LOS ANGELES–LAWFUEL – The Legal Newswire – The Center for Financial Executive Education and the West Coast Anti-Money Laundering Forum issued a warning today to financial institutions regarding the potential movement of illicit funds from high-risk and highly regulated areas to institutions located in lower risk communities.
Recent enforcement activity by the Arizona Attorney General found evidence of a shift by Arizona-based criminals away from traditional remittance products offered by financial services providers to bulk cash transport. According to the Arizona Attorney General, the shift to bulk cash transport is directly related to Arizona’s aggressive crack down on remittance services that were found to assist human smugglers and drug traffickers in moving illicit funds from the U.S. to Mexico.
Similarly, bank regulatory agencies such as the Officer of the Comptroller of the Currency (OCC), Federal Reserve and Federal Deposit Insurance Corporation (FDIC) have implemented “risk-based” anti-money laundering examination procedures that require banks in high-risk areas, referred to as High Intensity Financial Crimes Areas (HIFCA), to implement more stringent procedures relative to cross-border funds transfers. As such, areas such as Southern California, New Mexico and Texas join Arizona in maintaining tough money transfer requirements.
Accordingly, as criminals seek less risky alternatives to moving their illicit funds to Mexico, many may opt to launder their portion of Mexico’s $25 billion drug trade through institutions located in lower risk communities (non-HIFCA areas).
“Money launderers are constantly changing tactics to remain one step ahead of law enforcement. As law enforcement and the regulatory agencies continue to raise the bar on institutions located in HIFCA regions, criminals will move to the lower hanging fruit in areas not traditionally known for financial crimes such as money laundering resulting from drug trafficking and human smuggling. Compliance officers at these institutions must ensure that they remain vigilant in order to avoid exploitation by these criminals,” said TomatoBank, N.A. Executive Vice President and WCAML Committee Member Jesse Torres.
Additional information is available at www.wcamlforum.org/hifca/.