Press Room
 

April 11, 2007
hp-346

Prepared Remarks of Pat O’Brien
Assistant Secretary Terrorist Financing and
Financial Crimes
Before the U.S.-Latin America Private Sector Dialogue on
Combating

Money Laundering and Terrorist Financing

Bogotá, COLOMBIA – Good afternoon. I first want to welcome and thank Vice-President Francisco Santos and FIU Director (Mario) Aranguren of Colombia. I would also like to thank U.S. Deputy Chief of Mission (Milton) Drucker for your encouragement and support of this initiative. Colombia is a regional leader in the fight against money laundering and we are honored to be here today in your country. I also would like to thank the members of the private sector who have chosen to attend and participate in the inaugural Private Sector Dialogue between the United Status and Latin America starting today here in Bogotá. The audience represents an extremely capable and diverse group of financial industry leaders.

As you know, today marks an important chapter in what we would like to be a continuing dialogue between the U.S. and the Latin American financial sectors. Our objective is to establish better relations between financial institutions from our respective regions and to encourage joint efforts aimed at controlling money laundering, drug trafficking, and terrorist financing activities. Your participation is a testament to your belief in and willingness to see through this important initiative.

We want this dialogue to build on the United States' continued commitment to supporting the economic development of Latin America, including developing engines of growth, opportunity, and reducing poverty. During Secretary Paulson's speech to the Governors of the Inter-American Development Bank in Guatemala last month, he elaborated on President Bush's commitment to your region, outlining three central economic priorities for the U.S. and Latin America: working together to promote more opportunity and prosperity for all people, creating an environment that nourishes the growth of small and medium-sized businesses, and developing the region's infrastructure.

Economic development requires the free movement of capital and a strong, transparent financial system.  Central to achieving this goal is the importance of continued cooperation between the public and private sectors in our collective effort to promote the continued strength, safety, and integrity of the global financial system. Our work to maintain a sound financial system must include efforts to stem transnational threats such as drug trafficking, money laundering, terrorist financing, and proliferation.  All of us here today have an obligation to mitigate these very real threats.

At the U.S. Treasury Department, we recognize how strong relationships and multilateral efforts such as this dialogue further strengthen our abilities to detect and disrupt illicit financial activity. A sound financial system means that our businesses and our citizens have a stronger economy and have greater access to opportunity. A sound financial system also guards against potentially devastating economic, security, and social consequences worldwide. Cooperation among nations' public and private sectors can help guarantee the continued health of the global financial system.

Safeguarding the integrity of the financial system is now more complicated than ever. Globalization creates an environment of great efficiency for legitimate commerce, however, it just as easily aids those involved in illicit financial activity. For example, online and remote banking, stored value cards, electronic payment systems, and other mechanisms can be of immense value to the public, but they also pose a regulatory and enforcement challenge. This challenge, wherever it exists, must be overcome to ensure a sound global financial system which in turn ensures safe, transparent, efficient, free flows of capital within and across borders. Unchecked, illicit activity can erode the integrity of a nation's financial institutions regardless of the size of the market in question – leaving in its wake serious long-term consequences.

The ever present threat of illicit financial activities has pushed finance ministries and other government authorities to re-examine, and in some cases to examine for the first time, their economic and financial security infrastructure both in their respective countries and as a part of the global community. In the U.S., the Treasury Department marshals its policy, enforcement, regulatory, and intelligence functions with the twin aims of safeguarding the financial system against illicit use and combating terrorist facilitators, proliferators, money launderers, drug kingpins, and other national security threats.

To date, international efforts to cooperatively identify and combat illicit finance have seen significant results – but most relevant to this group, we have seen important successes in Latin America. A key example is GAFISUD. As a Financial Action Task Force – or FATF – Style Regional Body, GAFISUD plays a critical role in coordinating anti-money laundering/combating the financing of terrorism (AML/CFT) training and improving implementation of the FATF AML/CFT standards across the region. Moreover, GAFISUD has been a leader in identifying and addressing emerging threats to the region, such as trade based money laundering. GAFISUD's newly released typology report on complex money laundering schemes is important in that it highlights money-laundering/terrorist financing vulnerabilities particular to the region. We applaud GAFISUD's continued efforts.

