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1. Follow the money: connecting anti-money laundering systems to disrupt environmental crime in the Amazon

Author:
Melina Risso, Carolina Andrade Quevedo, Lycia Brasil, Vivian Calderoni, and Maria Fe Vallejo
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Igarapé Institute
Abstract:
Environmental crime became the world’s third most lucrative illicit economy after drug trafficking and smuggling, with estimates of $110 to $281 billion in annual profits. Between 2006 and 2016, environmental crimes grew at a rate of 5% to 7% per year, a pace two or three times faster than that of global GDP growth. Money laundering is part of the criminal machinery that plunders the Amazon Rainforest. The study “Follow the Money: connecting anti-money laundering systems to disrupt environmental crime in the amazon” reveals the need for systems, agencies, and institutions responsible for preventing money laundering to turn their attention to the connections between this illicit practice and environmental crimes. The Igarapé study shows that the money laundering cycle follows three stages before the laundered funds can enter the financial system: placement, layering, and integration. However, not all proceeds from criminal activity are directly laundered into the formal financial system. Thus, informal diversification constitutes the process of moving illegal flows into the informal economy. It is estimated that 30% of the money to be laundered is used to pay the operating expenses of illicit economies. Cash transactions, divided into small amounts and deposited by “money mules,” are used to finance the hiring of precarious labor, accommodations, food, security, transportation, health services, leisure, and machinery, for example. The remaining 70% of illicit proceeds are formally inserted into the financial system. The study also recalls that the World Bank estimated in 2019 that governments lose between 6 and 9 billion dollars in tax revenue each year due to illegal logging. Similarly, other environmental crimes such as illegal mining, especially of gold and diamonds, generate between 12 and 48 billion dollars in revenue. In 2018, Interpol’s Global Illicit Flows Atlas found that illegal logging accounted for a percentage between 15% and 30% of the global timber trade, calculated between 51 billion and 152 billion dollars per year. The illegal logging industry is responsible for up to 90% of deforestation of tropical forests in African countries such as the Democratic Republic of Congo. Combating illicit financial flows is a powerful tool for dismantling illegal economies. It becomes even more relevant when it is identified that illicit financial flows fuel an ecosystem of environmental crime composed of a convergence of environmental and non-environmental crimes, such as corruption, fraud, tax evasion, and others.
Topic:
Security, Environment, Financial Crimes, Money Laundering, and Illicit Financial Flows
Political Geography:
Brazil, South America, and Amazon Basin

2. CTC Sentinel: June 2023 Issue

Author:
Pierre Boussel, Kristina Hummel, Teddy Macdonald, Ashley A. Mattheis, Amarnath Amarasingam, Graham Macklin, and Marc-Andre Argentino
Publication Date:
06-2023
Content Type:
Journal Article
Journal:
CTC Sentinel
Institution:
The Combating Terrorism Center at West Point
Abstract:
In this month’s feature article, Pierre Boussel provides a deep examination of the Quds Force in Syria. He writes: “The key mission of the Quds Force of the Revolutionary Guards (IRGC) is to defend the Iranian Islamic Revolution and create armed militias in the countries of its ‘Axis of Resistance.’ Its organization is opaque and complex, coordinating combat operations with soft-power actions aimed at, among other initiatives, establishing a Pax Irania in the Middle East, a ‘peace’ of which it is the initiator and guarantor. Although the Quds Force’s apparatus in Syria has been under pressure from Israeli airstrikes, Tehran is sticking to its mission set: infiltrating Syrian civil society and sending fighters to the north, where the civil war will one day end, and to the south, on the edge of the Golan Heights, to establish a base against Israel if necessary.” Our interview is with Brian Nelson, the Under Secretary of the Treasury for Terrorism and Financial Intelligence. He describes how his office “marshals the Department’s intelligence and enforcement functions with the dual aims of safeguarding our financial system against illicit use and also combating corrupt regimes, terrorist facilitators, weapons of mass destruction proliferators, money launderers, drug kingpins, and other national security threats.” On May 6, 2023, Mauricio Garcia, a man with longstanding neo-Nazi views, murdered eight people in a mass shooting at the Allen Premium Outlets mall in Allen, Texas. Ashley Mattheis, Amarnath Amarasingam, Graham Macklin, and Marc-André Argentino look at what led to the attack. They write that the deceased perpetrator “had an ideologically fuzzy tapestry of extreme thoughts tied to rampant violence. He appeared to view neo-Nazis and other members of the extreme far-right as living the ‘real’ masculine ideal in its fullest form by their commitment to generating dominance through violent, radical, racial, and cultural action. This interaction between race and gender is an increasingly present aspect of far-right violence and needs to be better understood.”
Topic:
Counter-terrorism, Financial Crimes, Far Right, Mass Shootings, Islamic Revolutionary Guard Corp (IRGC), Political Extremism, Quds Force, Domestic Terrorism, and Axis of Resistance
Political Geography:
Iran, Middle East, Israel, Palestine, Syria, North America, United States of America, and Golan Heights

