Agencies assess money-laundering threat

The Treasury Department on Wednesday released the first ever governmentwide threat assessment of money laundering.

The study was produced by an interagency working group that included participants from the Justice, Treasury and Homeland Security departments, as well as the Postal Service and the Drug Enforcement Administration. The assessment is intended to be the first step in developing a threat-based strategic plan to combat the problem.

The fact that the report was even released to the public is significant, said Stuart Levey, Treasury's undersecretary for terrorism and financial crimes, at a briefing for reporters. It was unveiled in part to provide private financial institutions with a broader understanding of the problem in the hope of enlisting their support in seeking more effective methods for combating financial crimes.

"We've done something unusual - we've been very candid about those vulnerabilities," Levey said. The assessment describes 13 money-laundering methods, from the smuggling of bulk cash to trade-based schemes, and the regulatory context in which they take place.

"[C]riminals are enjoying new advantages with globalization and the advent of new financial services such as stored value cards and online payment systems," the introduction to the report stated.

Nonetheless, the report cited progress in combating financial crimes over the last decade as agencies have begun focusing on the problem. "With so many agencies looking at distinct but related aspects of this issue, it is critical that information be shared freely and studied jointly," it said.

Susan Schmidt Bies, a member of the board of governors of the Federal Reserve, said the assessment will help agencies and financial institutions identify better ways of combating money laundering.

According to the Internal Revenue Service, which refers to money laundering as "tax evasion in progress," the agency's criminal investigation division initiated 1,639 investigations into money laundering last year and recommended prosecution in 1,338 cases.

While money laundering is most often associated with drug trafficking, the implications are much broader. In a statement, Richard Speier, acting chief of the IRS criminal investigation division, said: "We often find money laundering as a very large component of most financial crimes, including corporate fraud, public corruption, abusive offshore trusts, bank fraud and terrorist financing."

Levey declined to speculate on how much money circulating in the United States may be tainted. "We've seen estimates about how much dirty money passes through the United States but I don't think we have much faith in any of those estimates," he said. "We know there's a lot of it, but we don't know how much there is."