US Treasury releases 2024 illicit finance risk assessments

The new reports outline the significant illicit finance threats, vulnerabilities, and risks confronting the United States, including recent updates to the anti-money laundering/counter-financing of terrorism framework. 

Key highlights from the assessments include the ongoing challenges posed by the fentanyl crisis, domestic and foreign terrorist attacks, ransomware attacks, professional money laundering activities, and the increasing digitisation of financial services. Additionally, the reports underscore how global security threats, such as Russia's actions in Ukraine and Hamas's terrorist activities, influence the illicit finance risk environment in the US. 

This marks the fourth iteration of the money laundering and terrorist financing risk assessment and the third update of the proliferation financing risk assessment in less than a decade. The assessments aim to provide both public and private sectors with insights to comprehend the current illicit finance landscape and devise effective risk mitigation strategies.

The most important findings in the report 

• Money Laundering: criminals employ a variety of traditional and innovative techniques to move and conceal illicit proceeds, with major sources including fraud, drug trafficking, cybercrime, human trafficking, and corruption. Persistent and emerging risks include misuse of legal entities, lack of transparency in real estate transactions, gaps in anti-money laundering/countering the financing of terrorism (AML/CFT) coverage, complicit merchants and professionals, and compliance weaknesses in some regulated financial institutions. 
• Terrorist Financing: the US faces diverse terrorist financing threats, both domestic and foreign, with common financial connections involving direct solicitation or attempted transfer of funds to foreign terrorist groups via cash, registered money services businesses, or virtual assets. The report also highlights Hamas's exploitation of the international financial system and the proliferation of domestic violent extremist movements. 
• Proliferation Financing: heightened risks are noted concerning Russia's activities in Ukraine and the Democratic People’s Republic of Korea's exploitation of the digital economy, including hacking virtual asset service providers and deploying fraudulent information technology workers. 

The assessment process was led by the Treasury’s Office of Terrorist Financing and Financial Crimes in collaboration with various government offices, law enforcement agencies, regulatory bodies, and intelligence and diplomatic communities. 

In the upcoming weeks, the Treasury plans to release the 2024 National Strategy for Combatting Terrorist and Other Illicit Finance, which will incorporate insights from these risk assessments to propose recommendations for addressing identified issues. Previous feedback has informed improvements to the AML/CFT regime, including the implementation of beneficial ownership reporting requirements and upcoming proposed rules targeting illicit finance vulnerabilities in the residential real estate sector and certain investment advisers.