Phase 2 of the research serves to build upon the foundation laid in Phase 1. The Phase 2 research further explores: the criminal groups utilizing digital assets in illegal activities; how these criminal groups are conducting illicit activity and recruiting members; cryptocurrency ATMs and Point-of-Sales illicit uses; generative AI applications in cybercrime; darknet market use of digital assets; the evolving use of cryptocurrencies (especially the year to date change); criminal activity’s impact on government and private sector; and additional policy recommendations. Although illicit use can never be completely eliminated, it can be mitigated by increased consumer knowledge, proactive law enforcement investigations, and better practices and regulations issued by key stakeholders.
DHS Public-Private Analytic Exchange Program Report: Combatting Illicit Activity Utilizing Financial Technologies and Cryptocurrencies Phase I
Private and public sector analysts and subject matter experts working in the cyber financial landscape gathered through a series of meetings to examine the use of financial technologies and cryptocurrencies by illicit actors. The key research points investigated include discovering the most common illicit finance activities, the most exploited elements of financial technologies, the legal vulnerabilities that allow exploitation, pseudo-anonymity in online transactions, weaknesses in Know-Your-Customer laws, and the risks of use associated with other emerging blockchain applications (i.e. NFTs). The research gathered from investigating these areas led to the development of suggested, effective changes to reduce illicit activity in this space and identifying the key stakeholders to implement these changes. This paper seeks to provide guidance in navigating cryptocurrencies, emerging digital payment solutions, and other blockchain applications to both consumers and stakeholders to minimize the illicit use of these platforms. While illicit use cannot be eliminated altogether, it can certainly be reduced with better consumer knowledge and better practices/regulations issued by key stakeholders.
DHS-FBI-NCTC Guide: International Partnerships Necessary To Mitigate ISIS’s Organ Harvesting for Terrorist Funding
The Islamic State of Iraq and ash-Sham (ISIS) is attempting to obtain money from organ harvesting, including from its own injured members, captives, and deceased individuals. Identification, prevention, and interdiction of organ harvesting and trafficking is a highly complex issue which may be effectively addressed through international partnerships among governmental, health, law enforcement, legal, and private-sector entities.
Despite battlefield losses, ISIS continues to operate its own terrorist pseudostate and claims a growing global footprint. At least 34 radical Islamist groups have pledged their allegiance to ISIS. As of this printing, the organization has managed to expand its presence to dozens of countries and territories—in addition to recruiting tens of thousands of fighters from over 120 nations. Most alarmingly, ISIS is driving an unprecedented surge of terror plots against the West and poses a persistent and grave threat to the U.S. homeland.
The Financial Crimes Enforcement Network (FinCEN) is issuing this advisory to provide financial institutions with information on identifying and reporting transactions possibly associated with Foreign Terrorist Fighters (FTFs) who support the Islamic State of Iraq and the Levant (ISIL), al-Qa’ida, and their affiliates in Iraq and the Lev ant region. Financial institutions may use this information to enhance their Anti-Money Laundering (AML) risk-based strategies and monitoring systems. This advisory is not intended to call into question financial institutions’ maintenance of normal relationships with other financial institutions, or to be used as basis for engaging in wholesale or indiscriminate de-risking practices.
After the September 11, 2001 terrorist attacks, the United States adopted a preventive approach to combating all forms of terrorist activity. Efforts to combat the financing of terrorism (CFT) are a central pillar of this approach. Cutting off financial support to terrorists and terrorist organizations is essential to disrupting their operations and preventing attacks. To that end, the U.S. government has sought to identify and disrupt ongoing terrorist financing (TF) and to prevent future TF. The law enforcement community, including various components of the U.S. Departments of Justice, Homeland Security, and the Treasury, along with the intelligence community and the federal functional regulators, applies robust authorities to identify, investigate, and combat specific TF threats, enforce compliance with applicable laws and regulations, and prosecute supporters in order to deter would-be terrorist financiers. The U.S. Department of the Treasury (Treasury), which leads financial and regulatory CFT efforts for the U.S. government, employs targeted financial sanctions, formulates systemic safeguards, and seeks to increase financial transparency to make accessing the U.S. financial system more difficult and risky for terrorists and their facilitators. All of these efforts involve extensive international engagement to try to prevent any form of TF, particularly financing that does not necessarily originate in the United States, from accessing the U.S. financial system.
