United States Government Accountability Office

GAO Report to the Chairman, Committee on 

the Judiciary, House of Representatives

INTERNATIONAL 

FINANCIAL CRIME 

Treasury’s Roles and 

Responsibilities 

Relating to Selected 

Provisions of the USA 

PATRIOT Act 

May 2006 

 

GAO-06-483 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

May 2006

INTERNATIONAL FINANCIAL CRIME

Treasury’s Roles and Responsibilities 

Relating to Selected Provisions of the 

USA PATRIOT Act 

Highlights of GAO-06-483, a report to the 

Chairman, Committee on the Judiciary, 

House of Representatives

Money laundering and terrorist

financing can severely affect the 

nation’s economy and also result in 

loss of lives. To combat these

transnational crimes, the Treasury

Department (Treasury) and its 

component bureau, the Financial 

Crimes Enforcement Network 

(FinCEN), have key roles. Section 

330 of the USA PATRIOT Act

encourages the federal government

to engage foreign jurisdictions in 

negotiations to ensure that foreign

banks and financial institutions

maintain adequate records to 

combat international financial 

crime. Treasury plays a lead role in 

facilitating such efforts. In 

accordance with its various

responsibilities codified by section 

361, FinCEN is to coordinate with 

its foreign counterparts—financial 

intelligence units (FIU). This report 

describes (1) Treasury’s approach 

for negotiating with foreign

jurisdictions, (2) how FinCEN has 

contributed to establishing FIUs in 

foreign countries and enhancing

the capabilities of these units, and 

(3) what actions FinCEN is taking 

to maximize its performance as a 

global partner.

What GAO Recommends

GAO recommends that the Director 

of FinCEN take appropriate steps 

to ensure that future customer 

satisfaction surveys include more 

comprehensive coverage of and

higher response rates from FIUs. 

Treasury agreed. 

With Treasury’s leadership, the U.S. interagency community has been acting 

to accomplish the goals articulated in section 330 of the USA PATRIOT Act. 

In particular, according to Treasury, negotiations with foreign jurisdictions 

are being accomplished through U.S. interactions with the Financial Action 

Task Force on Money Laundering (FATF), an intergovernmental entity that 

has developed international standards for combating money laundering and 

terrorist financing. Treasury emphasized that enactment of section 330 

provided a welcomed congressional endorsement of long-standing U.S. 

policy to combat international financial crime by negotiating with foreign 

jurisdictions through multilateral organizations, such as FATF. 

Since its formation in 1995, FinCEN has helped foreign jurisdictions 

establish new FIUs and improve the capabilities of existing units. The 

number of FIUs has jumped from 14 in 1995 to 101 currently, partly because

of training and technical support provided by FinCEN and Treasury’s Office 

of Technical Assistance and funding provided by the Department of State. 

Given the growth in the number of FIUs, future efforts likely will involve 

giving more attention to improving the capabilities of existing units, 

especially in reference to combating terrorist financing—an operational task 

now included in the formal definition of an FIU. 

To maximize performance as a global partner, FinCEN is taking various 

actions, such as assigning an analyst to the Federal Bureau of Investigation’s

Terrorist Financing Operations Section. Also, FinCEN is modernizing the 

Egmont Secure Web, which is used by FIUs worldwide to exchange sensitive

case information. To enhance its responsiveness to FIUs that request case

assistance, FinCEN is allocating additional staff to its Office of Global 

Support and also is developing a new case management system. However, in 

the most recent customer satisfaction survey, FinCEN invited less than onehalf of FIUs to participate and received only two responses. Future surveys 

would need to be more inclusive and incorporate better survey development 

and administration practices, such as follow-up efforts to achieve higher 

response rates, if the surveys are to serve as a useful management

information tool for monitoring and enhancing performance. 

Meeting of FIU Representatives in Washington, D.C. (June 30 to July 1, 2005) 

www.gao.gov/cgi-bin/getrpt?GAO-06-483.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Rich Stana at 

(202) 512-8777 or stanar@gao.gov. 
Contents 

Letter 1

Results in Brief 3

Background 5

Treasury Department Has a Key Role in Promoting International 

Cooperation to Combat Money Laundering and Terrorist 

Financing 7

Enhancing the Capabilities of Financial Intelligence Units Is a 

Continuing Challenge 12 

FinCEN Is Taking Various Actions to Maximize Its Performance as 

a Global Partner, but More Comprehensive Feedback from 

Financial Intelligence Units Would Be Useful 23 

Conclusions 33

Recommendation for Executive Action 34 

Agency Comments and Our Evaluation 34 

Appendix I Objectives, Scope, and Methodology 36 

Objectives 36

Scope and Methodology 37 

Data Reliability 41 

Appendix II Financial Action Task Force and Related Regional 

Bodies 42 

The Financial Action Task Force and Related Regional Bodies 

Encompass Member Jurisdictions around the Globe 42 

FATF Recommendations Provide a Set of Countermeasures against 

Money Laundering and Terrorist Financing 44 

A Widely Adopted Methodology Is Used for Monitoring Compliance 

with Financial Action Task Force Recommendations 51 

Appendix III The Egmont Group of Financial Intelligence Units 53 

The Egmont Group of Financial Intelligence Units Has Grown 

Significantly since 1995 53 

The Egmont Group Provides a Network for Exchanging 

Information 54

Page i GAO-06-483 Combating Money Laundering and Terrorist Financing
Tables 

Table 1: Main Weaknesses Identified in Assessments of 

Compliance with FATF Recommendations for Combating 

Money Laundering and Terrorist Financing 19 

Table 2: Financial Intelligence Units Connected to Egmont Secure 

Web and Number of User Accounts per Country (as of 

February 2006) 27 

Table 3: Case-Management Statistics—Foreign FIU and FinCEN 

Requests for Assistance 29 

Table 4: Number and Names of Foreign Customer Entities That 

Requested Assistance from FinCEN in Fiscal Year 2005 (as 

of July 25, 2005) 31 

Table 5: Establishment Dates and Membership of FATF and FATFstyle Regional Bodies 43 

Table 6: FATF Recommendations on Money Laundering and 

Terrorist Financing 45 

Table 3: Essential Criteria Used in the Methodology for Monitoring 

Implementation of FATF Recommendation 26 52 

Table 8: Egmont Group Membership by Year and Jurisdiction 54 

Figure 

Figure 1: Annual Growth in the Number of Financial Intelligence 

Units 13

Page ii GAO-06-483 Combating Money Laundering and Terrorist Financing
Abbreviations 

BSA Bank Secrecy Act 

FATF Financial Action Task Force on Money Laundering

FBI Federal Bureau of Investigation 

FinCEN Financial Crimes Enforcement Network 

FIU financial intelligence unit 

IDW Investigative Data Warehouse 

IMF International Monetary Fund 

SAR suspicious activity report 

USA PATRIOT (Act) Uniting and Strengthening America by Providing 

Appropriate Tools Required to Intercept and 

Obstruct Terrorism (Act)

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page iii GAO-06-483 Combating Money Laundering and Terrorist Financing
United States Government Accountability Office

Washington, DC 20548 

 

May 12, 2006

The Honorable Jim Sensenbrenner, Jr. 

Chairman 

Committee on the Judiciary 

House of Representatives 

Dear Mr. Chairman: 

Money laundering and terrorist financing are transnational crimes that can 

have devastating effects, involving severe economic consequences as well

as loss of lives. The combating of these crimes demands not only effective 

U.S. interagency efforts but also concerted international cooperation. Key 

roles are played by the Department of the Treasury (Treasury) and one of 

its components, the Financial Crimes Enforcement Network (FinCEN). 1

Section 330 of the USA PATRIOT Act2

 expresses the sense of the Congress

that the President should direct the Secretary of State, the Attorney 

General, or the Secretary of the Treasury to enter into negotiations with 

foreign jurisdictions to ensure that foreign banks and other financial 

institutions maintain records of transactions and account information 

relating to terrorist organizations or their members and to ensure that 

such records are made available to U.S. law enforcement and domestic 

financial institutions when appropriate. State Department, Justice 

Department, and Federal Reserve Board officials told us that the Treasury 

Department plays a lead role in addressing the efforts encouraged by 

section 330. According to Treasury Department officials, the U.S. 

interagency community has been acting to accomplish the goals 

articulated in section 330 through ongoing efforts to combat international

financial crime. Section 361 of the USA PATRIOT Act3

 established FinCEN 

as a statutory bureau in the Treasury Department and listed its various 

duties and powers, which include coordinating with its foreign 

 1

Among other functions, FinCEN is responsible for administering the Bank Secrecy Act,

Pub. L. No. 91-508, 84 Stat. 1115 (1970) (codified as amended at 12 U.S.C. §§ 1951 et seq.), 

which is a record-keeping and reporting law designed to prevent financial institutions from 

being used as intermediaries for the transfer or deposit of money derived from criminal 

activity. See also 31 U.S.C. § 5301 et seq.

2

Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept 

and Obstruct Terrorism (USA PATRIOT) Act of 2001, Pub. L. No. 107-56, § 330, 115 Stat. 

272, 320. 

3

Codified as amended at 31 U.S.C. § 310. 

Page 1 GAO-06-483 Combating Money Laundering and Terrorist Financing
counterparts—that is, financial intelligence units (FIUs) in other countries. 

These units are specialized governmental agencies created to combat 

money laundering, terrorist financing, and other financial crimes. Each 

FIU is the respective nation’s central agency responsible for obtaining 

information (e.g., suspicious transaction reports) from financial 

institutions, processing or analyzing the information, and then

disseminating it to appropriate authorities. 

This report addresses the following questions regarding efforts under 

sections 330 and 361 of the USA PATRIOT Act to combat money 

laundering and terrorist financing: 

• Under section 330, how has the Department of the Treasury interacted 

or negotiated with foreign jurisdictions to promote cooperative efforts 

to combat money laundering and terrorist financing? 

• Under section 361, how has FinCEN contributed to establishing FIUs in 

foreign countries and enhancing the capabilities of these units to 

combat money laundering and terrorist financing? 

• What actions is FinCEN taking to maximize its performance as a global 

partner in combating money laundering and terrorist financing? 

To address these questions, we interviewed responsible officials at and 

analyzed relevant documentation obtained from the Departments of 

Justice, State, and the Treasury and applicable components. Also, in 

further reference to promoting international cooperation, we focused on 

obtaining information about Treasury’s role and activities regarding 

multilateral organizations—particularly the Financial Action Task Force 

on Money Laundering (FATF), an intergovernmental entity that has 

developed international standards for combating money laundering and 

terrorist financing, and the various FATF-style regional bodies that 

implement the standards.4

 We obtained information about FinCEN’s 

participation in the Egmont Group, the association of FIUs worldwide, 

whose purpose is to facilitate transnational cooperation and information 

sharing to combat money laundering and terrorist financing. Regarding 

statistical information that we obtained from FinCEN—such as the 

number of requests for assistance submitted by foreign FIUs to FinCEN—

 4

FATF-style regional bodies represent nations in seven geographic areas, respectively, 

Asia/Pacific, Caribbean, Europe, Eurasia, South America, Eastern and Southern Africa, and 

Middle East and North Africa.

Page 2 GAO-06-483 Combating Money Laundering and Terrorist Financing
we discussed the sources of the data with FinCEN officials and worked 

with them to resolve any discrepancies. We determined that these data 

were sufficiently reliable for the purposes of this review. We conducted 

our work from May 2005 through March 2006 in accordance with generally 

accepted government auditing standards. Appendix I presents more details 

about our objectives, scope, and methodology. 

According to Treasury Department officials, the U.S. interagency 

community has been seeking to accomplish the goals articulated in section 

330 through ongoing efforts to combat international financial crime by 

actively engaging and negotiating with foreign jurisdictions through the 

medium of FATF, the related FATF-style regional bodies, the International 

Monetary Fund, and the World Bank. Treasury officials also commented 

that enactment of section 330 represents a welcomed congressional 

endorsement of long-standing U.S. government policy to work with these 

entities to develop a global system to ensure that all countries adopt and 

are assessed against international standards for protecting financial 

systems and jurisdictions from money laundering and terrorist financing. 

Further, as an incentive or pressure mechanism that can be used in 

conjunction with foreign negotiations, Treasury considers section 311 of 

the USA PATRIOT Act to be particularly relevant.

5

 For example, section 

311 authorizes the Secretary of the Treasury (following appropriate 

interagency consultation and consideration of multiple factors) to 

designate a foreign jurisdiction or an institution as being of “primary 

money laundering concern”—which, in turn, could result in the Secretary

of the Treasury taking one or more special measures, such as prohibiting 

or imposing conditions upon the opening of correspondent accounts with 

the designated entity. Since the USA PATRIOT Act was signed into law in

October 2001, three foreign jurisdictions (Burma, Nauru, and Ukraine) and 

certain financial institutions in Belarus, Latvia, the Macau Special 

Administrative Region (China), Syria, and the “Turkish Republic of 

Northern Cyprus”6

 have been designated primary money laundering 

concerns. Special measures have not been imposed in most of these cases, 

but the prospect of imposing them has led to some corrective actions. 