Our international cooperation is also yielding operational successes. For example, as a result of deep and longstanding cooperation with the Colombian authorities, the Treasury Department's Office of Foreign Assets Control (OFAC), in consultation with the Departments of Justice, State, and Homeland Security designated five individuals and twenty entities all associated with SDNT principal individuals Raul Alberto Grajales Lemos and Carlos Alberto Renteria Mantilla last year.  The individuals and companies comprised an international financial network for Colombia's North Valle drug cartel and are located in Colombia (8), Panama (5), the British Virgin Islands (1) and the United States (6).  The 20 companies encompass a wide range of services including real estate, investment, construction, property management and manufacturing.  Simultaneous with OFAC's action, Colombian authorities arrested the five designated individuals under Colombian money laundering charges. This is an example of how our regions can work together to combat a significant threat.

The development of effective and long-term AML/CFT regimes ultimately requires collaboration not only between governments, but also between the public and private sectors. Government-to-government engagement on illicit financing has been a central pillar of Treasury's policy for many years. That ongoing conversation has been beneficial and has set the stage for increased coordination in our public sectors. However, it is our private sectors – including this group that sits before me today - that serve on the front lines, protecting in the first instance our financial systems from the threats we face. Our financial sectors must continue to further integrate with one another and work seamlessly to make our respective efforts as effective and efficient as possible. Recognizing the need for greater outreach and collaboration, the Treasury Department has engaged in a number of efforts to provide outreach to the private sector. These efforts are both formal and informal.

Last summer, the U.S. Treasury hosted an initial roundtable event for private sector representatives and senior U.S. regulatory officials and their counterparts from Latin America. Roundtable participants spent the day discussing private sector perspectives on AML/CFT implementation. The roundtable identified a number of issues for further work and discussion and participants agreed to cooperatively plan conferences and seminars dedicated to addressing core areas of mutual interest and concern.

Today represents the first fruits of that roundtable, the U.S.-Latin America Private Sector Dialogue (US-LA PSD) and is a significant milestone for the private sectors of Latin America and the United States. This event has brought together leaders from the Latin American and U.S. financial sectors to discuss timely issues related to the sound implementation of AML/CFT measures. It has also set the stage for future dialogue and long-term cooperation.

The goal of the inaugural US-LA PSD is to encourage direct dialogue between the financial sectors in the United States and Latin America in order to:

  • Raise awareness of money laundering and terrorist financing risks;
  • Facilitate a better understanding of effective practices and programs to combat such risks;
  • Strengthen implementation of effective AML/CFT controls; and
  • Exchange information and improve understanding of business cultures and norms.

Over the next three days, four United States/Latin America plenary sessions will be held to advance a variety of critical issues stemming from the initial roundtable discussions. These issues include:

  • Supervision and AML/CFT Compliance: Including regulations, liability, and cross-border barriers in both regions;
  • Correspondent Banking: Including due diligence, correspondent relations, and shell bank situations;
  • Non-Bank Financial Institutions: including aspects of payment systems and the management and risk of those systems; and
  • Cross-Border Transfers/Economic Sanctions: Including aspects of due diligence, know your customer (KYC), and economic sanctions and financial measures.

This event has been made possible through the work of last summer's roundtable and through the dedication, hard work, and fine leadership of Asobancaria, FELEBAN, the Florida International Bankers Association, and the American Bankers Association, as well as government entities throughout Latin America and especially the Government of Colombia and others, such as Argentina. We deeply appreciate your efforts.

In sum, I look forward to our time together over the next couple of days. Dialogues like this are vital as we strive to always stay one step ahead of the threat, and I would again like to thank you for your strong participation. Ultimately, our progress will be measured in part by our commitment to collaborate and create highly effective and integrated AML/CFT regimes. May we all be equal to this task and achieve the desired success of a more secure, prosperous region and world.

Thank you.