Money Laundering Regulations After September 11 Attacks

It's almost a month since the 20th anniversary of the terrorist attacks of September 11, 2001, to commemorate the memory of all those who died in the aftermath of the attacks 20 years ago. An event that changed the daily life not only of American citizens but the dramatic consequences of the post-attack has also involved in some way, directly or indirectly, the whole world. 

Since that event, the national security systems have changed; the event itself has demonstrated important vulnerabilities to national security, particularly the absence of specific financial security parameters aimed at preventing terrorist financing activities. Shortly after this event, in a short time, the United States, with the competent ministries (Defence, Homeland Security, Treasury, Transport and Justice) modify their normative, operative, and infrastructural parameters to the fight against terrorism. A "fight" which, first of all, must be fought and then won in Parliament, an ad-hoc Anti-Terrorism and Mitigation of the Illicit Use of Money Act will be promulgated, the "Patriot ACT 2001". This will not be the only act: powers of access to financial information, increased monitoring, control parameters, and improved reporting are strengthened, and the BSA (Bank Secret ACT) and FINCEN will be targeted by these changes. Special sections of the Federal Bureau of Investigation (think TFOS-The Terrorist Financing Operations Section closed in 2019), the DEA, the CIA, and the NSA on prevention and prosecution of economic and financial crimes are also established. Over the years, important steps have been taken towards greater financial transparency by involving international entities such as the UN, the FATF (weights to the 40 recommendations), The European Union, and Moneyval for audits and certifications on the compliance of AML/CFT standards and then the collaboration of U.S. government structures such as the constant strengthening of sanctioning and customs powers in the trade that has been reserved for OFAC in mitigating the activities of purchase, sale and use of weapons of mass destruction. 

All these procedures have had important repercussions also in the private sphere, which has led to a more restrictive regulatory evolution on anti-terrorism and anti-money laundering issues in the credit sector; measures and procedures of Due Diligence have been introduced that are more attentive to the identification of objective and subjective elements (KYC) and the detection of anomalies on financial transactions by imposing quantitative and subjective limits (PEP's). The main subjects involved were all those operating in the so-called formal systems of money transfer such as banks, insurance companies, credit intermediation companies, real estate intermediation companies, Money and Exchange transfers, but in general, all sectors with possible risks of distorted or illicit use of money, intended for the financing of criminal activities, are included; and then there is the other side of money, the dark one, the para banking systems or also known as the underground, which legally is known as informal systems of money transfer (IVTS-IFT), the latter being more difficult to identify as they are rooted in historical, social and economic customs prior to the creation and operation of the modern (formal) systems of use and transfer of money. 

All these initiatives of financial safeguards put the activity of financial intermediation constantly subjected to stricter and more in-depth controls, as far as anti-money laundering compliance is concerned, which has led over time (the positive element) to the emergence of many scandals or cases of misuse of money; however (and this, I believe, is the negative element) in a similar way this has created multiple rivalries between States, government security agencies belonging to the financial sector and public bodies serious and repeated accusations against the services offered by the private sector, without, however, considering an operation built on synergy and collaboration between the public and private sectors, which in fact, as claimed by several experts, could increase the vulnerability and risks to the realization or incentive of money laundering activities and financing of terrorism, in addition to high-risk sectors directly involved in the aforementioned economic crimes.

In these 20 years, we have tried to act in a coordinated way under different profiles; on the one hand, trying to foresee any threat activity and risk of terrorism (internal and external) and, on the other hand, regulating and mitigating the risks the new criminal cases. In particular, one thinks of the threats included in the binomial economy and informatics in the cyberspace of the Internet—for example, the digital evolution and the bitcoin dematerialized currencies, or the cryptocurrency systems in general. The long-awaited Anti-money Laundering Act 2020 (the AMLA) is doing its part by providing new obligations and widening the subjects subject to AML/CFT regulations. For this particular type of risks, greater collaboration and computer knowledge are necessary to mitigate these new threats (Cyber-Crime and Computer-Crime), taking into account the criminal purposes of Cyber-Terrorism and Cyber-Laundering, branches of the Criminal Information Technology Law still, 20 years later, little known but that substantially impact on daily life.

Precisely these 20 years can be an excellent opportunity to reflect, to think that the historical events teach us not to take steps backward, risky and dangerous to which it is difficult to go back; it is, therefore, prudent that we must learn something from the events and not make mistakes, the event of September 11 as the subsequent events in Europe (think of the attacks in Madrid, Paris, Nice, London, etc. ..) makes us understand that we must work as a team, with operational synergy and not one on their own or for interests (sometimes economic and political). Some years ago, in a seminar on computer crimes in which I assisted, a speaker said: "The criminal is always one step ahead of the Police" this is what should frighten us and at the same time unite us.

Written by Dimitri Barberini

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