This report highlights that understanding how a terrorist organisation manages its assets is critical to starving the organisation of funds and disrupting their activities in the long term. Terrorist organisations have different needs, depending on whether they are large, small, or simply constituted of a network of seemingly isolated individuals. The section on financial management explores the use of funds by terrorist organisations, not only for operational needs but also for propaganda, recruitment and training, and the techniques used to manage these funds, including allocating specialised financial roles. The report finds that authorities need to do further work to identify and target various entities responsible for these functions.
U.S. Treasury Office of Foreign Assets Control Specially Designated Nationals and Blocked Persons List 2013
This publication of Treasury’s Office of Foreign Assets Control (“OFAC”) is designed as a reference tool providing actual notice of actions by OFAC with respect to Specially Designated Nationals and other persons (which term includes both individuals and entities) whose property is blocked, to assist the public in complying with the various sanctions programs administered by OFAC. The latest changes to the SDN List may appear here prior to their publication in the Federal Register, and it is intended that users rely on changes indicated in this document.
To examine the current money laundering and terrorist financing threats associated with correspondent banking, the Subcommittee selected HSBC as a case study. HSBC is one of the largest financial institutions in the world, with over $2.5 trillion in assets, 89 million customers, 300,000 employees, and 2011 profits of nearly $22 billion. HSBC, whose initials originally stood for Hong Kong Shanghai Banking Corporation, now has operations in over 80 countries, with hundreds of affiliates spanning the globe. Its parent corporation, HSBC Holdings plc, called “HSBC Group,” is headquartered in London, and its Chief Executive Officer is located in Hong Kong.
U.S. Treasury Office of Foreign Assets Control Specially Designated Nationals and Blocked Persons List
This publication of Treasury’s Office of Foreign Assets Control (“OFAC”) is designed as a reference tool providing actual notice of actions by OFAC with respect to Specially Designated Nationals and other persons (which term includes both individuals and entities) whose property is blocked, to assist the public in complying with the various sanctions programs administered by OFAC. The latest changes to the SDN List may appear here prior to their publication in the Federal Register, and it is intended that users rely on changes indicated in this document. Such changes reflect official actions of OFAC, and will be reflected as soon as practicable in the Federal Register under the index heading “Foreign Assets Control.” New Federal Register notices with regard to Specially Designated Nationals or blocked persons may be published at any time. Users are advised to check the Federal Register and this electronic publication routinely for additional names or other changes to the SDN List.
If you’re trying to set up an untraceable shell corporation, your best bet may no no longer be a tax haven or some far away island nation. According to a surprising new study, developed countries like the U.S. and Canada are among the easiest places in the world to set up the kind of anonymous shell corporation that could be used for money laundering, terrorist financing and other nefarious activities. In contrast, known tax havens like the Seychelles, Bahamas and the Cayman Islands all present far more obstacles to the establishment of untraceable corporate structures due to their more stringent compliance with international regulations. In fact, the study found that U.S.-based incorporation services provide one of the easiest routes to establishing an anonymous shell corporation, with only Kenya surpassing the U.S. in terms of noncompliance.
This handbook provides an understanding of the processes and procedures being employed by joint force commanders (JFCs) and their staffs to plan, execute, and assess counter threat finance (CTF) activities and integrate them into their joint operation/campaign plans. It provides fundamental principles, techniques, and considerations related to CTF that are being employed in the field and are evolving toward incorporation in joint doctrine.
As authorities have clamped down on traditional financing pipelines, such as charitable front groups, and as terrorist networks have grown increasingly decentralized, terrorists have turned to criminal activities to finance their operations locally. Throughout the world, Al Qaeda, Hamas, and Hezbollah operatives have involved themselves in an array of criminal enterprises, including counterfeiting, drug dealing, cigarette smuggling, credit card fraud, auto theft, kidnapping, extortion, and artifact trafficking. Although criminality is outlawed under Islamic law, the Al Qaeda manual advises that “necessity permits the forbidden.” Reflecting this theory, when Jemaah Islamiyah (JI) operatives questioned whether hacking into foreigners’ bank accounts was acceptable in Islam, JI leader Abu Bakr Bashir reportedly responded, “[if] you can take their blood; then why not take their property?” “Terrorist groups are particularly interested in raising funds through crime because as Lieutenant Colonel David LaRivee, Associate Professor of Economics at the United States Air Force Academy, stated, “many of the agencies responsible for enforcement in these areas do not traditionally focus on counterterrorism nor do they have strong ties with counterterrorist agencies. This means that many indictable criminal activities that support terrorism are overlooked because they seem insignificant when evaluated locally, but are in fact very significant when considered from a broader perspective.” In order to disrupt these financing efforts, “local law enforcement officials will be key,” as the FBI assessed in a May 25, 2005 Intelligence Bulletin.
