International Efforts to Combat Money Laundering

As a result of increases in communication and trade throughout the world, experts have witnessed an alarming increase in the international nature of money laundering investigations. Globalization and greater competition in the financial services industry has resulted in criminals being able to access financial services within other countries where anti-money laundering laws are weak.

In the ever competitive financial services sector, some jurisdictions and countries offer their services with little or no control or regulation.  These jurisdictions are considered attractive to money launderers because they offer a number of services that allow them to hide their assets.  Often countries are considered attractive if they:

• have strict banking secrecy and privacy laws

• have lax or non-existent company formation regulations

• the inability to identify the beneficial owner of a company or bank account

• allow unregulated use of lawyers, secretarial companies, and nominees in company formation and financial transactions

• have little or no identification requirements to open accounts or conduct transactions

• allow off-shore banking

This environment has resulted in a situation where officials in these jurisdictions are either unwilling due to regulations, or refuse to cooperate in requests for assistance during international money laundering investigations.

To combat this and other international impediments to effective money laundering investigations, many like-minded countries have met to develop, coordinate, and share model legislation, multilateral agreements, trends & intelligence, and other information.  For example, such international watchdogs as the Financial Action Task Force (FATF) evolved out of these discussions.