Results in Brief 

 5

Codified as amended at 31 U.S.C. § 5318A. 

6

The quotes indicate that the U.S. government has not officially recognized the “Turkish 

Republic of Northern Cyprus.” 

Page 3 GAO-06-483 Combating Money Laundering and Terrorist Financing
As a member of the Egmont Group since 1995, FinCEN has focused its 

global efforts particularly on assisting jurisdictions to establish new FIUs 

and improving the capabilities of existing units. Over the past decade, the 

number of FIUs recognized by the Egmont Group has increased more than 

sevenfold, from 14 in 1995 to 101 as of July 2005, partly because of federal

interagency efforts, including training and technical support provided by 

FinCEN and Treasury’s Office of Technical Assistance as well as funding 

provided by the Department of State.7

 According to FinCEN, given the 

dynamic growth in the number of FIUs, future efforts will involve giving 

more attention to improving the capabilities of existing units, especially in

reference to combating terrorist financing—an operational task now 

included in the Egmont Group’s definition of an FIU. During our review, 

State Department officials noted one area where they would like to 

augment U.S. assistance to nascent FIUs; that is, ensuring the nascent 

FIUs have appropriate information technology (hardware and software) 

because such technology is essential to appropriately functioning FIUs. 

The State Department and FinCEN are engaged in ongoing discussions on 

how to augment such assistance. 

To maximize its performance as a global partner in combating money 

laundering and terrorist financing, FinCEN is undertaking various actions. 

Following passage of the USA PATRIOT Act, FinCEN’s most important 

operational priority has been to provide counterterrorism support to the 

law enforcement and intelligence community. In this regard, FinCEN in 

January 2006 assigned an analyst to the Federal Bureau of Investigation’s

(FBI) Terrorist Financing Operations Section. Also, FinCEN currently is 

modernizing the Egmont Secure Web—an Internet-based system used 

primarily for its encrypted e-mail capability to exchange sensitive case 

information. Most (96) of the Egmont Group’s 101 members are connected 

to the Egmont Secure Web, which is operated and maintained by FinCEN, 

and the system is considered to be of paramount importance to the 

operations of FIUs. By operating and improving the Egmont Secure Web,

FinCEN plays a key role in fostering the exchange of information among 

FIUs. Further, to enhance its own responsiveness to information requests 

submitted by foreign FIUs, FinCEN is allocating additional staff resources 

to its Office of Global Support, which is responsible for processing 

requests from foreign FIUs, and FinCEN is developing a new case 

 7

The most recent Egmont Group plenary meeting was held June 30 to July 1, 2005, in 

Washington, D.C. At the plenary meeting, the Egmont Group recognized 7 new members to 

its global network of FIUs, bringing the total membership to 101. 

Page 4 GAO-06-483 Combating Money Laundering and Terrorist Financing
management system, which is targeted for completion in fiscal year 2008.

FinCEN periodically surveys its customers to help assess its 

responsiveness to domestic and international requests for assistance. 

However, FinCEN’s most recent customer satisfaction survey of external 

clients had limited coverage of FIUs; less than half of all Egmont Group 

members were invited to participate, and only two provided responses. 

This report recommends that the Director of FinCEN take appropriate 

steps to help ensure that future surveys of FIUs are sufficiently inclusive

and responsive to achieve the intended purpose of providing performancebased information as a basis for evaluating services, including the 

identification of areas warranting improvement. The Department of the 

Treasury agreed with our recommendation. 

In an international context, the Treasury Department is the United States’ 

counterpart to other nations’ ministries of finance. The department’s 

responsibilities, among other things, include safeguarding the U.S. 

financial system from abuse by money launderers, terrorists, and other 

criminals. Over the years, in carrying out this responsibility, the 

department has established relationships with finance ministries, central

banks, and other financial institutions in nations around the world as well 

as with multilateral organizations such as FATF, the FATF-style regional 

bodies, the International Monetary Fund (IMF), and the World Bank. 

Background 

FATF is an intergovernmental entity whose purpose is to establish 

international standards and to develop and promote policies for combating 

money laundering and terrorist financing. At its formation in 1989 by the 

United States and other industrialized nations, FATF’s original focus was 

to establish anti-money-laundering standards and monitor the progress of 

nations in meeting the standards. In 1990, FATF issued its “Forty 

Recommendations on Money Laundering” to promote the adoption and 

implementation of anti-money-laundering measures. For instance, the

recommendations encouraged nations to enact legislation criminalizing 

money laundering and requiring financial institutions to report suspicious 

transactions. Following the events of September 11, 2001, FATF expanded 

its role to combat terrorist financing. Specifically, in October 2001, FATF 

adopted “Eight Special Recommendations on Terrorist Financing.” Among 

other actions, these recommendations committed members to criminalize 

the financing of terrorism and to freeze and confiscate terrorist assets. In 

October 2004, FATF published a ninth special recommendation on 

terrorist financing to target cross-border movements of currency and

monetary instruments (“cash couriers”). 

Page 5 GAO-06-483 Combating Money Laundering and Terrorist Financing
Collectively, FATF’s “40 plus 9” recommendations are widely recognized 

as the international standards for combating money laundering and 

terrorist financing (see app. II). In monitoring nations’ progress in 

implementing the recommendations, FATF collaborates with other 

multilateral organizations, particularly the FATF-style regional bodies that 

represent nations in seven geographic areas. These regional groups are to 

help nations in the region to implement the international standards 

developed by FATF. Also, these standards have been recognized and 

endorsed by the World Bank and IMF for use in conducting evaluations 

and assessments of nations’ progress in implementing measures to counter 

money laundering and terrorist financing. To be compliant with FATF 

recommendations, a nation must, among other measures, establish an 

effective FIU. 

The United States’ FIU is FinCEN, which was administratively established 

in 1990 as a Treasury Department component. FinCEN was 1 of the 

14 charter members of the Egmont Group, which was formed in 1995 to 

enhance information sharing among FIUs (see app. III). In 2001, section 

361 of the USA PATRIOT Act established FinCEN as a statutory bureau in

the Treasury Department. Organizationally, FinCEN is part of Treasury’s 

Office of Terrorism and Financial Intelligence, which is the department’s 

policy and enforcement entity regarding terrorist financing, money 

laundering, financial crime, and sanctions issues. Treasury’s budget 

request for fiscal year 2007 included $91.3 million (and 352 full-timeequivalent personnel) to support FinCEN’s mission of safeguarding the 

financial system from abuses of money laundering, terrorist financing, and

other financial crime. FinCEN carries out this broad mission by, among 

other means, administering the Bank Secrecy Act (BSA)8

 and networking 

with domestic regulatory, law enforcement, and intelligence agencies as 

well as with foreign counterparts. 

 8

Pub. L. 91-508, 84 Stat. 1115 (1970). 

Page 6 GAO-06-483 Combating Money Laundering and Terrorist Financing
Section 330 of the USA PATRIOT Act expresses the sense of the Congress

that the President should direct the Secretary of State, the Attorney 

General, or the Secretary of the Treasury to enter into negotiations with 

foreign jurisdictions to facilitate cooperative efforts to combat money 

laundering and terrorist financing. State Department, Justice Department, 

and Federal Reserve Board officials told us that the Treasury Department 

plays a lead role in addressing these efforts. According to Treasury 

Department officials, the U.S. interagency community has been acting to 

accomplish the goals articulated in section 330 through its interactions 

with FATF and the FATF-style regional bodies to ensure global 

compliance with international standards for combating money laundering

and terrorist financing. Treasury officials also told us that enactment of 

section 330 provided a welcomed congressional endorsement of longstanding U.S. government policy to actively engage and negotiate with 

foreign jurisdictions through the medium of FATF and the related FATFstyle regional bodies. Further, in conjunction with foreign negotiations, 

Treasury considers another provision of the USA PATRIOT Act—section 

311—to be a useful mechanism for helping to promote compliance with 

standards. 

Treasury Department 

Has a Key Role in 

Promoting 

International 

Cooperation to 

Combat Money 

Laundering and 

Terrorist Financing 

The Congress Has 

Encouraged International 

Cooperative Efforts

Through section 330 of the USA PATRIOT Act, Congress has encouraged 

the United States to engage in international cooperative efforts to combat 

money laundering and terrorism. Specifically, section 330 specifies, “It is 

the sense of the Congress that the President should direct the Secretary of 

State, the Attorney General, or the Secretary of the Treasury, as 

appropriate, and in consultation with the Board of Governors of the 

Federal Reserve, to seek to enter into negotiations with the appropriate 

financial supervisory agencies and other officials of any foreign country 

the financial institutions of which do business with United States financial 

institutions or which may be utilized by any foreign terrorist organization 

(as designated under section 219 of the Immigration and Nationality Act),

any person who is a member or representative of any such organization, or

any person engaged in money laundering or financial or other crimes.” 

In carrying out such negotiations, section 330 further specifies the sense of 

the Congress that 

Page 7 GAO-06-483 Combating Money Laundering and Terrorist Financing
“the President should direct the Secretary of State, the Attorney General, or the Secretary 

of the Treasury, as appropriate, to seek to enter into and further cooperative efforts,

voluntary exchanges, the use of letters rogatory,9

 mutual legal assistance treaties, and 

international agreements to (1) ensure that foreign banks and other financial institutions

maintain adequate records of transaction and account information relating to any foreign 

terrorist organization (as designated under section 219 of the Immigration and Nationality 

Act), any person who is a member or representative of any such organization, or any

person engaged in money laundering or financial or other crimes; and (2) establish a 

mechanism whereby such records may be made available to United States law enforcement 

officials and domestic financial institution supervisors, when appropriate.”

Section 330 does not constitute an express mandate—that is, section 330

does not impose an affirmative obligation on any agency or official to 

enter into negotiations. Nonetheless, the language of section 330 does 

suggest that efforts should be undertaken to engage in appropriate 

negotiations. 

Treasury and the 

Interagency Community 

Engage in Multilateral 

Efforts to Promote 

International Cooperation 

State Department, Justice Department, and Federal Reserve Board 

officials told us that the lead role regarding the efforts encouraged by

section 330 of the USA PATRIOT Act is held by the Treasury Department. 

According to the Treasury Department, the U.S. interagency community is 

fulfilling section 330 by actively engaging and negotiating with foreign 

jurisdictions through the medium of FATF and the related FATF-style 

regional bodies. The U.S. delegation to FATF, which is headed by the 

Deputy Assistant Secretary of the Treasury’s Office of Terrorist Finance 

and Financial Crime, includes representatives of the Departments of 

Homeland Security, Justice, and State; the federal financial regulators; and 

the National Security Council. 

Regarding efforts encouraged by section 330, Treasury’s Office of Terrorist 

Finance and Financial Crime said that the United States—working through 

FATF, the FATF-style regional bodies, the International Monetary Fund, 

and the World Bank—has led efforts to develop a global system to ensure 

that all countries adopt and are assessed against international standards 

for protecting financial systems and jurisdictions from money laundering 

and terrorist financing. As mentioned previously, these international 

 9

In this context, a letter rogatory is a method of obtaining assistance from abroad in the 

absence of a treaty or executive agreement. Essentially, this device is a formal request from 

a court in one country to a court in another country to seek international judicial assistance 

in obtaining testimony or other evidence. 

Page 8 GAO-06-483 Combating Money Laundering and Terrorist Financing
standards consist of the FATF “Forty Recommendations on Money 

Laundering” and “Nine Special Recommendations on Terrorist Financing” 

(see app. II).

Treasury testimony at a congressional hearing in July 2005 before the 

Senate Committee on Banking, Housing, and Urban Affairs also cited the 

benefits of international standard-setting bodies. Regarding U.S. efforts 

and participation in these bodies, the Treasury Under Secretary’s prepared 

statement included the following points:10

• “The Financial Action Task Force (FATF) sets the global standards for 

anti-money laundering and counter terrorist financing, and it is also 

through this venue that we promote results. Treasury, along with our 

counterparts at State, Justice, and Homeland Security, has taken an

active role in this 33-member body which articulates international 

standards in the form of recommendations, guidelines, and best 

practices to aid countries in developing their own specific anti-money 

laundering and counter-terrorist financing laws and regulations. ... The 

success and force of FATF lie not only in the mutual evaluation process 

to which it holds its own members, but also in the emergence of FATFstyle regional bodies ... that agree to adopt FATF standards and model 

themselves accordingly on a regional level.” 

