Assessment of the measures to combat money laundering and the financing of terrorism and proliferation in the United States: ratings, key findings and priority actions.

1. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
1
Anti-money laundering and counter-
terrorist financing (AML/CFT)
measures in The United States
Fourth Round Mutual Evaluation
Key findings, ratings and priority actions
December 2016
www.fatf-gafi.org/publications/mutualevaluations/documents/mer-united-states-2016.html

2. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
Ratings – Effectiveness (1/3)
2
Immediate outcome of an effective system to combat money
laundering (ML) and terrorist financing (TF)
Extent to
which The
United States
has achieved
this objective
1. ML and TF risks are understood and, where appropriate,
actions co-ordinated domestically to combat ML and TF
Substantial
2. International co-operation delivers appropriate information,
financial intelligence, and evidence, and facilitates action
against criminals and their assets
Substantial
3. Supervisors appropriately supervise, monitor and regulate
financial institutions and designated non-financial
businesses and professions (DNFBPs) for compliance with
AML/CFT requirements commensurate with their risks.
Moderate
4. Financial institutions and DNFBPs adequately apply AML/CFT
preventive measures commensurate with their risks, and
report suspicious transactions.
Moderate

3. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
3
Immediate outcome of an effective system to combat money
laundering (ML) and terrorist financing (TF)
Extent to
which The
United States
has achieved
this objective
5. Legal persons and arrangements are prevented from misuse
for money laundering or terrorist financing, and information
on their beneficial ownership is available to competent
authorities without impediments
Low
6. Financial intelligence and all other relevant information are
appropriately used by competent authorities for money
laundering and terrorist financing investigations.
Substantial
7. Money laundering offences and activities are investigated
and offenders are prosecuted and subject to effective,
proportionate and dissuasive sanctions
Substantial
8. Proceeds and instrumentalities of crime are confiscated. High
Ratings – Effectiveness (2/3)

4. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
4
Immediate outcome of an effective system to combat money
laundering (ML) and terrorist financing (TF)
Extent to
which The
United States
has achieved
this objective
9. Terrorist financing offences and activities are investigated
and persons who finance terrorism are prosecuted and
subject to effective, proportionate and dissuasive sanctions.
High
10. Terrorists, terrorist organisations and terrorist financiers are
prevented from raising, moving and using funds, and from
abusing the non-profit sector.
High
11. Persons and entities involved in the proliferation of weapons
of mass destruction are prevented from raising, moving and
using funds, consistent with the relevant United Nations
Security Council Resolutions.
High
Ratings – Effectiveness (3/3)

5. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
5
Ratings – Effectiveness
14-Sep-2016
4
4
2
1
High
Substantial
Moderate
Low

6. 1-Dec-16
6
Ratings – technical compliance
(1/5)
AML/CFT POLICIES AND COORDINATION
1. Assessing risks & applying a risk-based approach Pa ParParPar Partially compliant
2. National cooperation and coordination Co ComComCom Compliant
MONEY LAUNDERING AND CONFISCATION
3. Money laundering offence LarLarLarLar Largely compliant
4. Confiscation and provisional measures LarLarLarLar Largely compliant
TERRORIST FINANCING AND FINANCING OF PROLIFERATION
5. Terrorist financing offence Co ComComCom Compliant
6. Targeted financial sanctions related to terrorism & terrorist
financing LarLarLarLar Largely compliant
7. Targeted financial sanctions related to proliferation LarLarLarLar Largely compliant
8. Non-profit organisations LarLarLarLar Largely compliant

7. 1-Dec-16
7
Ratings – technical compliance
(2/5)
PREVENTIVE MEASURES
9. Financial institution secrecy laws ComCo ComCo Compliant
Customer due diligence and record keeping
10. Customer due diligence ParPa ParPa Partially compliant
11. Record keeping LarLarLarLar Largely compliant
Additional measures for specific customers and activities
12. Politically exposed persons ParPa ParPa Partially compliant
13. Correspondent banking LarLarLarLar Largely compliant
14. Money or value transfer services LarLarLarLar Largely compliant
15. New technologies LarLarLarLar Largely compliant
16. Wire transfers ParPa ParPa Partially compliant

8. 1-Dec-16
8
Ratings – technical compliance
(3/5)
PREVENTIVE MEASURES (continued)
Reliance, Controls and Financial Groups
17. Reliance on third parties LarLarLarLar Largely compliant
18. Internal controls and foreign branches and subsidiaries LarLarLarLar Largely compliant
19. Higher-risk countries LarLarLarLar Largely compliant
Reporting of suspicious transactions
20. Reporting of suspicious transactions ParPa ParPar Partially compliant
21. Tipping-off and confidentiality ComCo ComCom Compliant
Designated non-financial Businesses and Professions (DNFBPs)
22. DNFBPs: Customer due diligence NonNo NonNon Non compliant
23. DNFBPs: Other measures NonNo NonNon Non compliant

