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FinCEN : "new division to focus on identifying primary foreign money laundering threats."

The USA's financial crime regulator and FIU, the Financial Crimes Enforcement Network, FinCEN, has announced that it has "launched" the "Global Investigations Division" or (inevitably) "GID". It is being sold as being focussed on money laundering threats that originate abroad. But what is it really? And has FinCEN at last found its calling?

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If one picks apart the announcement, one thing is immediately apparent: FinCEN, which is a division or the US Department of the Treasury, is moving beyond its traditional remit.

FinCEN has two primary functions: one is in relation to regulation. It is the place where those "Final Rules" mostly originate (and some fester until they are quietly abandoned whilst still "draft final rules"). It is also the registrar for, for example, money services businesses, for Bank Secrecy Act purposes.

The second, and most widely recognised, is as the recipient and computer-aided analyst of the data contained in suspicious activity reports and cash transaction reports.

It has long been argued, in these pages and elsewhere, that the role of FIUs is enhanced where there is an integrated investigation division - the original success story in this area is AMLO in Thailand. Nigeria's EFCC and others subsequently followed that model. It took a long time but, eventually, the UK moved the FIU into the National Crime Agency, so bringing a wide range of functions under the same roof.

FinCEN has always had a problem with its public persona. The general population have no idea what it is or what it does. It doesn't have black blousons with a three letter acronym emblazoned in yellow. It doesn't go on raids. It has, from time to time, been vilified as a form of big brother (that's true of all FIUs) but mostly when it's mentioned n the general media, it's prefaced by something like "the shadowy division of the Treasury." Ironically, it's not at all shadowy: it's just it's not something that hits the public eye.

FinCEN has had, almost since inception, a problem with data. It tried to develop its own data-matching and analysis software but big promises turned into a big black hole into which money was poured and outrageous statements as to the percentage of it that was ready (percentages of readiness for a data analysis system amount to one thing: it doesn't work and, because no one can ever say how much there is to do, until there is nothing left to do, the statements were nonsense). After a while, it bought in the class-leading commercial software and its efficiencies rose dramatically - but not until FinCEN gave up trying to crunch its own data and outsource it to its uncle in Treasury where supercomputers did the the heavy lifting.
FinCEN's other main problem is that, although it has contributed to hundreds of cases across the USA, it's famous for only one and the fact that it's the only one that is trotted out to prove FinCEN's effectiveness actively militates against its own arguments.It was already old news at the end of the 1990s: The Black Money Peso Exchange case. Ironically, such schemes have been the subject of a number of prosecutions in recent years meaning that now it's a scheme not a case and that further diminishes the effect of FinCEN's reliance on it for its reputation.

FinCEN's function in relation to intelligence has always been simple: collect, analyse and make available to investigation agencies. And nothing else. So, in Federal cases, the beneficiaries have been the Department of Justice and the FBI.

Jump sideways a bit: the USA's Secret Service is also part of the Treasury. The Office of Foreign Assets Control (OFAC) is, also, part of the Treasury. The Bureau of Industry and Security (BIS - which amongst other things manages and enforces many forms of sanctions) is part of the Department of Commerce but OFAC manages the publicaitons of BIS sanctions lists. The FBI is a semi-autonomous division of the Department of Justice. The Central Intelligence Agency is the overseas operations of the State Department (the USA's Foreign Office). The CIA operates outside the USA only (officially - no one is really fooled by that particular fiction) but the FBI operates, for very specific purposes, globally. Its officers are openly declared in Embassies while the CIA's people are usually given a title that (once more) rarely fools anybody and unless they do something to attract attention to themselves, they are usually left alone. But when one reads of an "attaché" being expelled for activities inconsistent with his status, it means that someone named as a clerk has been sent home for spying or some kind of subversive activity.

Back to the point: the new Global Investigations Division is a FinCEN division that will operate as a quasi FBI in relation to overseas activity that may result in money laundering (or terrorist financing) in the USA. As money laundering, in particular, is the grease that keeps the wheels of crime spinning, and as taxation is one of the fundamental concerns of governments, it is inconceivable that the Global Investigations Division will not be involved in FACTA and other tax related investigations. Because the sale of sanctioned goods, if done in USD, is - under the USA PATRIOT Act - a predicate crime for laundering in the USA, FinCEN's new division will be looking at subjects such as the Iranian oil in a tanker off Gibraltar.

That, the announcement made clear : the Global Investigations Division "will leverage FinCEN’s BSA authorities, including Section 311 of the USA PATRIOT Act, to investigate and target terrorist finance and money laundering threats." It will also use the Egmont Group and MoUs to facilitate international co-operation.

There's a grand mission statement saying that the new division "will employ FinCEN’s authorities to detect and deter a wide range of potential threats to our national security and financial system, including those that have a nexus to the proliferation of weapons of mass destruction, rogue state actors, transnational organised crime, international narcotics trafficking, and terrorism."

The most interesting thing about that is that the statement harks back to the late 1980s and early 1990s when such statements made much of the threats of national security and organised crime but carefully avoided mentioning tax matters.

Red our lips: the Global Investigations Division is part of FinCEN which is part of the US Department of the Treasury. Of course it's about tax at least as much as it's about the various matters that are listed. And tax matters that are offshore the USA, have not been a priority of the FBI.

Has FinCEN found its calling? Probably not yet but it's taking a bold step in the right direction, especially as its uncle Treasury can and does bring prosecutions and as the whole Treasury, FinCEN combine has the power to freeze assets.

World Money Lau...