• “Hawala, a relationship-based system of money remittances, plays a 

prominent role in the financial systems of the Middle East. ... 

Internationally, Treasury leadership in the FATF has brought the issue 

of hawala to the forefront, resulting in implementation of FATF Special

Recommendation VI, which requires all FATF countries to ensure that 

individuals and entities providing money transmission services must be 

licensed and registered, and subjected to the international standards 

set out by FATF.” 

• “As governments apply stricter oversight and controls to banks, wire 

transmitters, and other traditional methods of moving money, we are 

witnessing terrorists and criminals resorting to bulk cash smuggling.

FATF Special Recommendation IX was issued in late 2004 to address 

this problem and it calls upon countries to monitor cross-border 

transportation of currency and to make sanctions available against 

 10Testimony of Stuart Levey, Under Secretary, Office of Terrorism and Financial 

Intelligence, Department of the Treasury, at a hearing (“Money Laundering and Terror

Financing Issues in the Middle East”), before the Senate Committee on Banking, Housing,

and Urban Affairs, July 13, 2005. 

Page 9 GAO-06-483 Combating Money Laundering and Terrorist Financing
those who make false declarations or disclosures in this regard. This 

recommendation has already prompted changes in legislation abroad.”

Further, on July 29, 2005, the United Nations Security Council

unanimously adopted a U.S.-sponsored resolution (Resolution 1617) that,

among other matters, “strongly urges” all member states to “implement the 

comprehensive, international standards” embodied in the FATF 40 plus 

9 recommendations.11 Subsequently, at its most recent plenary meeting 

(October 12 to 14, 2005), FATF noted that “formal endorsement of the 

FATF standards by the U.N. Security Council is a major step toward 

effective implementation of the Recommendations throughout the world.” 

Regarding the U.S. government’s continuing efforts to actively engage and 

negotiate with foreign jurisdictions as encouraged by section 330, 

Treasury’s Office of Terrorist Finance and Financial Crime said that 

outreach to the international community to enhance global best practices

to combat money laundering and terrorist financing involves various 

challenges. These challenges include ensuring that the international 

standards are current in reference to emerging trends and technology and 

are balanced and flexible enough to be relevant and applicable to all 

countries and situations, as well as ensuring that evaluations or 

assessments of countries are conducted on a consistent basis and manner. 

Treasury Views Section 

330 as a Congressional 

Endorsement of Longstanding U.S. Government 

Policy and a Stimulus for 

Continued Efforts 

According to Treasury’s Office of Terrorist Finance and Financial Crime, 

interagency efforts to work through FATF and the FATF-style regional 

bodies to help ensure global compliance with international standards for 

combating money laundering and terrorist financing is a long-standing 

policy of the U.S. government—a policy that has had strong support from 

the White House. In further elaboration, Treasury officials said that 

because working through FATF and the FATF-style regional bodies is a 

long-standing policy, no specific guidance was needed from the President

or the White House to implement section 330. That is, Treasury was 

already seeking to accomplish the goals articulated in section 330. The 

officials commented that passage of section 330 did not cause Treasury or 

the interagency community to alter the objectives of ongoing or planned

negotiations. In sum, the Treasury officials stressed that enactment of 

section 330 provided a welcomed congressional endorsement of long-

 11A primary purpose of Security Council Resolution 1617 was to reaffirm and strengthen

international sanctions on Al-Qaida, the Taliban, and their associates. 

Page 10 GAO-06-483 Combating Money Laundering and Terrorist Financing
standing U.S. government policy and also provided a stimulus for 

continued efforts in negotiating with foreign jurisdictions. 

Treasury Considers 

Section 311 as Particularly 

Relevant for Negotiating 

with Foreign Jurisdictions 

As an incentive or pressure mechanism that can be used in conjunction 

with foreign negotiations, Treasury considers section 311 of the USA 

PATRIOT Act to be particularly relevant for helping to ensure global

compliance with international standards for combating money laundering

and terrorist financing.12 Section 311 authorizes the Secretary of the 

Treasury—in consultation with the Secretary of State and the Attorney 

General and with consideration of multiple factors—to find that 

reasonable grounds exist for concluding that a foreign jurisdiction, a 

financial institution, a class of transactions, or a type of account is of 

“primary money laundering concern.” Such a designation is a precursor or 

condition precedent for taking one or more special measures. For 

instance, following a designation and with additional consultation and 

consideration of specific factors, the Secretary of the Treasury may 

require U.S. financial institutions to take certain “special measures” with 

respect to applicable jurisdictions, institutions, accounts, or transactions. 

The special measures can range from enhanced recordkeeping or 

reporting obligations to a requirement to terminate and not open 

correspondent accounts involving the primary money laundering concern.

Since the USA PATRIOT Act was signed into law in October 2001, section 

311 designations have been announced for three foreign jurisdictions 

(Ukraine, Nauru, and Burma). Treasury’s first use of section 311 authority 

was in December 2002, with the designation of Ukraine and Nauru as 

being of primary money laundering concern. A third jurisdiction, Burma, 

was designated in November 2003. 

In addition to foreign jurisdiction designations, Treasury has also used 

section 311 authority to designate certain foreign financial institutions as 

being of primary money laundering concern. Examples include Myanmar 

Mayflower Bank and Asia Wealth Bank (November 2003), Commercial 

Bank of Syria (May 2004), First Merchant Bank of the “Turkish Republic of

Northern Cyprus” and Infobank of Belarus (August 2004), and Multibanka 

and VEF Banka of Latvia (April 2005). More recently, in September 2005,

Treasury designated Banco Delta Asia SARL, which is located in the 

Macau Special Administrative Region, China. 

 12Codified as amended at 31 U.S.C. § 5318A.

Page 11 GAO-06-483 Combating Money Laundering and Terrorist Financing
In discussing section 311 with us, Treasury’s Office of Terrorist Finance 

and Financial Crime officials characterized designations—even without 

subsequent special measures being taken—as a very useful tool for 

bringing pressure on countries and institutions to meet international 

standards. For example, after being designated by Treasury in December 

2002, Ukraine subsequently took steps to address deficiencies by 

amending its anti-money-laundering law, its banking and financial services 

laws, and its criminal code. Accordingly, Treasury revoked its designation 

in April 2003. 

Since 1995, the number of FIUs recognized by the Egmont Group has 

increased more than sevenfold. Attributable reasons include FATF-related 

efforts, as well as those of the federal interagency community. A particular 

focus of FinCEN—working with federal interagency partners—has been to

provide training and technical assistance to help create and enhance the 

capabilities of FIUs. Given the significant growth in the number of FIUs 

recognized by the Egmont Group, which now totals 101, more attention is

being focused on improving the capabilities of existing units, especially in 

reference to combating terrorist financing—an operational task now 

included in the Egmont Group’s definition of an FIU. Generally, FIUs are 

evaluated as part of an overall methodology designed to assess a country’s

compliance with the international standards contained in the FATF 40 plus

9 recommendations for combating money laundering and terrorist 

financing. According to FinCEN, its efforts to improve the capabilities of 

foreign FIUs must be achieved through cooperation, collaboration, and 

consensus—given that the Egmont Group is responsible for dealing with 

its members’ shortcomings or noncompliance with standards. 

Enhancing the 

Capabilities of 

Financial Intelligence 

Units Is a Continuing 

Challenge 

The Number of Financial 

Intelligence Units Has 

Increased Significantly 

Since 1995 

Over the past decade, the number of FIUs recognized by the Egmont 

Group increased more than sevenfold, from 14 in 1995 to 101 as of July 

2005 (see fig. 1). 

Page 12 GAO-06-483 Combating Money Laundering and Terrorist Financing
Figure 1: Annual Growth in the Number of Financial Intelligence Units

a

As of July 2005.

A goal of the Egmont Group is to provide a forum for FIUs to improve 

support to their respective national programs for combating money 

laundering and terrorist financing. Egmont Group membership is not 

automatic for new or nascent FIUs. Rather, the Egmont Group has a Legal 

Working Group responsible for assessing each FIU-candidate to ensure 

that the prospective member meets admission criteria. For instance, the

assessment criteria are used to determine whether the FIU-candidate 

meets the Egmont definition of an FIU, has reached full operational status, 

and is legally capable and willing to cooperate on the basis of Egmont 

principles (see app. III). Also, among other responsibilities, an Egmont 

Group member that sponsors or mentors the FIU-candidate is expected to

Page 13 GAO-06-483 Combating Money Laundering and Terrorist Financing
have first-hand experience (including an on-site visit) to confirm the 

operational status of the candidate FIU. 

Growth in the Number of 

Financial Intelligence 

Units Is Attributable to 

Various Reasons 

The significant growth in the number of FIUs is attributable to various 

reasons, including FATF-related efforts to establish international 

standards and promote policies for combating money laundering and 

terrorist financing. For example, FATF recommendation number 26 (see 

app. II) specifies that countries should establish an FIU that serves as a 

national center for receiving (and, as permitted, requesting), analyzing, 

and disseminating suspicious transaction reports and other information 

regarding potential money laundering or terrorist financing. Moreover, a 

contributing role has been played by the Egmont Group, which has an 

Outreach Working Group to identify candidate countries for membership 

and help them meet international standards. 

Further, the growth in the number of FIUs is attributable partly to federal 

interagency efforts, including training and technical support provided by 

FinCEN and Treasury’s Office of Technical Assistance, as well as funding

provided by the State Department. As a member of the Egmont Group 

since 1995, FinCEN in particular has focused its global efforts on assisting 

jurisdictions establish new FIUs and improving existing units. For 

instance, in helping to establish new FIUs, FinCEN’s assistance has 

included a variety of activities, such as performing country assessments, 

advising or commenting on draft FIU legislation, providing seminars on 

the combating of money laundering, conducting training courses for FIU 

personnel, and furnishing technical advice on computer systems. 

According to FinCEN, much of its work now involves strengthening 

existing FIUs. In this regard, FinCEN’s activities include conducting 

personnel exchanges (from foreign FIU to FinCEN and vice versa) and 

participating in operational workshops and other training initiatives. Also, 

FinCEN noted that much of its assistance involves regional or multilateral 

efforts, such as working closely with the Egmont Group of FIUs, the 

United Nations, and multilateral development banks. 

As an example of a recent FIU-related activity, FinCEN reported that it 

sent a four-person team to Saudi Arabia in the first quarter of fiscal year 

2006 to conduct an on-site assessment and provide various presentations 

(covering, for example, information exchange issues) to employees of the 

Saudi FIU. In addition, FinCEN’s activities for fiscal year 2005 included 

providing training (either abroad or at FinCEN) to FIU representatives 

from various nations, such as Argentina, Brazil, China, Guatemala, South 

Korea, Paraguay, and Sri Lanka. For fiscal year 2004, FinCEN reported that 

Page 14 GAO-06-483 Combating Money Laundering and Terrorist Financing
it joined with the United Arab Emirates to host representatives from 

Afghanistan, Bangladesh, Maldives, Pakistan, and Sri Lanka on developing 

FIUs. Also, FinCEN’s reported activities for fiscal year 2003 include 

• conducting personnel exchanges with Egmont Group allies from 

several Baltic nations (i.e., Estonia, Latvia, and Lithuania), Bolivia, 

Turkey, South Korea, Ukraine, and Russia; 

• co-hosting regional training workshops in Malaysia and Mauritius; and 

• sponsoring Bahrain, Mauritius, and South Africa as new members into 

the Egmont Group—with the latter two countries representing Africa’s 

first representatives in the group. 

Similarly, according to the State Department, recent activities of 

Treasury’s Office of Technical Assistance include (1) providing training 

and technical assistance to FIUs in Paraguay and Peru, (2) helping the 

Senegal FIU achieve operational status, and (3) working with Ukraine to

streamline its national FIU.13 

Generally, U.S. government assistance in creating and strengthening FIUs

can be viewed as being one strategic element among several designed to

enhance the capacity of global partners. For instance, the training and 

technical assistance that U.S. agencies provide to vulnerable countries are 

intended to help the countries develop five elements that, according to the 

State Department, are needed for an effective anti-money-laundering and 

counter-terrorism-financing regimes—a legal framework, a financial 

regulatory system, law enforcement capabilities, judicial and prosecutorial 

processes, and an appropriate FIU. However, despite the formation of an

interagency coordination entity—the Terrorist Financing Working 

Group—U.S. efforts to coordinate the delivery of training and technical 

assistance lack an integrated strategic plan, as we recently reported.14

Among other matters, our October 2005 report noted disagreements 

between the State and Treasury departments on procedures and practices 

for delivering training and technical assistance as well as disagreements 

 13Department of State, Bureau for International Narcotics and Law Enforcement Affairs, 

International Narcotics Control Strategy Report, Volume II, Money Laundering and

Financial Crimes (March 2006). 

