Within the United States, the BSA and related AML regulations provide  the legal and regulatory framework for preventing, detecting, and  deterring money laundering. The BSA and its implementing regulations  generally require banks and other financial institutions, such as securities  broker-dealers and certain types of insurance companies, among others,  to collect and retain various records of customer transactions, verify  customers’ identities in certain situations, maintain AML programs, and  report suspicious and large cash transactions. In addition, the United  States has put in place a variety of AML measures intended to mitigate  risks, including the following: promulgation of regulations requiring reporting by financial institutions  to promote transparency with regard to the origin of funds; providing oversight to financial institutions in the United States by  federal financial regulators to assess the effectiveness of BSA/AML  compliance programs and take consequent appropriate legal action, if  necessary; and  forming partnerships with other countries through multilateral and  bilateral treaties and arrangements to promote global AML policies  and standards and facilitate the exchange of information on suspected  money laundering activities. FinCEN relies on financial regulators and other entities to conduct  examinations of U.S. financial institutions across a variety of financial  sectors to determine compliance with the BSA and its implementing  regulations. State and Treasury Support Capacity- Building Efforts and Collaborate to Combat Money Laundering in Western Hemisphere Countries

INL and OTA work with other U.S. agencies, primarily components within  DHS, Justice, and Treasury, as well as with financial regulators, to  provide capacity-building, training, and technical assistance on money  laundering countermeasures and financial investigations to their  counterparts in the Western Hemisphere and around the globe. From fiscal years 2011 through 2015, INL, in collaboration with U.S. law  enforcement agencies, supported AML capacity-building and technical  assistance for foreign partners in the law enforcement, prosecutorial, and  judicial sectors in several other Western Hemisphere countries, as the  following examples illustrate:  INL funded training, provided by ICE, and the acquisition of equipment  for the Jamaican Constabulary Force’s Major Organized Crime and  Anti-Corruption Unit to enhance intelligence gathering and analysis  capacity for financial crime investigations. INL funded training provided at the Judicial Studies Institute in Puerto  Rico where OPDAT trained judges from the Dominican Republic,  Haiti, Mexico, Guatemala, Honduras, El Salvador, Costa Rica,  Panama, Peru, Colombia, and Uruguay. Specifically, this report describes (1)  U.S. financial regulators oversight and monitoring of compliance with the  Bank Secrecy Act (BSA) and related AML requirements and efforts to  collaborate with counterparts in other Western Hemisphere countries, and  (2) the activities that the Departments of State (State) and Treasury  (Treasury) support to build capacity in other Western Hemisphere  countries to combat money laundering and how State and Treasury  collaborate on those efforts. Each of these 3 countries was designated a Major Drug  Transit or Major Illicit Drug Producing Country from fiscal years 2014  through 2016. To describe how U.S. agencies are helping to build capacity in other  Western Hemisphere countries to combat narcotics-related money  laundering and how State and Treasury coordinate these activities, we  reviewed budget data provided by INL and OTA for fiscal years 2011  through 2015. We also  interviewed officials from State’s INL and offices within Treasury and  officials from the Departments of Justice and Homeland Security. Appendix IV: Department of State’s International Narcotics and Law Enforcement Affairs Allocations for Anti-Money Laundering

The Department of State’s International Narcotics and Law Enforcement  Affairs Bureau allocated funding for anti-money laundering (AML)  capacity-building and technical assistance to a variety of countries in  Latin America and the Caribbean from fiscal years 2011 through 2015. Table 6 below shows the Department of the Treasury’s Office of  Technical Assistance allocations by country or region for Western  Hemisphere AML programs in this time period.
Why GAO Did This Study

Proceeds from narcotics-related illicit activities are one of the most common sources of money laundering in the United States. Though difficult to accurately determine, in 2015, Treasury estimated that drug trafficking generated about $64 billion annually from U.S. sales. Moreover, the Western Hemisphere accounts for about a third of the jurisdictions designated by State as of primary concern for money laundering.
GAO was asked to provide information on U.S. efforts to impede illicit proceeds from drug trafficking from entering the financial systems of the United States and other Western Hemisphere countries. This report describes (1) U.S. agency oversight and monitoring of compliance with the BSA, including collaboration with counterparts in other Western Hemisphere countries, and (2) State's and Treasury's efforts to build capacity in other Western Hemisphere countries to combat narcotics-related money laundering.
GAO reviewed laws and regulations; interviewed experts and U.S. officials; reviewed documents and examined State's and Treasury's budget data for fiscal years 2011 through 2015, the most recent at the time of the review, for anti-money laundering activities. GAO selected Colombia, Mexico, and Panama—three principal recipients of AML support—for site visits, in part, because each country was designated a major drug transit or illicit drug-producing country from fiscal years 2014 through 2016.

What GAO Found

U.S. financial regulators oversee and monitor compliance with anti-money laundering (AML) requirements of the Bank Secrecy Act (BSA) to prevent, detect, and deter the laundering of proceeds from narcotics trafficking and other illicit activities using a risk-based examination approach. The Department of the Treasury's (Treasury) Financial Crimes Enforcement Network (FinCEN) administers the BSA and related AML regulations, which provides the legal framework for combating money laundering. The BSA includes requirements for financial institutions to retain various records of customer transactions, verify customers' identity, maintain effective AML programs, and report suspicious transactions. FinCEN relies on a variety of U.S. financial regulators and agencies to help FinCEN oversee and monitor financial institutions' compliance with the BSA. U.S. financial regulators and FinCEN also collaborate directly with counterparts in other Western Hemisphere countries and through international working groups to identify and reduce risks to the financial sector by sharing information and analysis on financial crimes.
The Departments of State (State) and Treasury support AML capacity-building and technical assistance efforts in other Western Hemisphere countries in collaboration with the Departments of Justice and Homeland Security and other federal agencies. For example, Treasury provides training to support the development of legal and regulatory frameworks in partner countries consistent with international standards to prevent money laundering. Similarly, State funds such training and provides equipment to financial intelligence units in these countries to help them detect illicit financial transactions. In fiscal years 2011 through 2015, State and Treasury allocated about $63 million to support AML-related capacity-building and technical assistance in the region, of which $52 million was from State (see figure).
Department of State's Bureau of International Narcotics and Law Enforcement Affairs Allocations by Country for Western Hemisphere Anti-Money Laundering Programs, Fiscal Years 2011 through 2015
a Central American Regional Security Initiative (CARSI) funding included regional programming for Costa Rica, Guatemala, Honduras, and El Salvador.
b Other includes funding for Barbados and the Eastern Caribbean, the Caribbean Basin Security Initiative, Jamaica,
Honduras, Dominican Republic, Paraguay, El Salvador, Guatemala, Ecuador, Haiti, Suriname, Trinidad and Tobago, Guyana, and Brazil.