from a local ATM, according to the threat assessment.

Officials said they would use the government study to draft a comprehensive strategy to combat money laundering, but declined to establish a deadline for completing a proposal. "We'll work on it as aggressively as we can," said a Treasury Department official. The official added that in the meantime, agencies would begin taking steps to combat vulnerabilities. Three ways to measure success, officials said, are the number of seizures and arrests; changes in patterns of money laundering tactics and pushing criminals out of the U.S. banking system and into constricted tactics. To combat money laundering, the FBI is developing computer software to visualize financial patterns and link and analyze distinct criminal activities. The agency also plans to deploy an advanced electronic file management system that would help investigators analyze and share intelligence about criminal activities.

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By Greta Wodele