14GAO, Terrorist Financing: Better Strategic Planning Needed to Coordinate U.S. Efforts

to Deliver Counter-Terrorism Financing Training and Technical Assistance Abroad, 

GAO-06-19 (Washington, D.C.: Oct. 24, 2005). 

Page 15 GAO-06-483 Combating Money Laundering and Terrorist Financing
regarding interagency leadership and coordination responsibilities. The 

report recommended that the Secretary of State and the Secretary of the

Treasury develop an integrated strategic plan and enter into an agreement 

specifying the roles of each department, bureau, and office with respect to

conducting needs assessments and delivering training and technical 

assistance. In March 2006, the State Department provided the Congress a 

written statement (as required under 31 U.S Code § 720) regarding action

taken on the recommendation. State commented that several steps were 

being taken to enhance interagency coordination. The written statement 

noted, for example, that the National Security Council and the 

departments of State, Justice, the Treasury, and Homeland Security were 

reviewing the work of the Terrorist Financing Working Group in light of 

recent years’ experience, with a view to making any appropriate updates 

and adjustments to enhance its effectiveness. 

Also, during our review, State Department officials noted one area where 

they would like to augment U.S. assistance to nascent FIUs. This area 

involves ensuring that nascent FIUs have appropriate information 

technology (hardware and software). The officials emphasized that such 

technology is essential to appropriately functioning FIUs. In this regard, 

the officials said that the State Department and FinCEN are engaged in 

ongoing discussions on how to augment such assistance. 

Further regarding future directions, FinCEN’s Deputy Director (who also 

chairs the Egmont Committee15) commented that there will be continuing 

efforts to establish new FIUs, particularly in priority regions (such as the 

Middle East and Central Asia) critical to combating money laundering and 

terrorist financing. Moreover, given the dynamic growth in the Egmont 

Group’s membership, the Deputy Director noted that the Egmont 

Committee will be giving more attention to improving the capabilities or 

effectiveness of existing FIUs. 

 15The Egmont Committee is composed of a chair, two co-vice chairs, the chairs of the

Egmont Group’s five working groups (information technology, legal, operational, training,

and outreach), and regional representation from Africa, Asia, Europe, the Americas, and 

Oceania. The committee functions as the consultation and coordination mechanism for FIU 

heads and the five working groups. 

Page 16 GAO-06-483 Combating Money Laundering and Terrorist Financing
Generally, FIUs are evaluated as part of an overall methodology designed 

to assess a country’s compliance with the international standards 

contained in the FATF 40 plus 9 recommendations for combating money 

laundering and terrorist financing (see app. II). 

As mentioned previously, FATF recommendations provide international 

standards for combating money laundering and terrorist financing. In this

regard: 

Capabilities of Financial 

Intelligence Units: Some 

Aspects Are Covered in 

Assessments of 

Compliance with FATF 

Recommendations

“A key element in the fight against money laundering and the financing of terrorism is the

need for countries to be monitored and evaluated, with respect to these international 

standards. The mutual evaluations conducted by the FATF and the FATF-style regional

bodies, as well as assessments conducted by the IMF and the World Bank, are a vital 

mechanism for ensuring that the FATF Recommendations are effectively implemented by

all countries.”

16

Our research and inquiries identified one published study that presented 

comparative or multicountry results based on mutual evaluations of 

nations’ compliance with the FATF recommendations. The study—TwelveMonth Pilot Program of Anti-Money-Laundering and Combating the 

Financing of Terrorism (AML/CFT) Assessments–Joint Report on the 

Review of the Pilot Program, March 10, 2004—was prepared jointly by 

IMF and the World Bank. The study summarized the results of the mutual 

evaluations of 41 jurisdictions, conducted during the 12-month period that

ended in October 2003.17 The assessments used a common methodology 

adopted by FATF and endorsed by the Executive Boards of IMF and the 

World Bank.18 Of the 41 assessments, 33 were conducted by IMF or the 

World Bank, and 8 were conducted by FATF and the FATF-style regional 

bodies. 

 16International Monetary Fund, Legal Department, AML/CFT Standards and Reference

Materials, April 2004. 

17At the time of the March 2004 report by IMF and the World Bank, the FATF 

recommendations were 40 plus 8. Later, in October 2004, FATF published a ninth special 

recommendation on terrorist financing (see app. II). 

18The common methodology reflects the principles of the FATF recommendations. See 

International Monetary Fund and World Bank, Joint Report on the Methodology for 

Assessing Compliance with the FATF 40 Recommendations and the FATF 8 Special

Recommendations—Supplementary Information (March 16, 2004). Also, appendix II of 

this report briefly discusses an updated version of the methodology—Methodology for 

Assessing Compliance with the FATF 40 Recommendations and the FATF 9 Special

Recommendations (updated as of February 2005). 

Page 17 GAO-06-483 Combating Money Laundering and Terrorist Financing
In their March 2004 joint report, IMF and the World Bank presented 

assessment findings for the 41 jurisdictions in a summary format, rather 

than associating compliance levels or deficiencies with any individual 

country. For instance, the report made the following general observations: 

• “Overall compliance with the FATF 40+8 Recommendations is uneven 

across jurisdictions. Many jurisdictions show a high level of compliance 

with the original FATF 40 Recommendations. The most prevalent 

deficiency among all assessments is weaker compliance with the Eight 

Special Recommendations on terrorist financing.” 

• “There is generally a higher level of compliance in high and middle income 

countries than in low income countries. Higher income countries typically

have well developed AML/CFT regimes but with specific gaps, especially

concerning the Eight Special Recommendations on terrorist financing.” 

The joint report did not separately present or discuss assessment findings 

related to the functioning or effectiveness of FIUs. However, two of the 13

main weaknesses identified are directly related to FIUs. These two 

weaknesses (see table 1) are topic 12 (no requirement to report promptly

to the FIU if financial institutions suspect that funds stem from criminal 

activity) and topic 13 (poor international exchange of information relating 

to suspicious transactions and to persons or corporations involved). 

Page 18 GAO-06-483 Combating Money Laundering and Terrorist Financing
Table 1: Main Weaknesses Identified in Assessments of Compliance with FATF Recommendations for Combating Money 

Laundering and Terrorist Financing 

Weakness 

identified 

Assessed countries found “materially

noncompliant” or “noncompliant” 

Reference 

number Topic

Total number of

countries assessed Number

Percent 

of total

1 Poor assistance to other countries’ financing of 

terrorism investigations 

40 19 48%

2 Poor attention to transactions with higher risk

countries. 

41 18 44

3 Poor detection and analysis of unusual large or 

otherwise suspicious transactions 

40 17 43

4 No criminalization of the financing of terrorism and 

terrorist organizations 

40 17 43

5 Inadequate systems to report suspicious 

transactions linked to terrorism

39 16 41

6 Inadequate anti-money-laundering programs in 

supervised banks, financial institutions or 

intermediaries; authority to cooperate with judicial 

and law enforcement 

40 16 40

7 Inadequate guidelines for suspicious transactions’ 

detection

41 16 39

8 Inadequate measures to freeze and confiscate

terrorist assets 

40 14 35

9 No requirement to take reasonable measures to 

obtain information about customer identity 

41 14 34

10 Inadequate procedures for mutual assistance in 

criminal matters for production of records, search 

of persons and premises, seizure and obtaining of 

evidence for money laundering investigations and 

prosecutions 

41 14 34

11 Inadequate internal policies, procedures, controls, 

audit, and training programs 

40 13 33

12 No requirement to report promptly to the financial 

intelligence unit if financial institutions suspect that 

funds stem from a criminal activity 

41 13 32

13 Poor international exchange of information relating 

to suspicious transactions and to persons or 

corporations involved 

41 13 32

Source: International Monetary Fund and World Bank, Twelve-Month Pilot Program of Anti-Money-Laundering and Combating the 

Financing of Terrorism (AML/CFT) Assessments—Joint Report on the Review of the Pilot Program (March 10, 2004, annex II, table 12, 

p, 55).

Notes: The assessments were conducted during the 12-month period ending in October 2003. 

Page 19 GAO-06-483 Combating Money Laundering and Terrorist Financing
According to the joint report, the 41 assessments in the pilot program included compliance ratings for 

27 of the FATF 40 Recommendations and 7 of the 8 Special Recommendations. Some 

recommendations were not rated because they had not yet fully come into force or they were not 

explicitly assessable, given their nature. The assessment methodology called for use of a four-grade 

rating scale—compliant, largely compliant, materially noncompliant, and noncompliant. 

The joint report noted that assessments using the common methodology 

are increasingly used as a diagnostic tool to identify technical assistance 

needs, including assistance for creating and strengthening FIUs. 

Although not published, an overview of more recent FIU-related 

assessment findings was presented on July 1, 2005, in Washington, D.C., 

at the annual plenary meeting of the Egmont Group. Specifically, an IMF 

representative presented summary information covering 29 countries, 

whose names were not disclosed. The IMF representative noted that the 

information was derived from the results of mutual evaluations or 

assessments conducted during 2003 to 2005 using the common 

methodology endorsed by FATF, IMF, and the World Bank. According to 

the presentation, the findings of the assessments indicated that many of 

the FIUs had shortcomings, such as a shortage of staff (one-third of the 

total), a lack of political independence (one-fourth), and legal obstacles to

international cooperation (one-third). Other shortcomings cited were 

(scope not quantified) lack of clear legal framework, lack of strategic 

analysis tools, lack of access to appropriate information and databases, 

excessive transmission of information to law enforcement agencies, lack

of guidelines on the identification of suspicious behavior, lack of 

feedback, lack of powers to sanction failure to report, and legal obstacles 

to the transmission of suspicious transaction reports. 

In its January 2006 response to our inquiry, the State Department said that

the U.S. government and other major donors generally are well informed 

about the existence of FIUs (and their capabilities and deficiencies) in 

those jurisdictions in which the donors wish to participate. State 

commented that while mutual evaluations are but one source of 

information and can be outdated before being discussed at meetings of the

FATF-style regional bodies, these evaluations are useful in identifying 

deficiencies and prompting corrective action by the respective 

jurisdiction. 

Page 20 GAO-06-483 Combating Money Laundering and Terrorist Financing
According to FinCEN’s Deputy Director (and chair of the Egmont 

Committee), the Egmont Group is responsible for dealing with its 

members’ shortcomings or noncompliance with standards. That is, even 

though influential, FinCEN has only one vote within the 101-member 

Egmont Group. Therefore, FinCEN’s efforts to improve the capabilities of 

foreign FIUs must be achieved through cooperation, collaboration, and 

consensus. 

Dealing with FIU 

Shortcomings or 

Noncompliance with 

Standards Is a 

Responsibility of the 

Egmont Group 

To better address Egmont Group members’ shortcomings or 

noncompliance with standards, the Deputy Director commented that his

preference is for full transparency of assessment findings. In this regard, in

its most recent annual report, FATF announced a new process for 

reporting assessment teams’ findings that are compiled in mutual 

assessment reports. Specifically, according to FATF, 

“A summary of each report will be published on the FATF website and FATF members 

have agreed in principle to make public the full mutual evaluation reports (with the 

ultimate decision being left to each FATF member for its own report). The FATF intends to 

provide comprehensive information on its members’ actions in combating money 

laundering and terrorist financing.”19

The Deputy Director also commented that the most significant functional 

change for the Egmont Group in recent years was expansion of the 

definition of an FIU in response to the terrorist attacks of September 11. 

Shortly thereafter, at an October 2001 special meeting of the Egmont 

Group in Washington, D.C., the members expressed a sense that the 

group’s operational functions should expand beyond money laundering to

address terrorist financing. Later, at the Egmont Group’s 12th plenary 

meeting—held during June 21 to 25, 2004, and hosted in Guernsey, 

Channel Islands—the definition of “financial intelligence unit” was 

amended to include a reference to terrorist financing. This new definition 

is reflected in the Statement of Purpose of the Egmont Group of 

Financial Intelligence Units, which resulted from the Guernsey plenary

meeting. Thus, combating terrorist financing now is included in the 

definition of tasks an FIU is required to perform. 

According to the Deputy Director, existing FIUs have a grace period of at 

least 2 years to become compliant with the new definition. He noted that 

 19Financial Action Task Force on Money Laundering, Annual Report 2004-2005, June 10, 

2005, p. 9. 

Page 21 GAO-06-483 Combating Money Laundering and Terrorist Financing
throughout the history of the Egmont Group, no member has ever been 

excluded from continuing participation. The Deputy Director added, 

however, that plenary meetings in recent years have begun to address the 

issue of noncompliance. For example, according to documentation of 

Egmont Group meetings:20

• The 11th Egmont Group plenary, held July 21 to 25, 2003, in Sydney,

Australia, marked the “first attempt to establish a procedure for dealing 

with members that may no longer meet Egmont standards.” 

