Cassidy calls for GAO review of federal attempts to stop trade-based money laundering

U.S. Sen. Bill Cassidy (R-LA), ranking member on the U.S. Senate Finance Committee, has requested a U.S. Government Accountability Office (GAO) review that evaluates the federal government’s efforts to end and prevent trade-based money laundering, one of the main methods by which drug traffickers, criminal organizations and terrorist financiers use a legitimate trade to disguise illegally obtained proceeds.

“It is one of the most sophisticated methods of cleaning dirty money, and trade-based money laundering red flags are among the hardest to detect,” according to the Association of Certified Anti-Money Laundering Specialists (ACAMS).

Trade-based money laundering has contributed significantly to the ongoing opioid crisis in the United States, according to Sen. Cassidy and U.S. Sen. Sheldon Whitehouse (D-RI), who serves on the U.S. Senate Judiciary Subcommittee on Crime and Terrorism.

“For example, the U.S. Treasury Department recently announced sanctions on five Chinese nationals involved in a trade-based money laundering scheme to traffic fentanyl and other synthetic opioids into the United States and launder the proceeds,” the lawmakers wrote in a July 13 letter sent to GAO Comptroller General Gene Dodaro seeking the government watchdog’s review.

“In our modern economy, there are more opportunities for criminal organizations to launder the proceeds of their illicit activities than ever before,” wrote the senators. “Also worrisome is the fact that transnational criminal organizations and terrorist activities often overlap. For example, Hezbollah in Latin America uses trade-based money laundering to finance its terrorism.”

Their end goal in requesting a GAO review, the members wrote, is to improve coordination and communication between federal agencies in fighting trade-based money laundering.

Toward that goal, Sens. Cassidy and Whitehouse have requested that the GAO examine several specific issues, including the roles and responsibilities of the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and other federal agencies, in combating trade-based money laundering.

FinCEN is the administrator of the 1970 Bank Secrecy Act, which requires financial institutions to assist the federal government in its efforts to detect and prevent money laundering. FinCEN also issues advisories to financial institutions specifically identifying the risks of trade-based money laundering to the financial system, among other duties, according to the lawmakers’ letter.

The senators want the GAO to assess what steps FinCEN and other federal agencies have taken to address trade-based money laundering; their level of attention given to fighting the crime, such as whether the illegal method is considered a priority or just handled when agencies learn about isolated cases when going after the money, drugs or criminals.

Additionally, Sens. Cassidy and Whitehouse want the GAO to determine to what extent FinCEN and other federal agencies collaborate and share data and information related to detecting and deterring trade-based money laundering, including with international trading partners.

Generally, Sens. Cassidy and Whitehouse requested information on what’s known about trade-based money laundering in the United States; the role shell companies play in facilitating the process; and the existing challenges regulators and law enforcement face when trying to determine ownership of shell companies.

And they desire to know what best practices and tools are being used by other countries or international organizations, such as the European Union, that could be utilized to improve efforts in the United States.

“Lastly, we ask that GAO provide any additional information regarding ways in which federal agencies can more effectively combat trade-based money laundering, which federal agency should lead the federal government’s efforts, and potential regulatory or legislative action to address identified deficiencies,” the senators wrote.

In closing, the lawmakers asked Dodaro for his “prompt attention to this request.”