Financial institutions have also adopted so-called “know your customer” policies to help them identify customers engaged in known or suspected financial crimes. These European countries require recording large currency transactions; however, with the exception of Italy, they do not require routinely reporting such transactions that the United States has relied on under BSA. In countries with laws that serve to prohibit U.S. regulators from entering to examine U.S. branches, U.S. regulators must rely on other means besides on-site examinations for obtaining information on U.S. overseas branches’ anti-money-laundering controls, according to FRB and OCC officials. Some European Officials Are Concerned About Coordination With U.S. Law Enforcement

European law enforcement officials we spoke with acknowledged the important role that U.S. law enforcement agencies play in investigating overseas money-laundering cases. International Arrangements to Combat Overseas Money Laundering

The United States works with other countries through multilateral and bilateral treaties and arrangements to establish global anti-money-laundering policies, enhance cooperation, and facilitate the exchange of information on money-laundering investigations. Countries That Have Signed Bilateral Agreements With the United States to Share Information on Criminal, Currency, and Customs Matters

The United States has entered into various bilateral treaties and agreements with other countries to facilitate its efforts in combating international money-laundering activities. Aruba, Canada, Cayman Islands, Colombia, Germany, Hong Kong, Italy, Mexico, the Netherlands, Nigeria, Panama, Singapore, Switzerland, Thailand, the U.K., the United States, and Venezuela Argentina, Brazil, Costa Rica, Ecuador, India, Japan, Liechtenstein, Luxembourg, the Netherlands Antilles, Pakistan, Paraguay, Russia, Spain, Turkey, Uruguay, and the United Arab Emirates Antigua, Australia, Austria, the Bahamas, Bahrain, Belgium, Belize, Bolivia, Bulgaria, Burma, the Channel Islands, Chile, China, Cyprus, France, Gibraltar, Greece, Guatemala, Hungary, Israel, South Korea, Kuwait, Lebanon, Macau, Madeira/Azores, Malaysia, Montserrat, Morocco, Peru, the Philippines, Poland, St. Vincent, and Taiwan Côte d’Ivoire, Cuba, Denmark, the Dominican Republic, Egypt, Nepal, Portugal, Sri Lanka, Trinidad, and Vanuatu (continued)

Synopsis of the 40 Financial Action Task Force Recommendations

The Financial Action Task Force (FATF) recommended that each member country take these actions: 1. implement the 1988 Vienna Convention, which includes criminalizing drug money laundering and cooperating with other countries on money-laundering investigations; 2. prevent financial institution secrecy laws from inhibiting the recommendations; 3. increase multilateral cooperation in money-laundering investigations; 4. make money laundering a crime; 5. extend money-laundering offenses beyond narcotic trafficking into other crimes, such as bank and insurance fraud, arms trafficking, and other serious crimes; 6. apply anti-money-laundering measures to individuals who knew or should have known that the money they received came from a criminal activity; 7. subject corporations, not only their employees, to criminal liability if they are found guilty of money laundering; 8. enable authorities to confiscate the proceeds or property obtained from criminal activity; 9. apply recommendations to nonbank financial institutions, such as exchange houses, money transmitters, brokerage houses, and check-cashing services; 10. take steps to ensure that the recommendations are implemented to cover not only banks, but also nonbank financial institutions; and 11. consider developing a list of nonbank financial institutions dealing with cash so that members can make them subject to these recommendations. 2. GAO’s Comments

1. 3.
Why GAO Did This Study

GAO provided information on U.S. efforts to combat international money laundering, focusing on: (1) U.S. money-laundering controls; (2) how U.S. law enforcement agencies coordinate their anti-money-laundering activities with European officials; and (3) U.S. participation in international money-laundering agreements.

What GAO Found

GAO noted that: (1) the United States relies on financial institutions to report suspect transactions to regulatory and law enforcement authorities; (2) some financial institutions rely on a "know your customer" policy to identify suspected money launderers; (3) European countries model their anti-money-laundering activities after 1991 European Union directives and U.S. financial institutions; (4) European countries require their financial institutions to record but not report large currency transactions; (5) European law enforcement officials believe that the United States should establish a single liaison office to coordinate money-laundering cases; (6) the United States participates in bilateral and multilateral agreements to establish global anti-money-laundering policies, enhance cooperation, and facilitate the exchange of information; (7) U.S. multilateral efforts are coordinated through the Financial Action Task Force, which encourages both member and nonmember countries to adopt money-laundering legislation and controls; and (8) the United States has entered into several bilateral agreements to facilitate the flow of information concerning criminal matters.