• At the 12th Egmont plenary session, held June 21 to 25, 2004, in 

Guernsey, Channel Islands, “a paper was drafted which outlines the 

procedures to address those Egmont members that may no longer meet 

the established definitions and standards of the Egmont Group, or that 

fail to exchange information.” 

The Deputy Director said that a paper on noncompliance was also 

presented at the most recent Egmont plenary meeting, held June 30 to 

July 1, 2005, in Washington, D.C. He added that the issue will be revisited

at the 2006 plenary meeting in Cyprus. He explained that dealing with 

noncompliance will be a difficult issue and likely will reflect a go-slow 

approach. For instance, the Deputy Director opined that before 

administrative action (such as exclusion) is taken, the noncompliant 

member probably would be offered ameliorating assistance over an 

extended period of time. 

 20Egmont Group, “Egmont Meetings at a Glance,” www.egmontgroup.org (2006). 

Page 22 GAO-06-483 Combating Money Laundering and Terrorist Financing
Since the events of September 11, FinCEN’s most important operational 

priority has been to provide counterterrorism support to the law 

enforcement and intelligence community. In January 2006, to enhance its 

support role, FinCEN assigned an analyst to the FBI’s Terrorist Financing 

Operations Section. Also, among other actions to maximize performance 

as a global partner in combating money laundering and terrorist financing, 

FinCEN is modernizing the Egmont Secure Web—the Internet-based 

system developed and maintained by FinCEN and used by FIUs worldwide 

to exchange information. Further, FinCEN is allocating additional staff 

resources to facilitate responding to foreign requests for assistance and is

developing a new case management system. However, FinCEN’s most 

recent customer satisfaction survey of FIUs had limited coverage and a 

very low response rate, partly because there was no follow-up with 

nonrespondents. Future surveys would need to be more inclusive and 

incorporate better survey development and administration practices, such 

as follow-up efforts to achieve higher response rates, if the surveys are to 

serve as a useful management information tool for monitoring and 

enhancing performance. 

FinCEN Is Taking 

Various Actions to 

Maximize Its 

Performance as a 

Global Partner, but 

More Comprehensive 

Feedback from 

Financial Intelligence 

Units Would Be

Useful 

Challenges for FinCEN 

Include Redirecting Its 

Efforts to More Complex 

Cases as well as 

Supporting the Nation’s 

Focus on Detecting and 

Preventing Terrorist

Financing 

FinCEN has recognized that it faces various challenges, such as 

redirecting its efforts to more complex cases, some of which inevitably 

have international linkages. Another important challenge is to support the 

nation’s focus on detecting and preventing terrorist financing, which also 

can involve international linkages. 

At a congressional hearing held on April 29, 2004, the FinCEN Director 

testified that FinCEN must step up its international engagement with 

counterparts around the world by, among other means, enhancing 

“the FinCEN analytical product we provide to our global counterparts when asked for

information. Today, we are primarily providing the results of a data check. We think we

owe our colleagues more. ... [W]e will also be making more requests for information and 

analysis from our partners—particularly when the issue involves terrorist financing or

money laundering.” 21

 21Statement of William J. Fox, Director, FinCEN, at a hearing (“Counterterror Initiatives 

and Concerns in the Terror Finance Program”) before the Senate Committee on Banking,

Housing, and Urban Affairs, April 29, 2004. 

Page 23 GAO-06-483 Combating Money Laundering and Terrorist Financing
Similarly, FinCEN’s strategic plan for fiscal years 2006 to 2008 noted that 

“a strategic challenge is to make the transition away from relatively simple 

query services that we have historically provided to law enforcement 

agencies, so that we can redirect our efforts toward more complex 

analysis and investigative support.”22 Also, the strategic plan stated: 

“Like the rest of America, the Financial Crimes Enforcement Network is still adapting to

changes triggered by the events of 9/11. These changes include ... supporting the 

Department of the Treasury’s new focus on detecting and preventing terrorist financing. ...

While the Financial Crimes Enforcement Network has historically developed the

information, analytical processes, and tools required to detect money laundering, we need

to develop additional tools—and to gain access to additional data, including classified 

data—in order to better detect terrorist financing.” 

Further elaboration of planned efforts to enhance FinCEN’s analytical

capabilities is presented in Treasury’s budget submission for fiscal 

year 2006: 

“FinCEN must upgrade the quality of its analysis related to terrorist financing and money 

laundering. FinCEN has begun a major initiative to enhance the ability of FinCEN analysts 

to consider all information sources, including, as appropriate, classified data, when 

analyzing money laundering and terrorist financing methods. To be successful, this will 

require an overall upgrade to the security environment, significant investments in training 

and building analytical skills relating to terrorist financing, upgrade of the analytical 

software related to text mining, enhanced availability of classified sources ... and an 

increase in overall personnel security classifications to allow the integration of all 

information sources.”23

A primary data source used by FinCEN analysts is the government’s 

database of BSA-related forms, including suspicious activity reports 

(SARs) filed by financial institutions. An integral part of FinCEN’s 

counterterrorism strategy involves reviewing and referring all SARs 

related to terrorist financing to law enforcement and intelligence agencies. 

For instance, as of September 2005, FinCEN reported that it had 

proactively developed and referred a total of 526 potential terrorist 

 22Financial Crimes Enforcement Network, Strategic Plan, FY 2006-2008: Safeguarding the

Financial System from the Abuse of Financial Crime (February 2005). 

23Department of the Treasury, Financial Crimes Enforcement Network, Fiscal Year 2006 

Congressional Budget Submission (Feb. 7, 2005), p. 4. 

Page 24 GAO-06-483 Combating Money Laundering and Terrorist Financing
financing leads to appropriate agencies, such as the FBI’s Terrorist 

Financing Operations Section and Joint Terrorism Task Forces. 

In 2004, the FBI contacted the Director of FinCEN and requested bulk 

access to BSA reports for ingestion into the FBI’s system, the Investigative 

Data Warehouse (IDW). The FinCEN Director recognized the benefits of 

having the data available in this format and approved the request. 

According to the FBI: 

“[The IDW] is a centralized, web-enabled, closed system repository for 

intelligence and investigative data. This system, maintained by the FBI, allows 

appropriately trained and authorized personnel throughout the country to query 

for information of relevance to investigative and intelligence matters. In addition 

to BSA data provided by FinCEN, IDW includes information contained in myriad

other law enforcement and intelligence community databases. The benefits of

IDW include the ability to efficiently and effectively access multiple databases in a

single query. As a result of the development of this robust information technology, 

a review of data that might have previously taken days or months now takes only 

minutes or seconds.”

24 

The FBI noted that FinCEN provides the IDW with regular updates of the 

BSA data. Also, the FBI told us that it has not had any discussions with 

FinCEN regarding ways to enhance FinCEN’s link-analysis capability. 

Generally, link analysis involves use of data mining and other 

computerized techniques to identify relationships across organizations, 

people, places, events, etc. Rather, the FBI noted that it requested FinCEN 

to assign an analyst to the FBI’s Terrorist Financing Operations Section. 

Such an assignment, the FBI explained, would provide FinCEN access to 

additional data sources, which would be useful to FinCEN in performing 

its various roles. FinCEN told us that it accepted this offer almost 

immediately, and, subsequently, in January 2006, the designated FinCEN 

analyst reported to the FBI to begin initial training (2 weeks) with 

Terrorist Financing Operations Section personnel. More recently, in March 

2006, in providing us feedback on this arrangement and other interactions, 

the FBI commented that it highly values its strong partnership with 

FinCEN. 

 24Statement of Michael F. A. Morehart, Section Chief, Terrorist Financing Operations 

Section, Counterterrorism Division, FBI, at a hearing before the House Committee on 

Financial Services (May 26, 2005). 

Page 25 GAO-06-483 Combating Money Laundering and Terrorist Financing
In further reference to analyzing SARs and developing counterterrorismrelated leads, we note that FinCEN developed and transmitted a total of 

four referrals to FIUs during the past 4 fiscal years, 2002 through 2005. Of

these four referrals, according to FinCEN, two were sent to Spain’s FIU, 

one was sent to the United Kingdom’s FIU, and one was sent to both 

Canada’s FIU and the United Kingdom’s FIU. In addition to these proactive 

referrals, FinCEN emphasized that it regularly interacts with foreign FIUs 

to explore opportunities for working on issues of mutual interest. These 

efforts, according to FinCEN, essentially achieve the same goals and 

results as proactive referrals—and perhaps in a more tailored and effective 

manner. 

Modernizing the Egmont 

Secure Web: Technology Is 

Critical to Information 

Sharing, a Core Function 

of Financial Intelligence 

Units 

Facilitating the cross-border exchange of information is a core function of

FIUs. FinCEN plays a key role in fostering the secure exchange of 

information among FIUs, given that FinCEN operates and maintains the 

Egmont Secure Web. An Internet-based system, the Egmont Secure Web is

used by FIUs primarily for its encrypted e-mail capability to exchange 

sensitive case information. In 1997, FinCEN initially launched the Egmont 

Secure Web, and its development was funded solely by the Treasury 

Forfeiture Fund.25

Operationally, according to FinCEN, the Egmont Secure Web is of 

paramount importance to FIUs. For instance, the Egmont Group’s 

guidelines—Best Practices for the Exchange of Information between 

Financial Intelligence Units—state that, where appropriate, FIUs should 

use the Egmont Secure Web, which permits secure online information 

sharing among members. According to FinCEN, the system has 

encouraged unprecedented cooperation among FIUs because of security, 

ease of use, and quick response time. Also, FinCEN officials explained that 

the Egmont Secure Web provides online access to many reference 

materials, such as official Egmont procedural documents, FIU contact 

information, case examples, recently noted trends, and minutes from all 

Egmont meetings. 

 25The Treasury Forfeiture Fund is the receipt account for the deposit of nontax forfeitures

made pursuant to laws enforced or administered by the Internal Revenue Service-Criminal 

Investigation and Department of Homeland Security components (including U.S. 

Immigration and Customs Enforcement, U.S. Customs and Border Protection, U.S. Secret

Service, and U.S. Coast Guard). 

Page 26 GAO-06-483 Combating Money Laundering and Terrorist Financing
A large majority (96) of the Egmont Group’s 101 members are connected 

to the Egmont Secure Web. As of February 2006, 67 of the 96 FIUs each 

had one Egmont Secure Web user account, and 29 other FIUs each had 

two or more user accounts (see table 2). With 49 user accounts, FinCEN’s 

total is nearly three times that of Belgium’s FIU, which has the second 

largest number of user accounts (18). For fiscal year 2004, FinCEN 

reported that it supported 844 law enforcement cases via information 

exchanges with foreign jurisdictions and that an estimated 98 percent of 

FinCEN’s responses to these jurisdictions went through the Egmont 

Secure Web.

Table 2: Financial Intelligence Units Connected to Egmont Secure Web and Number of User Accounts per Country (as of 

February 2006) 

Number and names of countries connected to Egmont Secure Web 

Number of Egmont 

Secure Web user 

accounts per

country

Number 

of 

countries Names of countries 

Total number of

Egmont Secure 

Web user accounts

1 67 Albania, Andorra, Anguilla, Aruba, Austria, Bahrain, Barbados, Belize, 

Bermuda, Bolivia, Bosnia and Herzegovina, Brazil, Bulgaria, Cayman 

Islands, Colombia, Cook Islands, Costa Rica, Croatia, Cyprus, Czech 

Republic, Dominica, Dominican Republic, Egypt, Estonia, Finland, 

Germany, Gibraltar, Grenada, Guatemala, Guernsey, Hong Kong, 

Hungary, Iceland, Ireland, Isle of Man, Israel, Japan, Jersey, Lebanon, 

Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Marshall 

Islands, Mexico, Monaco, Netherlands Antilles, New Zealand, 

Panama, Paraguay, Peru, Portugal, Qatar, Romania, Russia, San 

Marino, Singapore, Slovakia, St. Vincent and the Grenadines, 

Sweden, Switzerland, Taiwan, Turkey, United Arab Emirates, 

Vanuatu, and Venezuela 

67

2 15 Antigua & Barbuda, Denmark, France, Georgia, Italy, Korea, Latvia, 

Liechtenstein, Mauritius, Montenegro, Norway, Poland, Serbia, South 

Africa, and United Kingdom 

30

3 5 Bahamas, Chile, Indonesia, Netherlands, and Slovenia 15

4 2 Honduras and Spain 8

5 2 Argentina and Canada 10

6 2 Thailand and Ukraine 12

12 1 Australia 12

18 1 Belgium 18

49 1 United States 49

Total 96 221

Source: FinCEN data.