3. ‘Follow the Money’: tracking the diffusion of the American anti-money laundering policy in Latin America (1990s-2000s)

Author:
Mariana Medeiros Bernussi, Priscila Villela, and Lívia Jardinovsky Debatin
Publication Date:
04-2023
Content Type:
Journal Article
Journal:
Conjuntura Austral: Journal of the Global South
Institution:
Conjuntura Austral: Journal of the Global South
Abstract:
Given the wide reach of transnational crimes and the illegal flow of money, policing at an international level has become a new frontier for authorities who aim to control these threats. The United States has taken the center stage in this effort ever since the proclamation of the War on Drugs and the continuing War on Terror by promoting the ‘Follow the Money’ principle as a fundamental strategy to be adopted worldwide. The main goal of this paper is to identify the US efforts to formulate and expand the anti-money laundering agenda and policies to Latin America, from the 1990s to the 2000s, mobilizing the policy diffusion approach. By incorporating this thinking tool, we also aim to highlight the United States hegemonic position when establishing agendas and priorities internationally. Therefore, based on a qualitative design, we trace US official documents describing strategies, practices and policies aimed at promoting anti-money laundering policies in Latin American institutions through coercion, competition, learning and emulation mechanisms. As a result, by promoting training events and formulating evaluation mechanisms, the US has stimulated Latin American countries to elaborate their own law enforcement efforts inspired by these same paradigms, indicating that the US uses these anti-money launderinginstruments to promote its policy agenda internationally.
Topic:
War on Drugs, Financial Crimes, War on Terror, Money Laundering, and Policy Diffusion
Political Geography:
Latin America and United States of America

4. Mali Suçlarla Mücadelede Mali İstihbaratın Rolünün Değerlendirilmesi

Author:
Hüseyin Akkaya
Publication Date:
12-2023
Content Type:
Journal Article
Journal:
Bilgi
Institution:
Sakarya University (SAU)
Abstract:
Günümüzde mali suçların önlenmesi ve tespit edilmesi, ülkelerin en önemli konularının başında yer almaktadır. Bu konu aynı zamanda mali istihbarat birimlerinin de temel mücadele mekanizmasını oluşturmaktadır. Mali suçların doğası gereği sınıraşan nitelikte olması beraberinde bu suçlarla mücadele açısından bir takım zorluklar ortaya çıkarmaktadır. Bu zorluklardan bir tanesi mali suçların ekonomik olarak ölçülmesinin imkânsız olmasıdır. Bu zorlukların ortadan kaldırılmasında en önemli etkenlerin başında mali istihbarat ve uluslararası işbirliği gelmektedir. Mali istihbarat, mali suçlarla mücadele edilmesinde ve suçun önlenmesinde etkili ve verimli bir şekilde mali istihbarat birimlerine yardımcı olmaktadır. Mali istihbarat, mali suçlarla mücadelede mali istihbarat birimlerinin verilerden yola çıkarak oluşturduğu analiz ve tipolojilerden meydana gelmektedir. Mali suçlarla mücadelede mali istihbaratın doğruluğu ve ortaya çıkacak olan finansal zekâ, suçun önlenmesi ve işlenmesi durumunda çözüme kavuşturulması için gereken en önemli olgu olarak kabul edilmektedir. Mali suçlarla mücadele eden pek çok uluslararası kurum bulunmaktadır. Başta FATF ve EGMONT Grup genel çerçevede mali suç faaliyetlerine ve mali istihbarat birimlerine yönelik çalışmalar sürdürmektedir. Bunun yanı sıra yerel olarak faaliyet gösteren ülke mali istihbarat birimleri tarafından da mali suçlarla mücadele edilmektedir. Bu çalışmanın amacı, mali suç türlerinin nelerden oluştuğunu belirtmek, mali istihbarat birimi kavramının üzerinde durmak ve mali istihbaratın mali suçlarla mücadeledeki rolünü incelemektir. Mali suçlarla mücadele edilirken mali istihbaratın rolünün değerlendirilmesi üzerine oluşturulan bu çalışma ile mali suçların durumu değerlendirilecektir.
Topic:
Intelligence, Law Enforcement, Financial Crimes, and Transnational Actors
Political Geography:
Global Focus