This “previously confidential list of people and organizations found to be involved in laundering money and funding terrorism” was presented by Rossiyskaya Gazeta, the Russian-government owned newspaper. It was originally compiled by the Russian Ministry of Justice.
This “previously confidential list of people and organizations found to be involved in laundering money and funding terrorism” was presented by Rossiyskaya Gazeta, the Russian-government owned newspaper. It was originally compiled by the Russian Foreign Ministry.
The BCCI Affair: Bank of Credit and Commerce International Senate Investigation Report December 1992
The relationships involving BCCI, the CIA, and members of the United States and foreign intelligence communities have been among the most perplexing aspects of understanding the rise and fall of BCCI. The CIA’s and BCCI’s mutual environments of secrecy have been one obvious obstacle. For many months, the CIA resisted providing information to the Subcommittee about its involvement with and knowledge of BCCI. Moreover, key players who might explain these relationships are unavailable. Some, including former CIA director William Casey, and BCCI customers and Iranian arms dealers Ben Banerjee and Cyrus Hashemi, are dead. Others, including most of BCCI’s key insiders, remain held incommunicado in Abu Dhabi.
A basic legal framework for combating money laundering and terrorist financing is in place in the UAE, but that framework needs further strengthening in a number of areas. The AML law needs to be amended to expand the range of predicate offences and to provide greater powers for the financial intelligence unit. The FIU should also increase its own staffing so that it may operate as an autonomous unit, rather than relying on the resources of the Central Bank’s Supervision Department and other regulatory agencies.
An assessment of the anti-money laundering (AML) and combating the financing of terrorism (CFT) regime of Italy was onducted based on the Forty Recommendations 2003 and the Nine Special Recommendations on Terrorist Financing 2001 of the Financial Action Task Force (FATF) and prepared using the AML/CFT Methodology 2004. The assessment considered the laws, regulations and other materials supplied by the authorities, and information obtained by the assessment team during its mission April 4–20, 2005, and subsequently.
The financial sector in Liechtenstein provides primarily wealth-management services, including banking, trust, other fiduciary services, investment management, and life insurance-based products. There has been significant expansion recently in the non-banking areas, particularly investment undertakings and insurance. Approximately 90 percent of Liechtenstein’s financial services business is provided to nonresidents, many attracted to Liechtenstein by the availability of discrete and flexible legal structures, strict bank secrecy, and favorable tax arrangements, within a stable and well-regulated environment.
This assessment of observance of the Financial Action Task Force (FATF) Recommendations for anti-money laundering and countering the financing of terrorism (AML/CFT) has been completed as part of an evaluation of Panama’s observance of regulatory standards for the financial sector.
Criminal activity in the Czech Republic that generates major sources of illegal proceeds is comparable to criminal activity in other countries in transition. Economic crime (e.g., fraud and asset stripping) that is linked to the privatization process is still a major concern. The authorities also mentioned tax offences as significant crime areas. Organized crime involving drug trafficking and counterfeiting of goods is also active in the Czech Republic with links to the region and Asia.
This assessment of the anti-money laundering (AML) and combating the financing of terrorism (CFT) regime of Bermuda is based on the Forty Recommendations 2003 and the Nine Special recommendations on Terrorist Financing 2001 of the Financial Action Task Force (FATF). It was prepared using the AML/CFT assessment Methodology 2004, as updated in June 2006. The assessment team considered all the materials supplied by the authorities, the information obtained on-site during their mission from May 7 to 23, 2007, and other information subsequently provided by the authorities soon after the mission. During the mission, the assessment team met with officials and representatives of all relevant government agencies and the private sector.
In order to assist Canadians, and particularly financial institutions, in continuing to cooperate with authorities and in complying with the United Nations Suppression of Terrorism Regulations and the United Nations Afghanistan Regulations, the Government of Canada has prepared the attached consolidated list of individuals and entities whose property should be frozen and reported to the relevant authorities.
1 – Do you agree with the proposed limitations on individual, daily and monthly transactions? If not, what limitations would you propose, and what are your justifications for these limitations from an AML/CFT perspective?
Generally, Vodafone supports a risk based approach to transaction limits, with higher limits granted where KYC levels are increased. This has been applied for M-PESA in Kenya.