The US Treasury Department has launched a global anti-money laundering (AML) campaign in an attempt to stop billions of dollars from being laundered into financial systems and is hoping for assistance from the governments in Beirut, Cyprus, Singapore and Dubai to ensure its success.
The campaign was originally created under former US President Barack Obama’s administration and was headed by Marshall Billingslea, Assistant Secretary for Terrorist Financing and Financial Crime but it is now being aggressively used by current US President Donald Trump in an effort to prevent illicit funds from China, Iran, and Russia from leaking into French and UK real estate, German banks and the Gulf states. Banks located in countries notorious for hiding illicit funds, such as Cyprus and Singapore, are being threatened to increase their regulations or face losing access to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), a system by which most of the world’s transactions travel through that allows financial institutions from around the the world to safely send and receive information.
Russia is one of the main focuses of this campaign due to the vast amount of laundered money flowing out of the country from those who gained their wealth during the former Putin regime, particularly in the real estate market. Realtors in New York have reported that 30% of condominium sales have been from buyers who listed addresses overseas, and include Najib Razak, former Prime Minister of Malaysia, who was caught in the Malaysia Development Berhad scandal, and Viktor Khrapunov, former mayor of Almaty, who has been accused of stealing millions from his country. Some sources believe that the US’s aggressiveness and the increased tension towards Russia is a result of the poisoning of former Russian Spy, Sergei Skripal and his daughter, in the UK decision to demand Roman Abramovich, owner of the Chelsea Football Club, to reveal his source of funds in order to renew his expired UK visa. The UK has also recently increased restrictions on wealthy investors within its borders, along with offshore accounts containing illicit funds in the Cayman Islands, Guernsey, Gibraltar, Jersey and Nassau.
With this campaign, the US is working to prevent funds from Iran from entering banks in Bahrain, Dubai, Kuwait and Qatar, along with banks in Asia including Woori Bank and the Industrial Bank of South Korea, through which Iran was able to funnel funds using escrow accounts in order to avoid US sanctions. However, with the campaign in place, banks in Dubai, Qatar and particularly Cyprus could face a “crisis” from the steep decrease in assets acquired from illicit funds that flow through them gained by terrorist activities. FBME Bank, for example, handled 90% of its business in Nicosia, Cyprus, despite being based in Tanzania, Africa. FBME was notorious for being used to deposit illicit funds by multiple outlaws including Dmitry Klyuev and Andreu Pavlov, who are both accused of looting Hermitage Capital, an investment fund and asset management company formerly supervised by William Browder.
With regards to Singapore, Indonesia has a reported US $368 billion in Singapore’s banks, which makes up 40% of the country’s total bank deposits. In 2007, the Asia Sentinel reported approximately 18,000 “rich” Indonesians living in Singapore with a total net worth of US $87 billion, which was more than Indonesia’s entire government budget. Singapore has begun to increase regulations and measures, by terminating licenses of two Swiss banks, BSI Bank and Falcon Private Bank, in 2016 for acting as a channel for billions to be laundered in the Malaysia Development Berhad scandal.
Funds coming from developing countries are extremely high according to the NGO Global Financial Integrity which reported in 2017 that illicit funds coming in and out of developing countries made up 13.8% of transactions overall (approximately US $2 trillion) during 2014 and a total of US $3.97 trillion of illicit funds was leaked out of China during 2000 to 2011.
Along with calling for cooperation from other countries with their global campaign, the US has already taken initiative against Iran by working with the UAE to shutdown a currency exchange system and sanctioning institutions that were discovered to be producing and transferring millions of USD for terrorist funding by the use of front companies, forged documents and assistance from the Central Bank of Iran. The US has also sanctioned Valiollah Seif, the chairman of Iran’s Central Bank, who was concealing the transactions of millions through the financial system that were being used to fund terrorist group, Qods Force.
The success of the US’s global AML campaign can be achieved with the full cooperation of global governments implementing their own strict regulations which can prevent countries such as Iran from exploiting and putting institutions at risk from being sanctioned and, in the long run, may be a driving force in the prevention of money laundering. Without cooperation between governments, criminals will simply target countries with lax regulations and weak enforcement policies, promoting the money laundering cycle to continue.
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