US failing to prevent money laundering by shell companies

The US is not implementing sufficient measures to adequately prevent the laundering of criminal proceeds by shell companies, the Financial Action Task Force (FATF) and the US authorities have said in a report.

The joint US and FATF mutual evaluation report says overall, the authorities are “robust” in their anti-money laundering and countering the financing of terrorism (AML/CFT) efforts, but opaque ownership details of shell companies create a serious gap in this context.

Serious gaps

The report says the US does not do enough to rein in corporate secrecy, which opens up “serious gaps” in the country’s otherwise robust regulatory framework.

Opaque ownership of companies leaves the entire financial system “vulnerable” to hide illegal proceeds and facilitate illicit funds flows, the report says.

The US is non-compliant – with the lowest possible score – on its ability to determine the beneficial owners of shell companies.

Other failings

The US also failed FATF’s standards for its minimal monitoring of non-financial industries sometimes used in money laundering, including law firms and real estate agents.

The mutual evaluation report published earlier this month records the first inspection of the US by FATF in ten years.

The report, Anti-money laundering and counter-terrorist financing measures, United States, Mutual Evaluation Report can be found here.



Categories: Trade Based Financial crimes News