9. 1-Dec-16
9
Ratings – technical compliance
(4/5)
TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL
PERSONS AND ARRANGEMENTS
24. Transparency and beneficial ownership of legal persons No No NonNo Non compliant
25. Transparency and beneficial ownership of legal
arrangements Pa Pa ParPa Partially compliant
POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES
AND OTHER INSTITUTIONAL MEASURES
Regulation and Supervision
26. Regulation and supervision of financial institutions LarLarLarLar Largely compliant
27. Powers of supervisors Co Co Co Co Compliant
28. Regulation and supervision of DNFBPs No No NonNo Non compliant
Operational and Law Enforcement
29. Financial intelligence units Co Co ComCo Compliant
30. Responsibilities of law enforcement and investigative
authorities Co Co ComCo Compliant
31. Powers of law enforcement and investigative authorities LarLarLarLar Largely compliant
32. Cash couriers Co Co ComCo Compliant

10. 1-Dec-16
10
Ratings – technical compliance
(5/5)
POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES
AND OTHER INSTITUTIONAL MEASURES (continued)
General Requirements
33. Statistics LarLarLarLar Largely compliant
34. Guidance and feedback LarLarLarLar Largely compliant
Sanctions
35. Sanctions LarLarLarLar Largely compliant
INTERNATIONAL COOPERATION
36. International instruments LarLarLarLar Largely compliant
37. Mutual legal assistance LarLarLarLar Largely compliant
38. Mutual legal assistance: freezing and confiscation LarLarLarLar Largely compliant
39. Extradition LarLarLarLar Largely compliant
40. Other forms of international cooperation Co Co ComCo Compliant

11. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
11
Ratings – technical compliance
14-Sep-2016
9
21
6
4
Compliant
Largely compliant
Partially compliant
Non compliant

12. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
Key findings
 The AML/CFT framework in the U.S. is well developed and
robust. Domestic coordination and cooperation on
AML/CFT issues is sophisticated and has matured since the
previous evaluation in 2006. The understanding of money
laundering (ML) and terrorist financing (TF) risks is well-
supported by a variety of ongoing and complementary risk
assessment processes, including the 2015 National Money
Laundering Risk Assessment (NMLRA) and National Terrorist
Financing Risk Assessment (NTFRA), which were both
published. The national AML/CFT strategies, key priorities
and efforts of law enforcement and other agencies seem to
be driven by these processes and are coordinated at the
Federal level across a vast spectrum of agencies in a
number of areas.
1214-Sep-2016

13. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
Key findings
14-Sep-2016 13
 The financial sectors bear most of the burden in respect of
required measures under the Bank Secrecy Act (BSA).
Financial institutions (FIs), in general, have an evolved
understanding of ML/TF risks and obligations, and have
systems and processes for implementing preventive
measures, including for on-boarding customers, transaction
monitoring and reporting suspicious transactions.

14. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
Key findings
 However, the regulatory framework has some significant
gaps, including minimal coverage of certain institutions and
businesses (investment advisers (IAs), lawyers, accountants,
real estate agents, trust and company service providers
(other than trust companies). Minimal measures are
imposed on designated non-financial businesses and
professions (DNFBPs), other than casinos and dealers in
precious metals and stones, and consist of the general
obligation applying to all trades and businesses to report
transactions (or a series of transactions) involving more
than USD 10 000 in cash, and targeted financial sanctions
(TFS) requirements. Other comprehensive AML/CFT
obligations do not apply to these sectors. In the U.S. context
the vulnerability of these minimally covered DNFBP sectors
is significant, considering the many examples identified by
the national risk assessment process.
1414-Sep-2016

15. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
Key findings
1514-Sep-2016
 Law enforcement efforts rest on a well-established task force
environment which enables the pooling of expertise from a wide
range of law enforcement agencies (LEAs), including prosecutors,
to support quality ML/TF investigation and prosecution
outcomes. Overall, LEAs have access to a wide range of financial
intelligence, capabilities and expertise allowing them to trace
assets, identify targets and undertake expert financial ML/TF
investigations. There is a strong focus on following the money in
predicate offence investigations at the Federal level. A similar
focus on identifying terrorist financiers in terrorism-related
investigations applies. The U.S. investigates and prosecutes TF
networks aggressively in line with its risk profile. International
cooperation in these areas is generally effective though
improvements are underway to further improve the timely
handling of (a large volume) of mutual legal assistance (MLA) and
extradition requests.

16. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
Key findings
 Lack of timely access to adequate, accurate and current
beneficial ownership (BO) information remains one of
the fundamental gaps in the U.S. context. The NMLRA
identifies examples of legal persons being abused for
ML, in particular, through the use of complex structures
to hide ownership. While authorities did provide case
examples of successful investigations in these areas,
challenges in ensuring timely access to and availability
of BO information more generally raises significant
concerns, bearing in mind risk and context.
1614-Sep-2016

17. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
Key findings
 At the Federal level, the U.S. achieves over 1 200 ML
convictions a year. Many of these cases are large, complex,
white collar crime cases, in line with the country’s risk
profile. Federal authorities have the lead role in all large
and/or international investigations. There is however no
uniform approach to State-level AML efforts and it is not
clear that all States give ML due priority. The AML system
would benefit from ensuring that a range of tax crimes are
predicate offenses for ML.
1714-Sep-2016

18. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
 The Federal authorities aggressively pursue high-value
confiscation in large and complex cases, in respect of
assets located both domestically and abroad. The
authorities effectively resort to criminal, civil and
administrative tools to forfeit assets. At State and local
levels, there is little available information, though it
appears that civil forfeiture is vigorously pursued by
some States.
14-Sep-2016 18
Key findings

19. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
 The U.S. authorities effectively implement targeted financial
sanctions for both terrorism and proliferation financing purposes,
though not all U.N designations have resulted in domestic
designations (mainly on the basis of insufficient identifiers). Most
designations take place without delay, and are effectively
communicated to the private sector. The U.S. Specially
Designated Nationals and Blocked Persons List (SDN List) is used
by thousands of FIs across the U.S. and beyond which gives the
U.S sanctions regime a global effect in line with the size,
complexity and international reach of the U.S. financial system.
The U.S has had significant success in identifying the funds/other
assets of designated persons/entities, and preventing them from
operating or executing financial transactions related to terrorism
and proliferation. Only minor improvements are needed in this
area.
14-Sep-2016 19
Key findings

20. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
Key findings
 AML/CFT supervision of the banking and
securities sectors appears to be robust as a whole,
and is evolving for money services businesses
(MSBs) through greater coordination at the State
level. The U.S. has a range of sanctions that it can
and does impose on FIs as well as an array of
dissuasive remedial measures, including informal
supervisory actions. These measures seem to
have the desired impact on achieving the
supervisory objectives. The most significant
supervisory gap is lack of comprehensive
AML/CFT supervisory processes for the DNFBPs,
other than casinos.
14-Sep-2016 20

21. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
Priority Actions for The United States
to strengthen its AML/CFT System
2114-Sep-2016
 Take steps to ensure that adequate, accurate and
current BO information of U.S. legal persons is
available to competent authorities in a timely
manner, by requiring that such information is
obtained at the Federal level.
 Implement BO requirements under the BSA
(scheduled to come into force in 2018) and apply
these to the sectors discussed in point 3 below.

22. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
Priority Actions for The United States
to strengthen its AML/CFT System
 Apply appropriate AML/CFT obligations as follows:
– To investment advisers. Even if some investment advisers are
already indirectly covered through their association with banks,
bank holding companies and security broker dealers, the direct
application of AML/CFT rules to all investment advisers will address
a vulnerability identified by the U.S. authorities themselves;
– On the basis of a specific vulnerability analysis, to lawyers,
accountants, trust and company service providers (other than trust
companies which are already covered); and
– After the outcomes of the recent GTO have been analysed, take
appropriate action to address the ML risks in relation to high-end
real estate.
2214-Sep-2016

23. Anti-money laundering and counter-terrorist financing measures in The United States – Mutual Evaluation Report – September
2016
Priority Actions for The United States
to strengthen its AML/CFT System
 Issue guidance to clarify the scope of the immediate SAR
reporting requirement, in order to make it clear that the
requirement applies below the otherwise applicable
thresholds; and conduct a focused risk review of the
existing SAR reporting thresholds and the 60/30 day
reporting deadlines.
 Improve the visibility of AML and State level activities and
statistics, including via improved data collection and
sharing, for a clearer nation-wide picture of the adequacy
of AML efforts at all levels.
 FinCEN should continue to expand its use of tools such as
the GTO and 314a requests, and further its pro-active
dissemination of strategic and operational intelligence
products to law enforcement.
2314-Sep-2016