5. U.S.-ROK Strategy for Enhancing Cooperation on Combating and Deterring Cyber-Enabled Financial Crime

Author:
Jason Bartlett
Publication Date:
11-2022
Content Type:
Special Report
Institution:
Center for a New American Security (CNAS)
Abstract:
The May 2022 U.S.-ROK Summit between President Joe Biden and President Yoon Suk-yeol revitalized previous bilateral commitments to establish a joint cyber working group to address the growing issue of cyber-enabled financial crime with specific emphasis on cryptocurrency, blockchain technology, and illicit North Korean cyber activity.1 This report provides specific policy recommendations for Washington and Seoul to incorporate within the cyber working group to enhance cooperation on combating and deterring cyber-enabled financial crime, especially from state-sponsored actors. North Korea has become the greatest state-sponsored threat to the global financial services sector. From 2021 to June 2022 alone, North Korean cyber operatives and their facilitators stole more than $1 billion (in U.S. currency, as throughout this report unless otherwise indicated) in digital assets through hacking cryptocurrency exchanges and laundering the stolen funds using various financial technologies and obfuscation techniques, including cryptocurrency mixers and foreign over-the-counter brokers. Pyongyang will likely maintain this position as long as the potential gains of cyber operations against financial services are greater than the potential risks and resources needed to conduct these operations. Washington and Seoul must work together to change this reality. This report compiles the findings of a year-long research project to generate actionable policy recommendations for Washington and Seoul to incorporate within their joint cyber working group to strengthen joint deterrence against state-sponsored cyber-enabled financial crime that continues to target both U.S. and South Korean social, financial, and cyber infrastructure. Based on intensive field research and interviews with U.S. and ROK stakeholders, this report outlines current challenges to enhancing U.S.-ROK cyber coordination, details the evolution of North Korea’s cyber program and modern-day threats, provides policy recommendations for the joint cyber working group, and includes an appendix with all relevant U.S. and ROK agencies that can contribute valuable expertise to the group.
Topic:
International Cooperation, Bilateral Relations, Cybersecurity, and Financial Crimes
Political Geography:
Asia, South Korea, North Korea, North America, and United States of America

6. An Econometric Approach on Money Laundering and Its Impact on Economic Growth (A Study of Pakistan)

Author:
Arfa Batool, Qamar Afaq Qureshi, and Shumaila Hashim
Publication Date:
01-2022
Content Type:
Journal Article
Journal:
South Asian Studies
Institution:
Department of Political Science, University of the Punjab
Abstract:
Money laundering is not the issue of today, as it is coming from the early days in many ways and the evil to society as it effects not only those peoples which are related to this evil as well as it also hits the noble peoples of the society by not paying the legal levies that increases the prices of products in the market. Research is carried out to check the impact of money laundering on the economy of Pakistan in an econometric way along with the other control variables (inflation, unemployment, remittances, number of crimes, total investment, and corruption). Money laundering is measured with informal economy and economic growth is measured with GDP. Annual data from 2000 to 2019 is employed for the purpose of analysis and suitable statistical tools are applied to derive the results. Through these test short run and long run effects are derived also. For analysis of the data, secondary data of two recent decades are used which is collected from the different sources i.e. economic surveys, published papers, and World Bank database etc. At the end it is concluded that money laundering has negative effect on the economy of Pakistan along with other variables.
Topic:
Corruption, Economic Growth, Financial Crimes, Inflation, Unemployment, Remittances, and Money Laundering
Political Geography:
Pakistan and South Asia

7. Curbing Illicit Financial Flows to Pay for Sustainable Development and COVID-19 Recovery

Author:
Gilles Carbonnier
Publication Date:
03-2021
Content Type:
Special Report
Institution:
Georgetown Journal of International Affairs
Abstract:
Illicit financial flows significantly erode the tax base of resource-rich developing countries, which do not have the means to invest in public health, education, and sustainable development. In this column, the author presents the latest research findings and policy implications and discusses some of the most promising avenues to effectively curb illicit financial flows, strengthening the nexus between trade and tax governance.
Topic:
Development, Environment, Human Rights, Financial Crimes, Trade, Development Aid, Sustainability, and COVID-19
Political Geography:
Africa

