Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) remain paramount global efforts to safeguard financial systems and national security. In 2021, the United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued the first-ever, definitive list of eight AML/CFT priorities designed to address both longstanding and emerging threats.
Introduction to AML Priorities
Money laundering and financing terrorism pose relentless threats that undermine global financial integrity, fuel organized crime, and damage governance structures. Authorities have responded by sharpening regulatory focus on the highest-risk areas through clearly defined AML priorities, aiding financial institutions in risk management and compliance.
FinCEN’s priority framework emerged under Section 5318(h)(4)(A) of the Bank Secrecy Act, mandating enhanced attention on specific vulnerabilities that, if unchecked, could lead to exploitation of financial channels. While not all priorities apply universally to every institution, they form an essential blueprint for the evolving AML strategy.
1. Corruption: Combating the Abuse of Power
Corruption, including bribery and misappropriation of public funds, significantly threatens national security by eroding the rule of law and human rights institutions. According to presidential directives, corruption accounts for roughly 2-5% of global GDP laundering.
FinCEN focuses on identifying and disrupting networks that facilitate funds derived from corrupt activities, especially those linked to high-profile foreign political figures involved in human rights abuses. Financial entities are urged to reassess AML policies to more rigorously monitor flows tied to corrupt actors and elevate due diligence protocols.
2. Cybercrime: Tackling Evolving Digital Threats
Cybercrime encompasses illegal activities perpetrated through computers and digital networks, including ransomware, phishing, and attacks exploiting cloud services or applications. The AML landscape increasingly recognizes the use of convertible virtual currencies (CVCs) and decentralized finance (DeFi) mechanisms by cybercriminals to launder illicit proceeds.
Institutions are advised to employ advanced monitoring technologies, share intelligence on cyber threats, and enhance controls to detect fraud patterns, safeguarding sensitive data and financial channels from cyber-enabled laundering.
3. Terrorist Financing: Disrupting Support for Terrorism
Preventing terrorist financing remains a core AML/CFT mission to thwart recruitment, operational logistics, and violent acts. Financial institutions must diligently file Suspicious Activity Reports (SARs) related to suspected terror financing and comply fully with sanctions regimes designed to inhibit resource flows to terrorist organizations.
This priority necessitates a risk-based approach to screening transactions and customers, ensuring vigilance against novel financing methods.
4. Fraud: Addressing a Significant Source of Illicit Funds
Fraudulent schemes within consumer banking, healthcare, and taxation generate substantial illicit proceeds. For example, fraud within the U.S. healthcare system is estimated to produce billions in illegal revenue annually.
Financial channels funnel fraud proceeds through various means, including offshore accounts and money mules, complicating detection efforts. FinCEN warns institutions to be alert to risks such as Business Email Compromise (BEC) and account takeovers, emphasizing technological solutions to combat these schemes.
5. Transnational Criminal Organizations (TCOs): Confronting Cross-Border Crime
TCOs drive a range of criminal enterprises such as human trafficking, drug smuggling, wildlife poaching, and arms dealing. Their sophisticated networks exploit financial systems to launder proceeds, presenting a formidable AML challenge.
Financial entities are called on to develop focused monitoring frameworks to detect behavior consistent with TCO activities, reinforcing Suspicious Activity Report (SAR) quality, and tracing complex transaction patterns that indicate organized crime operations.
6. Proliferation Financing: Preventing Funding for Weapons of Mass Destruction
Proliferation financing involves channeling funds that support the development or acquisition of weapons of mass destruction (WMDs), undermining global security. Emerging threats also include the misuse of technology, such as AI and machine learning, to evade sanctions and regulatory scrutiny.
Financial institutions, particularly those engaged in international trade finance, must bolster Customer Due Diligence (CDD) and Know Your Customer (KYC) processes, meticulously review sanction programs, and maintain heightened awareness of high-risk transactions and parties.
7. Human Trafficking and Smuggling: Financial Pathways for Illicit Networks
Human trafficking and smuggling generate significant illicit revenue streams that intersect with formal financial systems. Income derived from victim exploitation, transportation, and logistics is often concealed through sophisticated laundering schemes.
Covered institutions should develop robust detection capabilities based on behavioral red flags and transaction anomalies, guided by FinCEN advisories, to interrupt these criminal financial flows and support broader law enforcement efforts.
8. Drug Trafficking Organization (DTO) Activity: Mitigating Public Health and Security Risks
Drug trafficking remains a primary driver of illicit financial activity and a catalyst for public health crises in the U.S. and globally. DTOs operate complex laundering schemes leveraging legitimate businesses and cross-border financial transactions.
AML priorities focus on identifying synthetic opioid traffickers, such as those distributing fentanyl, by pinpointing suspect transactions aligned with drug proceeds. Institutions must integrate current advisories into risk assessments and continually update methodologies to adapt to evolving trade-based money laundering tactics.
Aligning AML Efforts With Priority Threats
The FinCEN AML/CFT priorities provide a strategic framework aimed at effectively countering the most pressing financial crime threats. Financial institutions are increasingly expected to advance beyond basic compliance, leveraging technology, intelligence-sharing, and risk-focused methodologies.
Confronted with emergent crime typologies and evolving regulatory landscapes, adaptable and comprehensive AML programs centralize these priorities. Success in combating money laundering and terrorism financing hinges on proactive, informed risk management tailored to these critical focus areas, supporting the integrity and security of the U.S. and global financial systems.