Page 27 GAO-06-483 Combating Money Laundering and Terrorist Financing
Note: An Egmont Secure Web user account is issued to an authorized user within an FIU that has 

been admitted into the Egmont Group. The request for a user account is submitted to FinCEN by an 

official within the foreign FIU. The account grants access to the Egmont Secure Web system and 

enables “view only” use of the Web content, including pages and documents posted for all FIUs. Also, 

the account includes the use of secure e-mail-enabling exchange of sensitive documents between 

FIUs. 

FinCEN is in the process of modernizing the system by acquiring upgraded

hardware and software. FinCEN officials estimated that the upgrade will 

be completed by mid-2006 and cost approximately $631,000. Further, the 

officials noted the following information: 

• The U.S. government is the owner of the system and all other users are 

stakeholders. In effect, FinCEN is providing a service to a group (i.e., 

the Egmont Group)—of which, FinCEN itself is a member. 

• The Egmont Secure Web meets or exceeds the requirements for 

information systems that handle sensitive but unclassified information. 

• The issuance of a digital certificate gives some assurance that users 

have met security requirements, but the burden is on the respective

FIU to be responsible.26 

As a further safeguard, the officials noted that the Egmont Secure Web

does not give foreign FIUs access to FinCEN’s internal systems—for 

example, the FIUs have no direct access to BSA data. 

Management Information 

and Customer Feedback 

Are Important Tools for 

Monitoring and Improving 

Performance 

Important tools for monitoring and improving performance of any 

organization include implementing an effective management information 

system and obtaining feedback from customers. Such tools are particularly 

relevant for FinCEN, a networking organization that has a significant role 

and responsibilities in combating international financial crime. 

 26Generally, before obtaining access to a federal computerized information system, a 

potential user must first be issued a digital certificate by a government-approved certificate 

authority. A digital certificate essentially is an electronic "credit card" that establishes a 

person’s credentials when doing business or other transactions on the Web. The certificate 

contains the person’s name, a serial number, expiration date, a copy of the certificate 

holder's public key (used for encrypting messages and digital signatures), and the digital 

signature of the certificate-issuing authority so that a recipient can verify that the

certificate is real. FinCEN is the authority for issuing digital certificates for use of the

Egmont Secure Web. 

Page 28 GAO-06-483 Combating Money Laundering and Terrorist Financing
In response to our inquiry about what trends are reflected in data 

regarding the timeliness of FinCEN’s responses to foreign FIU requests for 

assistance, FinCEN officials said that their management information 

system does not lend itself easily to the identification of trends. The 

officials noted, however, that FinCEN was developing a new case 

management system to make statistical information more readily 

available. According to FinCEN officials, full implementation of the new 

system is scheduled for the last quarter of fiscal year 2008. The officials 

told us that as of March 2006, no decision had been reached on the new 

system’s hardware or software platform. However, the officials noted that

in developing the new system, FinCEN is coordinating with Treasury’s 

Enterprise Architecture Office and also is complying with applicable 

guidance from the Office of Management and Budget. 

Case Management: New 

Information System Being 

Developed to Better Manage 

Requests for Assistance 

Available case-management statistics show that FinCEN receives more 

requests from foreign FIUs than it submits to these counterparts. As table 

3 indicates, the number of incoming requests to FinCEN has been about

twice the number of outgoing requests in recent fiscal years. 

Table 3: Case-Management Statistics—Foreign FIU and FinCEN Requests for 

Assistance 

Fiscal year 

Foreign FIU requests to

FinCEN (incoming 

requests) 

FinCEN requests to

foreign FIUs (outgoing 

requests)

2002 510 341

2003 529 211

2004 612 292

2005 (through 7/25/05) 561 238

Source: FinCEN data.

Note: The data in table 3 quantify only those requests in which FinCEN was a party that either 

received or submitted a request for information. Thus, the data do not include, for example, requests 

submitted by a foreign FIU to another foreign FIU. 

In managing and processing incoming requests, FinCEN’s policy is to give 

priority to terrorism-related requests and other “expedite” requests, such 

as those involving imminent law enforcement action or other extenuating

time-sensitive circumstances. FinCEN officials said that responses are 

prepared to meet these deadlines. Otherwise, the officials said that 

requests from foreign FIUs are to be handled on a first-come, first-served 

basis. Generally, the officials noted that the timeliness of FinCEN in 

responding to requests from foreign FIUs can depend on a variety of 

Page 29 GAO-06-483 Combating Money Laundering and Terrorist Financing
factors, such as the volume of requests, the types and amount of 

information being requested, the number of subjects involved (e.g., 

persons and accounts), whether additional clarifications of the requests 

are needed, and even the extent of time zone differences between FinCEN 

and the foreign FIUs. 

According to FinCEN data, the average time for responding to foreign 

requests was 106 days in fiscal year 2002 and increased to 124 days in 

fiscal year 2004. The FinCEN officials attributed this increase to various 

reasons, including the growing number of FIUs and a loss of contract staff 

who handled the majority of the requests from foreign FIUs. More 

recently, FinCEN officials said that the average response time had 

decreased to 63 days for fiscal year 2005 (through July 25, 2005). To 

further improve response times, the officials indicated that FinCEN was 

(1) shifting additional employees to its Office of Global Support (within 

the Analysis and Liaison Division), which is responsible for processing 

requests from foreign FIUs, and (2) hiring contract staff to specifically 

handle FIU requests for information. 

For fiscal year 2005 (through July 25, 2005), a total of 561 requests were 

made to FinCEN by 75 foreign customers, primarily FIUs. Sixteen FIUs 

accounted for two-thirds of the total requests, as table 4 shows. 

Customer Satisfaction Survey 

of Financial Intelligence Units: 

Limited Coverage and Low 

Response Rate 

Page 30 GAO-06-483 Combating Money Laundering and Terrorist Financing
Table 4: Number and Names of Foreign Customer Entities That Requested Assistance from FinCEN in Fiscal Year 2005 (as of

July 25, 2005)

Foreign customers (75) that requested assistance from

FInCEN Foreign requests to FinCEN for assistance

Number Jurisdiction and entity Number of requests 

Percentage of total 

foreign requests

1 Ukraine FIU 44

2 Belgium FIU 40

3 Isle of Man FIU 39 

4 Russia FIU 28

5 Poland FIU 27

6 Hungary FIU 26

7 Bulgaria FIU 23

8 Romania FIU 19

9 Brazil FIU 18

10 France FIU 18

11 Ireland FIU 18

12 Switzerland FIU 16

13 Israel FIU 15

14 Spain FIU 15

15 Latvia FIU 14

16 Croatia FIU 13

Subtotal (1 through 16) 373 66

All 59 others (17 through 75)

a

188 34

Total 561 100

Source: FinCEN. 

a

The number of requests submitted by each of these 59 entities (primarily FIUs) ranged from 1 to 9. 

Foreign customers other than FIUs were relatively few and included, for example, Interpol. 

One management priority of FinCEN is to periodically conduct customer 

satisfaction surveys. The purpose of such surveys is to “identify strengths 

and opportunities to improve services to external clients.”27 FinCEN 

contracted with an independent research organization to conduct the most 

recent survey, which was designed and implemented during August to 

October 2005. 28 To obtain feedback on FinCEN’s support for investigative 

 27Financial Crimes Enforcement Network, Strategic Plan FY 2006 – 2008, Safeguarding 

the Financial System from the Abuse of Financial Crime (February 2005, p. 22). 

28FinCEN’s previous survey was conducted in September to October 2003. 

Page 31 GAO-06-483 Combating Money Laundering and Terrorist Financing
cases, one survey instrument was used for both domestic law enforcement 

customers (federal, state, and local) and international customers (FIUs). 

The survey instrument was designed to obtain feedback on various aspects 

of FinCEN’s services provided during fiscal year 2005, such as the ease of

making requests, the timeliness of responses, and the value or usefulness 

of information provided. 

To facilitate distribution of the survey instrument, FinCEN provided the 

contractor with a list of 325 customers, a total consisting of both domestic 

and international customers. According to FinCEN, this total represented 

all customers who had requested assistance from FinCEN in fiscal year 

2005 and for whom FinCEN had valid e-mail addresses. All 325 customers 

were invited via e-mail to participate in the Web-based survey. 

Of the 325 customers, 41 were FIUs. In answering our inquiry, FinCEN 

officials were unable to explain why all FIUs that requested assistance 

from FinCEN in fiscal year 2005 were not included in the survey. 

Subsequently, from the 325 domestic and international customers invited 

to participate in the survey, a total of 78 responses were collected, giving 

an overall response rate of 24 percent. Although not broken out separately 

in the contractor’s final report, the FIU-related response rate was much 

lower, with only 2 of the 41 FIUs responding. 

As a result of the low response rate from the FIUs, insufficient information 

was received to help FinCEN identify strengths and opportunities to 

improve services to external clients. FinCEN did receive feedback on the 

level of satisfaction for two FIUs, which is helpful; however, the 

experiences of the two FIUs cannot be interpreted as representing the 

experiences of other FIUs. 

Generally, in conducting a survey, various efforts to promote the highest 

possible response rate can be considered during both survey development 

and survey administration. During survey development, consideration can 

be given to individual and organization characteristics that may affect the

prospective respondents’ level of cooperation in completing the survey. 

For instance, the prospective respondents may not want to be critical of 

the survey’s sponsor. Another factor that affects cooperation is the burden 

that completing the survey instrument imposes on prospective 

respondents in terms of their time and the level of effort required to 

understand the questions and formulate responses. Pretesting the survey 

instrument is a way to help evaluate whether the potentially adverse 

effects of these types of factors have been minimized. Further, during 

Page 32 GAO-06-483 Combating Money Laundering and Terrorist Financing
survey administration, follow-up efforts with prospective respondents can 

help to promote the highest possible response rate. Such follow-up efforts 

can include e-mail messages, letters, or telephone calls. FinCEN officials 

told us they were unaware why the response rate from FIUs was low or 

whether the survey included any follow-up efforts to obtain responses 

from additional FIUs. 

In perspective, periodic surveys of customers are not the only method 

used by FinCEN to obtain performance feedback. For instance, in 

responding to each request for assistance from FIUs, the practice of 

FinCEN is to include an accompanying form that solicits feedback 

regarding the timeliness of FinCEN’s response and the usefulness of the 

specific information provided. According to FinCEN officials, many of the

feedback forms either are not returned or are returned with annotations 

indicating, for example, that the usefulness of the information provided by

FinCEN may not be known until some future date. However, even if

request-specific feedback is obtained, FinCEN officials recognize the 

benefits of conducting more comprehensive efforts, such as the periodic 

customer satisfaction surveys. This recognition, as mentioned previously, 

is reflected in FinCEN’s Strategic Plan. 

FinCEN plays a critically important role in international efforts to combat 

money laundering and terrorist financing. It has been a leader in the 

adoption and implementation of international money laundering 

countermeasures and supporting and advancing the Egmont Group’s 

principles and activities. A key part of FinCEN’s international role has 

been its efforts to respond to requests for information related to possible 

international financial crime. Yet, FinCEN’s method for obtaining 

performance feedback data from global partners is flawed. Relevant

feedback data include whether FIUs find the information provided by 

FinCEN to be substantive, timely, and useful—or how information-sharing 

efforts could be improved. Without such data, FinCEN is not in the best 

position to help the international community combat financial crime. 

Conclusions 

In its Strategic Plan, FinCEN recognizes the importance of periodically

surveying its customers to “identify strengths and opportunities to 

improve services.” However, FinCEN’s most-recent customer satisfaction 

survey of its global partners had limited coverage—with less than one-half

of all FIUs being invited to participate. Also, the response rate was very 

low, with no follow-up efforts directed specifically at nonresponding FIUs. 

In the future, FinCEN’s customer satisfaction surveys of FIUs need to be

more inclusive and reflect higher response rates if the surveys are to serve 

as a useful management information tool for monitoring and enhancing 

Page 33 GAO-06-483 Combating Money Laundering and Terrorist Financing
performance. The importance of monitoring and improving performance 

by obtaining feedback from customers is highlighted by the new 

operational role of FIUs in combating terrorist financing—a role in which 

the sharing or exchanging of information can be especially time critical. 

We recommend that the Director of FinCEN take appropriate steps in 

developing and administering future customer satisfaction surveys to help

ensure more comprehensive coverage of and higher response rates from 

FIUs. For example, such steps could include pretesting the survey 

instrument and following-up with nonresponding FIUs. 

We provided a draft of this report for comment to the departments of the 

Treasury, State, Homeland Security, and Justice, and the Federal Reserve

Board. We received written responses from each agency. 

