ANALYSIS OF NARCOTICS-RELATED ILLICIT FINANCIAL FLOWS BETWEEN THE US, MEXICO, AND COLOMBIA

On 8 September, a new report from Global Financial Integrity (GFI) presents an analysis of narcotics-related illicit financial flows between the US and the major narcotics production and transit countries of Mexico and Colombia. The report was commissioned by the Western Hemisphere Drug Policy Commission as part of its mandate to evaluate US drug policies and programs in Latin America and the Caribbean, assess current efforts to reduce the illicit drug supply and address the harms associated with trafficking and drug abuse.  GFI argues that AML/CFT is underutilised in current US and regional counter-narcotics efforts and needs to be reprioritised. Effectively responding to the challenges of drug trafficking and transnational organised crime will require a multi-pronged, multi-stakeholder and multi-disciplinary effort that includes AML/CFT, as well as a more comprehensive approach to drug policies that encompasses human rights, public health and development.  Estimates of the value of narcotics-related illicit financial flows affecting the US, Mexico and Colombia is between $42.3 billion and $121.6 billion a year.  It makes a number of recommendations for each of the 3 countries including, in the case of the US:

  • the US should enact legislation requiring the collection of information on the real people, or “beneficial owners” behind corporations, LLC and other similar entities at the time of registration;
  • re trade-based money laundering and bulk-cash smuggling as ways to launder narcotics proceeds, the US should require beneficial ownership information for all companies involved in cross-border trade, as well as for speedboats and aircraft;
  • the US should require lawyers, accountants and corporate formation agents to carry out AML/CFT requirements, such as CDD: and
  • the US should strengthen Trade Transparency Units (TTU), allowing for real-time exchange of information on a pilot basis with trusted partners to examine the impact on enforcement, to combat trade-based money laundering.

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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