Magazine article American Banker

GAO: Disclosure Law Scaring Money Launderers from Banks

Magazine article American Banker

GAO: Disclosure Law Scaring Money Launderers from Banks

Article excerpt

WASHINGTON -- More money launderers are bypassing banks, the General Accounting Office said in a report.

"Laundering money through U.S. financial institutions and businesses is now considered to pose an increased threat to those seeking to disguise illicit cash," the report said. As a result, criminals have been forced to smuggling billions of dollars in cash abroad.

The GAO -- the investigative arm of Congress -- prepared the study at the request of Sen. Sam Nunn, D-Ga., who released the report Wednesday.

Dramatic Shift Seen

Sen. Nunn said that in 1984 estimates showed criminals used smuggling to take one-third of the money laundered out of the country. "Improved compliance by the banks with reporting requirements since then has probably resulted in this figure currently being more like two-thirds," Sen. Nunn said.

Law enforcement officials believe that in the past, criminals typically laundered their cash through banks.

The American Bankers Association said the GAO report proves that it is no longer easy to move ill-gotten money through banks. "Diligent bankers have forced drug traffickers to rethink their money-laundering strategy," said ABA senior counsel John Byrne.

The GAO said that government officials believe "that increased efforts by federal regrulatory and law enforcement agencies, as well as enhanced cooperation by the banks themselves, have significantly improved bank compliance with the reporting requirements, making it much more difficult for banks to be used for money laundering purposes. …

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