The Department of the Treasury responded that it supports our 

recommendation that the Director of FinCEN take appropriate steps in 

developing and administering future customer satisfaction surveys to help

ensure more comprehensive coverage of and higher response rates from 

FIUs. The Department of the Treasury commented that it is committed to 

ensuring that customer surveys provide reliable performance feedback. 

The Department of State commented that our October 2005 report—

Terrorist Financing: Better Strategic Planning Needed to Coordinate 

U.S. Efforts to Deliver Counter-Terrorism Financing Training and 

Technical Assistance Abroad (GAO-06-19)—was not relevant for 

discussion in this report. In our view, however, the October 2005 report 

provides relevant perspectives on interagency coordination and strategic 

planning, so we retained a brief discussion of it in this report. The 

Department of State also provided a technical comment regarding section 

311 of the USA PATRIOT Act, which we incorporated where appropriate.

The Department of Homeland Security and the Federal Reserve Board 

responded that they had no comments on this report. The Department of 

Justice provided technical comments only, which we incorporated in this 

report where appropriate. 

Recommendation for 

Executive Action 

Agency Comments 

and Our Evaluation 

As arranged with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days after the 

date of this report. At that time, we will send copies of this report to 

Page 34 GAO-06-483 Combating Money Laundering and Terrorist Financing
interested congressional committees and subcommittees. We will also 

make copies available to others on request. In addition, this report will be 

available at no charge on GAO’s Web site at http://www.gao.gov. 

If you or your staff have any questions about this report or wish to discuss 

the matter further, please contact me at (202) 512-8777 or stanar@gao.gov. 

Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this report. Other key contributors 

to this report were Danny Burton, Frederick Lyles, Natasha Ewing, 

Thomas Lombardi, and Evan Gilman. 

Sincerely yours, 

Richard M. Stana 

Director, Homeland Security and Justice Issues 

Page 35 GAO-06-483 Combating Money Laundering and Terrorist Financing
Appendix I: 

Methodology 

Objectives, Scope, and 

Page 36 GAO-06-483

Appendix I: Objectives, Scope, and 

Methodology 

In response to a request from the Chairman, House Committee on the 

Judiciary, we reviewed the global or international-related efforts of the 

Department of the Treasury and the Financial Crimes Enforcement 

Network (FinCEN) to combat money laundering and terrorist financing. 

Section 330 of the USA PATRIOT Act expresses the sense of the Congress

that the President should direct the Secretary of State, the Attorney 

General, or the Secretary of the Treasury, in consultation with the Board 

of Governors of the Federal Reserve, to seek to enter into negotiations 

with foreign jurisdictions that may be utilized by a foreign terrorist 

organization in order to further cooperative efforts to ensure that foreign 

banks and other financial institutions maintain adequate records of 

transactions and account information relating to any foreign terrorist 

organization or member thereof.1

 The negotiators should also seek to 

establish a mechanism whereby those records would be made available to 

U.S. law enforcement officials and domestic financial institution 

supervisors, when appropriate. 

Objectives 

Section 361 of the USA PATRIOT Act established FinCEN as a statutory 

bureau in the Treasury Department and listed FinCEN’s various duties and 

powers, which include coordinating with foreign counterparts—that is, 

financial intelligence units (FIUs) in other countries.2

 These units are 

specialized governmental agencies created to combat money laundering,

terrorist financing, and other financial crimes. Each FIU is the respective 

nation’s central agency responsible for obtaining information (e.g., 

suspicious transaction reports) from financial institutions, processing or 

analyzing the information, and then disseminating it to appropriate 

authorities. 

Specifically, our review focused on the following questions regarding 

efforts under sections 330 and 361 of the USA PATRIOT Act to combat 

money laundering and terrorist financing: 

 1

Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept 

and Obstruct Terrorism (USA PATRIOT) Act of 2001, Pub. L. No. 107-56, § 330, 115 Stat. 

272, 320. 

2

Codified as amended at 31 U.S.C. § 310. 

 Combating Money Laundering and Terrorist Financing
Appendix I: Objectives, Scope, and 

Methodology 

• Under section 330 of the USA PATRIOT Act, how has the Department 

of the Treasury interacted or negotiated with foreign jurisdictions to 

promote cooperative efforts to combat money laundering and terrorist 

financing? 

• Under section 361, how has FinCEN contributed to establishing FIUs in 

foreign countries and enhancing the capabilities of these units to 

combat money laundering and terrorist financing?

• What actions is FinCEN taking to maximize its performance as a global 

partner in combating money laundering and terrorist financing? 

Initially, in addressing the principal questions, we reviewed sections 330 

and 361 of the USA PATRIOT Act and relevant legislative histories. Also, 

we reviewed information available on the Web sites of federal entities, 

including the departments of the Treasury (and FinCEN), Justice, State, 

and Homeland Security. Similarly, we reviewed information available on 

the Web sites of relevant multilateral or international bodies, such as 

(1) the Financial Action Task Force on Money Laundering (FATF), an 

intergovernmental entity whose purpose is to establish international 

standards and to develop and promote policies for combating money 

laundering and terrorist financing;3

 (2) the various FATF-style regional 

bodies; (3) the International Monetary Fund; (4) the World Bank; and 

(5) the Egmont Group of FIUs.4

 To obtain additional background and 

overview perspectives, we conducted a literature search to identify 

relevant reports, studies, articles, and other documents—including 

congressional hearing testimony—regarding U.S. and multilateral efforts 

to combat money laundering and terrorist financing. 

Scope and 

Methodology 

 3

FATF has issued “Forty Recommendations on Money Laundering” and “Nine Special 

Recommendations on Terrorist Financing.” Collectively, FATF’s “40 plus 9”

recommendations are widely recognized as the international standards for combating 

money laundering and terrorist financing. 

4

On June 9, 1995, representatives of various nations (including the United States) and 

international organizations met at the Egmont-Arenberg palace in Brussels, Belgium, to

discuss ways to enhance mutual cooperation in combating the global problem of money 

laundering. A result was creation of the Egmont Group, whose members are the specialized 

anti-money-laundering organizations known as FIUs. 

Page 37 GAO-06-483 Combating Money Laundering and Terrorist Financing
Appendix I: Objectives, Scope, and 

Methodology 

Regarding section 330 of the USA PATRIOT Act, to determine how the 

Department of the Treasury has interacted or negotiated with foreign 

jurisdictions to promote cooperative efforts to combat money laundering 

and terrorist financing, we interviewed responsible officials at and 

reviewed relevant documentation obtained from the departments of the 

Treasury, Justice, and State and the Federal Reserve Board. Also, because

our preliminary inquiries indicated that efforts to accomplish the goals 

articulated under section 330 largely involve interactions with multilateral 

organizations—particularly FATF—we focused especially on the efforts of 

Treasury’s Office of Terrorist Finance and Financial Crime, which leads 

the U.S. delegation to FATF and is the department’s policy and 

enforcement entity regarding money laundering and terrorist financing. 

Further, because section 330 does not specify any consequences or 

penalties for noncooperative parties or countries, we determined the 

availability of incentive or pressure mechanisms that could be used in 

conjunction with negotiations. In this regard, on the basis of Treasury’s 

response to our inquiry, we identified federal actions taken under USA 

PATRIOT Act section 311, which authorizes the Secretary of the 

Treasury—in consultation with the Secretary of State and the Attorney 

General—to find that reasonable grounds exist for concluding that a 

foreign jurisdiction, a financial institution, a class of transactions, or a type 

of account is of “primary money laundering concern.”5

 If such a finding is

made, U.S. financial institutions could be required to take certain “special

measures” against the applicable jurisdictions, institutions, accounts, or 

transactions. The special measures can range from enhanced record 

keeping or reporting obligations to a requirement to terminate 

correspondent banking relationships with the designated entity. 

Treasury Department 

Efforts to Accomplish 

Goals Articulated under 

Section 330 of the USA 

PATRIOT Act 

FinCEN Contributions to 

Establishing FIUs in 

Foreign Countries and 

Enhancing Their 

Capabilities 

In addressing this topic, we first obtained data on the annual growth in the 

number of FIUs over the past decade—from 1995, when the Egmont 

Group of FIUs was formed, to the present. Also, we obtained overview 

information on the history, purposes, and functioning of FIUs. For 

instance, the overview information—which was available on the Egmont 

Group’s Web site (www.egmontgroup.org) or was otherwise published—

included the following: 

 5

Codified as amended at 31 U.S.C. § 5318A. 

Page 38 GAO-06-483 Combating Money Laundering and Terrorist Financing
Appendix I: Objectives, Scope, and 

Methodology 

• Statement of Purpose of the Egmont Group of Financial Intelligence 

Units, 

• Principles for Information Exchange Between Financial Intelligence 

Units for Money Laundering and Terrorism Financing Cases, 

• Best Practices for the Exchange of Information between Financial 

Intelligence Units, and 

• International Monetary Fund and World Bank, Financial Intelligence 

Units—An Overview, 2004. 

In further reference to establishing FIUs and enhancing their capabilities, 

we obtained information on the efforts (e.g., training and technical 

support) of FinCEN and other federal contributors, such as Treasury’s 

Office of Technical Assistance and the State Department. In so doing, we 

interviewed responsible officials at and reviewed relevant documentation

obtained from FinCEN, Treasury, and State. The federal officials we 

contacted included FinCEN’s Deputy Director, who chairs the Egmont 

Committee, which functions as the consultation and coordination 

mechanism for FIU heads and the Egmont Group’s five working groups 

(information technology, legal, operational, training, and outreach).6

 The 

documentation we reviewed included FinCEN’s annual reports and 

strategic plans as well as the international narcotics control strategy 

reports released annually by the State Department’s Bureau for 

International Narcotics and Law Enforcement Affairs—reports that 

present information on FinCEN’s and other federal agencies’ efforts to 

create and improve FIUs. In identifying these federal efforts, we did not 

attempt to disaggregate or separately quantify contributions attributable to 

the respective federal agency. Rather, we made inquiries regarding any

potential issues involving interagency coordination of federal efforts. 

Further regarding the capability of FIUs, we identified and reviewed 

available studies or reports. In particular, we reviewed a report prepared 

by the International Monetary Fund (IMF) and the World Bank that 

presented comparative or multicountry results based on mutual 

evaluations of nations’ compliance with the FATF recommendations. The 

study—Twelve-Month Pilot Program of Anti-Money-Laundering and 

 6

The Egmont Committee is composed of a chair, two co-vice chairs, the chairs of the

Egmont Group’s five working groups, and regional representation from Africa, Asia, 

Europe, the Americas, and Oceania. 

Page 39 GAO-06-483 Combating Money Laundering and Terrorist Financing
Appendix I: Objectives, Scope, and 

Methodology 

Combating the Financing of Terrorism (AML/CFT) Assessments–Joint 

Report on the Review of the Pilot Program, March 10, 2004—summarized 

the results of the mutual evaluations of 41 jurisdictions, conducted during

the 12-month period that ended in October 2003. The assessments used a 

common methodology adopted by FATF and endorsed by the Executive 

Boards of IMF and the World Bank.7

To obtain more current transnational perspectives on the capability of 

FIUs, we attended (as an observer) the most recent annual plenary 

meeting (June 30 to July 1, 2005) of the Egmont Group. At the plenary 

meeting, held in Washington, D.C., a summary of FIU-related assessment 

findings was presented. The information was derived from the results of 

mutual evaluations or assessments (of 29 countries) conducted from 2003 

to 2005 using the common methodology endorsed by FATF, IMF, and the 

World Bank. 

Actions FinCEN Is Taking 

to Maximize Its 

Performance as a Global 

Partner in Combating 

Money Laundering and 

Terrorist Financing 

We inquired about FinCEN’s efforts to update or modernize the Egmont 

Secure Web, which is the Internet-based communications system 

developed and maintained by FinCEN and used by FIUs worldwide to 

share or exchange information. Generally, the Egmont Secure Web is 

considered to be of paramount importance to the operations of FinCEN 

and foreign FIUs. For instance, the Egmont Group’s guidelines—Best 

Practices for the Exchange of Information between Financial 

Intelligence Units—state that, where appropriate, FIUs should use the 

Egmont Secure Web, which permits secure online information sharing 

among members. FinCEN is in the process of modernizing the system’s 

1997 architecture by acquiring upgraded hardware and software. A large 

majority (96) of the Egmont Group’s 101 members are connected to the 

Egmont Secure Web. 

Also, we reviewed annual statistical information on international-related 

requests for assistance in developing or investigating cases. Specifically, 

for fiscal years 2002 to 2005, we obtained statistics on requests for 

 7

The common methodology reflects the principles of the FATF recommendations. See 

International Monetary Fund and World Bank, Joint Report on the Methodology for 

Assessing Compliance with the FATF 40 Recommendations and the FATF 8 Special

Recommendations–Supplementary Information (March 16, 2004). The common 

methodology was updated in 2005—Methodology for Assessing Compliance with the FATF

40 Recommendations and the FATF 9 Special Recommendations (updated as of February

2005). 

