Money Laundering

Money laundering is a global problem that needs to be fought collectively by the international community. This report provides a framework for understanding U.S. efforts oversees to combat international money laundering. GAO describes (1) the approaches used by the United States and European countries to combat money laundering through regulation of financial institutions, (2) U.S. bank regulators' oversight of money-laundering controls at overseas branches of U.S. banks, (3) U.S. law enforcement agencies' efforts to coordinate their overseas anti-money-laundering activities among themselves and with law enforcement agencies in these European countries, and (4) U.S. participation in international agreements to combat money laundering abroad.

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.