Under Secretary for Terrorism and Financial Intelligence Brian Nelson shared an update on his teams efforts to revamp money laundering enforcement at Deloitte's 15th Annual Anti-Money Laundering Conference.
Mr. Nelson’s talk focused on the financing of terrorism, specifically targeting Hamas and Treasury's efforts to disrupt these networks in collaboration with international partners.
He identified three key areas for discussion:
(Remarks have been edited for brevity for full text see here)
"Moments like this bring a profound sense of clarity and purpose to the work that we do. The consequences of these threats are life-or-death. Fighting money laundering and terrorist financing is about far more than simply checking compliance boxes. This is our responsibility, and we must act urgently.
Over the past two decades, Hamas financiers have been particularly insidious in using the formal financial system to raise and move their funds, as I’ll discuss today.
"Countering the financing of terrorism, the CFT in “AML/CFT,” is the foundation upon which we have built our approaches to combating a range of illicit finance threats. And for many of us, this mission is what drove us to fight financial crime in the first place.
I’ll discuss our strengthening of the United States’ Anti-Money Laundering Countering the Financing of Terrorism (AML/CFT) Regime in order to stomp out terrorists and other illicit actors from our financial system.
Hamas is a uniquely resourced terrorist group. It’s comprised of a large number of fighters, a cache of drones, rockets, munitions, and other supplies, as well as training and storage facilities throughout Gaza. It owns substantial financial assets and possesses well-honed methods of surreptitiously accessing the formal financial system.
While Hamas receives significant financial support from Iran, it also generates vast sums of revenue through its secret investment portfolios, with a network of global assets estimated to be worth hundreds of millions of dollars. These types of investments have allowed senior Hamas officials to live in luxury, including elsewhere in the Middle East, while ordinary Palestinians in Gaza face harsh living conditions and dire economic prospects. Treasury has targeted, and will continue to target, these portfolios and those who service them.
Disrupting Hamas’ financing operations is not new to us; this has been a priority for Treasury for decades. We are equipped to target this infrastructure and its supporters, whether they be political leadership, operatives, facilitators, financiers, investors, or entire global procurement networks.
Permissive jurisdictions facilitate Hamas’ networks of terrorism, as well as their ties to destabilizing regional actors.
We support the significant progress Türkiye has made to address deficiencies in its AML/CFT regime as identified in their Financial Action Task Force (FATF) Mutual Evaluation. But Hamas poses a direct threat to the integrity of the region’s financial system, and now is the time for their government to strengthen its AML/CFT regimes and decisively close these avenues of funds that directly support Hamas’ acts of violence.
We know Hamas is leveraging the tragedy it created to further finance its ambitions of terrorism. We are already seeing online grassroots campaigns, linked to so-called charities that we’ve previously designated in Kuwait, solicit funds under the guise of humanitarianism.
Of course, as in all U.S. sanctions programs, our counter-terrorism sanctions retain licensing authorizations to permit the efforts of certain international organizations, including the United Nations and the ICRC, as well as specified transactions in support of pre-determined, legitimate NGO activities. Our commitment to humanitarian activity will never waned.
As you know, Treasury is undertaking a substantial modernization of the U.S. AML/CFT framework—the biggest set of reforms in the post-9/11 era. Priority number one in our National Strategy for Combatting Illicit Financing is closing the legal and regulatory gaps that illicit actors exploit. This includes by enhancing corporate transparency, curtailing money laundering through the real estate, and combatting the misuse of sectors that lack comprehensive AML/CFT obligations.
To address beneficial ownership risks, we continue to prioritize the implementation of the Corporate Transparency Act (CTA), which will require certain U.S. and foreign companies to disclose information to FinCEN about persons who own or control the companies. It will also require FinCEN to maintain this information in a secure, non-public database and authorizes FinCEN to disclose this information to authorized government authorities and financial institutions, subject to effective safeguards and controls.
FinCEN will begin accepting beneficial ownership information on January 1st, 2024.
In parallel, FinCEN is working to finalize a rule for access to beneficial ownership information (“the Access Rule”) to establish who may request and receive beneficial ownership information, how recipients may use it, and how they must secure it.
We’re also focused on addressing the risks associated with non-financed purchases of residential real estate, which we know illicit actors misuse to launder funds. We’re in the process of crafting a proposed rule to enhance the transparency of the sector—building on the data we’ve collected since 2016 from FinCEN’s Geographic Targeting Order (GTO) program, as well as the comments received following the 2021 ANPRM. We hope to publish this proposed rule by year’s end.
We are also turning our sights to investment advisers, a set of professionals in a $120 trillion sector that are generally not subject to comprehensive AML/CFT obligations We are conducting risk assessments on this sector and are considering possible policy options.
These regulatory initiatives reinforce and complement our broader work under the AML Act to streamline, modernize, and strengthen the United States’ AML/CFT regime. They will make it harder for criminals and terrorists to abuse the formal financial system to raise and move money.
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