Question

Many new anti-money laundering laws such as the Know Your Customer Act and the Foreign Account Tax Compliance Act (FATCA) have been implemented since 9/11. These laws were passed in the name of fighting terrorism, but have also been used for many other purposes such as detecting tax evasion. Have these AML laws been effective at fighting terrorism? Have these AML laws been unconstitutional violations of privacy and, an overly bureaucratic waste of time?

Answer 1

Criminals use the financial system to support terrorists or acts of terrorism. Terrorist financiers and other criminals use the formal financial system, new payment methods. In the days, months and first few years after 9/11, the FBI and segments of the FSS teamed to establish five distinctive initiatives to proactively investigate terrorist financing.

1. A working group of representatives from approximately 20 financial institutions. This group was comprised of anti-money laundering (AML) and fraud investigative compliance officers.

2. Select financial services providers, who were in a position to legally provide law enforcement with near real time transactional information for select investigative purposes.

3. A designated bank representative was available on an around-the-clock basis to provide financial information to law enforcement on terrorist threat leads.

4. One financial services provider established a platform for law enforcement to legally obtain certain and specific transactional information.

5. A working group of representatives from seven major financial institutions. This group worked on sensitive high-level issues that were intended to enhance information sharing between law enforcement and financial institutions.

Preserving privacy rights and concerns and enforcing a strong and effective anti-money laundering effort. Section 7 of the Privacy Act says that if there is another piece of law which says that personal information must, shall or must not be used in a certain way, this will override the general provisions of the Privacy Act. AML Compliance programs rely on time-consuming and manual processes to keep the customer segments up to date.