To provide some framework for the legal basis of prosecuting money laundering, it is useful to look at the United States Internal Review Manuals section on Money Laundering and Currency Crimes . In this manual, the IRS states that there is no condition in 18 USC 1956(a)(2) that the financial device or assets be the direct result of illegal behavior but that the defendant was aware that such funds were in some way connected to illicit activity. Moreover, this provision does not place the burden of proof on the government to establish that said funds were derived illegally, meaning that originally “clean” funds that were later used in connection to illegal activities are prosecutable. However, this provision does not extend to funds that are in connection with tax evasion, arguably placing more strength in legal tax havens on the state level.

For the purposes of addressing some of the hurdles that the United States and other nations might encounter in fully stopping corruption and money laundering schemes, it is useful to look at the obstacles detailed in Global Shell Games: Testing Money Launderers’ and Terrorist Financiers’ Access to Shell Companies from Griffith University. They first address the issues of policing power within the US, citing a lack of jurisdiction to act across international borders . However, following the passing of the US PATRIOT Act, particularly section 319(b) (further discussed below), it is clear that the US government is willing to take the steps to legally support any attempts at international intervention, whereas the actual practice of such may be a different issue entirely. Conversely, it is addressed that on a practical level, lacking some clear enforcement directly connected to the US government, there are limited guarantees that such laws will be prosecuted . This raises an interesting question of international law, even if just on principle alone. Given the presence of an already eroded sense of trust with the US as an inconsistent actor and other intergovernmental organizations as prescribers of change, how exactly can one expect these laws to be upheld in foreign lands? Furthermore, even with a possible good-faith effort on behalf of the US to curtail these nefarious financial practices, what will happen when the first line of administration, like the local police in a different nation, are in fact part of the web of bad actors? This is often the case. Given that cases of money laundering rarely ever grab widescale attention, if they manage to even make it onto the radar of governing bodies, it is difficult to think of a scenario in which public outcry would garner the attention necessary to effectuate administrative interference.

The other obstacle cited is the “passive” and often “archival” nature of corporate registries, like those used by the Financial Crimes Enforcement Network . This once again raises an interesting question, however this time regarding the duties of government. It would not be especially insightful to identify the inefficiencies of government administration but there is a question to be asked about the expectation of latency in synthesizing. To possess an expectation beyond an archival function following a government agency obtaining some type of information creates an inference which borders on that of an authoritarian regime. Additionally, that is not even considering the sheer quantity of resources that it would take for such an expectation to become a reality. Furthermore, in order for such a practice to occur, the concerns mentioned above would then have to be woven into some type of global police force that utilizes highly efficient monitoring mechanisms. There is, nonetheless, a more collaborative path of lesser resistance that would not throw the world into a police state, and that would just be an agreement to work from the ground up to prevent these corruptive practices. Of course, this is an exercise in the extremes, juxtaposing a wholly cynical suggestion with a more optimistic one.

Moving on to specific enforcement agencies, the Financial Crimes Enforcement Network is a bureau of the Department of Treasury that specializes in the investigation of financial crimes. In 2007, the FinCEN released a report called Money Laundering Strategies which is meant to highlight the efforts from the agency regarding the combat of these types of crimes . Within the report, they detail nine goals that the bureau plans on executing to address the primary issues within financial crime enforcement. Within these proposed goals, they include specific risks and vulnerabilities within the world of commerce and detail clear strategies that could be implemented. Of particular note within this report are Goal 1 – Continue to Safeguard the Banking System, Goal 2 – Enhance Financial Transparency in Money Service Business, and Goal 4 – Attack Trade-Based Money Laundering at Home and Abroad. It should be noted, however, that this 2007 report occurred prior to the Great Recession and lacks the perspective of such a substantial mark in recent history. It also fails to address more modern issues in the prosecution of financial crimes, like the evasive use of digital currency for nefarious purposes.

Goal 1, which addresses the security exposures within banking, demonstrates difficulties in monitoring funds once they are placed in financial institutions due to intermingling and the ease of relocation through the use of wire transfer . They further identify the susceptibility of laundering by creating online accounts through fraudulent means. To combat some of these threats, the FinCEN has historically taken advantage of the probing mechanisms granted in the USA PATRIOT ACT, specifically section 312 which requires that financial institutions are given the additional responsibility of maintaining and documenting the information of non-US accounts, of both private individuals and of private organizations. This can include tracking and submitting the information of international political figures, their families, and their known associates . However, this action item does not explain the consequences for a bank’s failure to meet these record keeping requirements and it is unclear if there are any.