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From Banking and Finance Law Daily, June 12, 2018

Financial facilitators used to enable human rights abuses, advisory warns

By Andrew A. Turner, J.D.

The Financial Crimes Enforcement Network warns that the use of financial facilitators is one way that corrupt senior foreign political figures access the financial system to move or hide illicit proceeds, evade sanctions, or otherwise engage in illegal activity. These corrupt senior foreign political figures and facilitators, according to a FinCEN advisory, often contribute directly or indirectly to human rights abuses (FIN-2018-A003).

"FinCEN is issuing this advisory to warn financial institutions about the use of financial facilitators, shell companies, and other schemes corrupt actors and human rights abusers use to move and hide their illicit proceeds and evade sanctions," said Treasury Undersecretary Sigal Mandelker.

To assist U.S. financial institutions’ effort to insulate themselves from corruption, the advisory highlights a number of typologies used by foreign politically exposed person (PEP) facilitators to obscure and launder the illicit proceeds of high-level political corruption. For example, the typologies used by financial facilitators of corrupt PEPs may include the misappropriation of state assets, the use of shell companies, or the exploitation of the real estate sector.

The FinCEN advisory also provides red flags that may assist financial institutions in identifying the methods used to obscure and further illicit activity. "Consistent with existing regulatory obligations, financial institutions should take reasonable, risk-based steps to identify and limit exposure they may have to funds and other assets associated with individuals and entities involved in laundering illicit proceeds, including the proceeds of foreign corruption," FinCEN notes in a reminder of regulatory obligations.

MainStory: TopStory BankSecrecyAct CrimesOffenses

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