8. State Capture in Mexico: A Theoretical and Historical Review

Author:
Gerardo Rodríguez Sánchez Lara
Publication Date:
06-2021
Content Type:
Journal Article
Journal:
Journal on International Security Studies (RESI)
Institution:
International Security Studies Group (GESI) at the University of Granada
Abstract:
The purpose of this article is to review the works of several academics specialized in the matter of security, which the authors will use as an analytical setting and revision their outcomes to define and understand the concept of state capture. Once the concept of state capture is defined, then the case of Mexico will be analysed. This article intends to discuss several indicators regarding state capture such as the rule of law, how political violence has also influenced the issues of corruption, impunity, and mentions how money laundering prevention serves as a tool for tackling corruption. In order to grasp an understanding what state capture is, we must first develop conceptualizations of corruption, impunity and its classifications, the rule of law, and the state apparatus. This article intends to analyse the implications that all of the above might have with regards to a state captured democracy, from an academic approach.
Topic:
Rule of Law, Financial Crimes, Impunity, Organized Crime, and State Capture
Political Geography:
Mexico

9. Anti-money laundering in Albania: What role for civil society?

Publication Date:
07-2021
Content Type:
Policy Brief
Institution:
Institute for Democracy and Mediation (IDM)
Abstract:
Topics related to money laundering and terrorist financing are not new to civil society, academia and especially the media in Albania. While the latter (media) has often reported on the phenomenon , law and economics researchers have addressed both topics, although they have done so less frequently in the context of research initiatives. Civil society, on the other hand, has been more passive regarding the phenomenon and measures against money laundering (AML), or those against terrorist financing (CFT). Except for several research organizations engaged in the field of security, anti-corruption or prevention of violent extremism, concepts such as AML / CFT became widely known to civil society actors a few years ago, when Albania took additional steps to meet the standards of Recommendation 8 of the Financial Action Task Force (FATF). Specifically, this recommendation suggests that FATF member countries should improve the legal framework for non-profit organizations to prevent their misuse for financing terrorism. Furthermore, the issue of money laundering is most frequently addressed in public discourse and various research reports mainly in the context of confiscation of assets and illicit proceeds generated by organized crime. However, money laundering is yet to be examined in the context of high-level corruption and state capture, increased reporting on organized crime, illegitimate interests intertwined in politics, economics and beyond. The fight against law enforcement institutions against criminal groups and other “traditional” or contemporary challenges (e.g. cryptocurrencies) suggest that the AML / CFT capacities of state institutions need additional support, new skills, in-depth analysis and alternative sources of knowledge.
Topic:
Civil Society, Crime, Law Enforcement, Financial Crimes, and Money
Political Geography:
Europe and Albania

10. Regulating The Enablers: How the U.S. Treasury Should Prioritize Imposing Rules on Professionals Who Endanger National Security by Handling Dirty Money

Author:
Josh Rudolph
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
When kleptocrats, foreign intelligence services, homegrown autocrats, and other malign actors weaponize corruption to undermine U.S. democracy, their financial secrecy relies upon the services of ten sectors of U.S. professionals, including lawyers, real estate agents, hedge fund managers, and others. The U.S. government should promulgate new financial regulations—similar to existing rules for banks—that would require non-bank enablers to watch out for dirty money. Regulators should prioritize six or seven sectors of professionals known to gravely endanger U.S. national security by facilitating corruption. Unfortunately, the United States is among the less than 10 percent of countries that do not require non-bank enablers to establish anti-money laundering (AML) programs, which are mandatory for banks. That is, unlike enablers based in more than 90 percent of the world, U.S. non-bank enablers do not need to have compliance officers, trainings, audits, and controls reasonably designed to spot potential money laundering by identifying customers, scrutinizing transactions, keeping records, and reporting suspicious activity to the government. Fortunately, that may change soon, as the regulation of enablers has become a top priority among U.S. lawmakers, law enforcement, civil society, and other stakeholders. President Joe Biden’s memorandum prioritizing the fight against corruption as a core national security interest—and ordering U.S. departments and agencies to develop a presidential anti-corruption strategy within 200 days—included a prominent warning about the threat of U.S.-based professional enablers who move and launder dirty money.
Topic:
National Security, Finance, Financial Crimes, and Money Laundering
Political Geography:
North America and United States of America