Page 40 GAO-06-483 Combating Money Laundering and Terrorist Financing
Appendix I: Objectives, Scope, and 

Methodology 

assistance submitted by foreign FIUs to FinCEN. To the extent permitted 

by available data, we analyzed the statistical information on incoming 

requests in reference to the subject matter of the request, the country of 

submission, and the timeliness of FinCEN’s response to the submitting 

FIU. We did not analyze the quality of FinCEN’s responses to the incoming 

requests for assistance. However, we reviewed the results of the most 

recent customer feedback survey conducted by FinCEN. Also, we inquired 

about FinCEN’s efforts to better monitor or improve timeliness 

performance by developing a new case management system and assigning

additional employees to the Office of Global Support, which is responsible 

for processing requests from foreign FIUs. 

Further, we inquired about FinCEN’s efforts to enhance its analytical

capabilities to handle more complex cases and support the nation’s focus

on detecting and preventing terrorist financing. For example, we 

contacted the Federal Bureau of Investigation’s (FBI) Terrorist Financing 

Operations Section and the Foreign Terrorist Tracking Task Force. 

We conducted our work from June 2005 to March 2006 in accordance with 

generally accepted government auditing standards. Regarding the 

statistical information we obtained from FinCEN—i.e., information 

concerning requests for assistance submitted by foreign FIUs to FinCEN—

we discussed the sources of the data with FinCEN officials and worked 

with them to resolve discrepancies we identified with the data they 

provided. As resolved and presented in this report, we determined that 

these data were sufficiently reliable for the purposes of this review. 

Data Reliability 

Page 41 GAO-06-483 Combating Money Laundering and Terrorist Financing
A

Related Regional Bodies 

ppendix II: Financial Action Task Force and

Page 42 GAO-06-483

Appendix II: Financial Action Task Force and 

Related Regional Bodies 

This appendix presents summary information regarding the purposes and 

functioning of the Financial Action Task Force on Money Laundering and 

the various FATF-style regional bodies—international entities whose 

mission focuses on combating money laundering and terrorist financing. 

The summary information is derived largely from FATF’s Web site 

(www.fatf-gafi.org), which provides links to the regional bodies. Also, we 

discussed the information with Treasury Department officials.

Initially, FATF was created in 1989 by the G7 nations in response to 

growing concerns about money laundering.1

 However, after the events of 

September 11, FATF’s mission was expanded to combat the financing of 

terrorism. The mission of FATF consists of three principal activities—(1) 

setting standards for combating money laundering and terrorist financing, 

(2) evaluating the progress of nations in implementing measures to meet 

the standards, and (3) identifying and studying methods and trends 

regarding money laundering and terrorist financing. In fulfilling this 

mission, FATF is assisted by various FATF-style regional bodies that have 

been established since 1992. As table 5 indicates, FATF and the related 

regional bodies encompass member jurisdictions around the globe. 

The Financial Action 

Task Force and 

Related Regional 

Bodies Encompass 

Member Jurisdictions 

around the Globe 

 1

The group of G7 nations—Canada, France, Germany, Italy, Japan, the United Kingdom, 

and the United States—has been expanded to include Russia. Annual G8 summits bring 

together the leaders of these nations—with participation of the European Union 

(represented by the President of the European Council and the President of the European

Commission)—to discuss a broad-based agenda of international, economic, political, and

social issues. 

 Combating Money Laundering and Terrorist Financing
Appendix II: Financial Action Task Force and

Related Regional Bodies 

Table 5: Establishment Dates and Membership of FATF and FATF-Style Regional Bodies

Number and names of member jurisdictions (as of July 2005) FATF and FATF-style

regional bodies

Year 

established Number Names 

FATF 1989 33 Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, 

France, Germany, Greece, Hong Kong, China, Iceland, Ireland, Italy, Japan, 

Luxembourg, Mexico, the Kingdom of the Netherlands, New Zealand, Norway, 

Portugal, the Russian Federation, Singapore, South Africa, Spain, Sweden,

Switzerland, Turkey, United Kingdom, United States, the European 

Commission,a

 and the Gulf Cooperation Councilb

Caribbean Financial 

Action Task Force 

 1992 30 Antigua and Barbuda, Anguilla, Aruba, The Bahamas, Barbados, Belize, 

Bermuda, the British Virgin Islands, the Cayman Islands, Costa Rica, 

Dominica, Dominican Republic, El Salvador, Grenada, Guatemala, Guyana, 

Republic of Haiti, Honduras, Jamaica, Montserrat, the Netherlands Antilles, 

Nicaragua, Panama, St. Kitts and Nevis, St. Lucia, St. Vincent and the 

Grenadines, Suriname, the Turks and Caicos Islands, Trinidad and Tobago, 

and Venezuela

Asia/Pacific Group on

Money Laundering 

1997 29 Australia, Bangladesh, Brunei Darussalam, Cambodia, Chinese Taipei, Cook 

Islands, Fiji Islands, Hong Kong (China), India, Indonesia, Japan, Republic of 

Korea, Macau (China), Malaysia, the Marshall Islands, Mongolia, Nepal, New 

Zealand, Niue, Pakistan, Palau, the Philippines, Samoa, Singapore, Sri Lanka, 

Thailand, Tonga, the United States,c

 and Vanuatu 

Select Committee of 

Experts on the 

Evaluation of AntiMoney Laundering 

Measures 

(MONEYVAL) 

1997 27dAlbania, Andorra, Armenia, Azerbaijan, Bosnia and Herzegovina, Bulgaria, 

Croatia, Cyprus, Czech Republic, Estonia, Georgia, Hungary, Latvia, 

Liechtenstein, Lithuania, Macedonia, Malta, Moldova, Monaco, Poland, 

Romania, the Russian Federation, San Marino, Serbia and Montenegro, 

Slovakia, Slovenia, and Ukraine 

Eastern and South 

Africa Anti-Money 

Laundering Group 

1999 12 Botswana, Kenya, Malawi, Mauritius, Mozambique, Namibia, Swaziland, 

Seychelles, Tanzania, Uganda, Zambia, and Zimbabwe 

GAFISUD (South 

America) 

2000 9 Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, and 

Uruguay. 

Eurasia FATF 2004 6 Belarus, China, Kazakhstan, Kyrgyz Republic, the Russian Federation, and 

Tajikistan 

Middle East and North 

Africa FATF 

2004 14 Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, 

Saudi Arabia, Syria, Tunisia, the United Arab Emirates, and Yemen 

Source: GAO, based on review of Web sites of FATF and regional bodies and verification by Treasury Department officials. 

a

The European Commission is the executive arm of the European Union and is responsible for 

implementing the decisions of the European Parliament and the Council of the European Union. 

b

The Gulf Cooperation Council—officially known as the Cooperation Council for the Arab States of the 

Gulf—was established in 1981 to promote stability and economic cooperation among the Persian Gulf

nations of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Although the 

Gulf Cooperation Council is a full member of FATF, the individual member countries are not. 

c

The United States is a founding member of the Asia/Pacific Group on Money Laundering. 

d

In addition to its 27 permanent members, MONEYVAL has 2 temporary members designated on a 2-

year basis by the FATF presidency. For the period 2005-2006, the 2 temporary members are France 

and the Netherlands. 

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FATF recommendations are designed to ensure that each nation has in 

place a set of countermeasures against money laundering and terrorist 

financing. In 1990, FATF issued its “Forty Recommendations on Money 

Laundering.” In October 2001, the month following the terrorist attacks in

the United States, FATF issued “Eight Special Recommendations on 

Terrorist Financing.” More recently, in October 2004, FATF published a 

ninth special recommendation on terrorist financing to target cross-border 

movements of currency and monetary instruments. Table 6 summarizes 

the “Forty Recommendations on Money Laundering” and the “Nine Special 

Recommendations on Terrorist Financing.” 

FATF 

Recommendations 

Provide a Set of 

Countermeasures 

against Money 

Laundering and 

Terrorist Financing 

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Table 6: FATF Recommendations on Money Laundering and Terrorist Financing

Forty Recommendations on Money Laundering 

Number Recommendation

1 Scope of the criminal offense of money laundering: Countries should criminalize money laundering on the basis of United 

Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988 (the Vienna Convention) and 

United Nations Convention against Transnational Organized Crime, 2000 (the Palermo Convention). Countries should apply 

the crime of money laundering to all serious offenses, with a view to including the widest range of predicate offenses. 

Predicate offenses may be described by reference to all offenses, or to a threshold linked either to a category of serious 

offenses or to the penalty of imprisonment applicable to the predicate offense (threshold approach), or to a list of predicate 

offenses, or a combination of these approaches. 

2 Criminal intent/legal persons: Countries should ensure that (a) The intent and knowledge required to prove the offense of

money laundering is consistent with the standards set forth in the Vienna and Palermo Conventions, including the concept 

that such mental state may be inferred from objective factual circumstances. (b) Criminal liability and, where that is not 

possible, civil or administrative liability should apply to legal persons. This should not preclude parallel criminal, civil, or 

administrative proceedings with respect to legal persons in countries in which such forms of liability are available. Legal 

persons should be subject to effective, proportionate, and dissuasive sanctions. Such measures should be without prejudice 

to the criminal liability of individuals. 

3 Provisional measures and confiscation: Countries should adopt measures similar to those set forth in the Vienna and 

Palermo Conventions, including legislative measures, to enable their respective competent authorities to confiscate property 

laundered, proceeds from money laundering or predicate offenses, instrumentalities used in or intended for use in the 

commission of these offense, or property of corresponding value, without prejudicing the rights of bona fide third parties. 

4 Financial secrecy: Countries should ensure that financial institution secrecy laws do not inhibit implementation of FATF

recommendations. 

5 Customer due diligence: Financial institutions should not keep anonymous accounts or accounts in obviously fictitious 

names. Financial institutions should undertake customer due diligence measures, including identifying and verifying the

identity of their customers. 

6 Politically exposed persons: Financial institutions should, in relation to politically exposed persons, in addition to performing 

normal due diligence measures (a) have appropriate risk management systems to determine whether the customer is a 

politically exposed person, (b) obtain senior management approval for establishing business relationships with such 

customers, (c) take reasonable measures to establish the source of wealth and source of funds, and (d) conduct enhanced 

ongoing monitoring of the business relationship. Examples of politically exposed persons include individuals who are heads 

of state or of government; senior politicians; senior government, judicial, or military officials; senior executives of stateowned corporations; and important political party officials. 

7 Cross-border correspondence: Financial institutions should, in relation to cross-border correspondent banking and other 

similar relationships, in addition to performing normal due diligence measures (a) gather sufficient information about a 

respondent institution to understand fully the nature of the respondent’s business and to determine from publicly available 

information the reputation of the institution and the quality of supervision, including whether it has been subject to a money 

laundering or terrorist financing investigation or regulatory action; (b) assess the respondent institution’s anti-moneylaundering and terrorist financing controls; (c) obtain approval from senior management before establishing new 

correspondent relationships; (d) document the respective responsibilities of each institution; and (e) with respect to payablethrough accounts, be satisfied that the respondent bank has verified the identity of and performed ongoing due diligence on 

the customers having direct access to accounts of the correspondent and that it is able to provide relevant customer 

identification data upon request to the correspondent bank.

8 Non-face-to-face business relationships or transactions: Financial institutions should pay special attention to any money 

laundering threats that may arise from new or developing technologies that might favor anonymity, and take measures, if 

needed, to prevent their use in money laundering schemes. In particular, financial institutions should have policies and 

procedures in place to address any specific risks associated with non-face-to-face business relationships or transactions. 

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Forty Recommendations on Money Laundering 

Number Recommendation

9 Intermediaries/introduced business: Countries may permit financial institutions to rely on intermediaries or other third parties 

to perform elements...of the customer due diligence process or to introduce business, provided that...[specified] 

criteria...are met. Where such reliance is permitted, the ultimate responsibility for customer identification and verification 

remains with the financial institution relying on the third party. 

10 Record keeping: Financial institutions should maintain, for at least 5 years, all necessary records on transactions, both 

domestic or international, to enable them to comply swiftly with information requests from the competent authorities. Such 

records must be sufficient to permit reconstruction of individual transactions (including the amounts and types of currency 

involved if any) so as to provide, if necessary, evidence for prosecution of criminal activity. Financial institutions should keep 

records on the identification data obtained through the customer due diligence process (e.g., copies or records of official 

identification documents like passports, identity cards, driving licenses or similar documents), account files and business

correspondence for at least 5 years after the business relationship is ended. The identification data and transaction records 

should be available to domestic competent authorities upon appropriate authority. 

11 Attention to complex, unusual transactions: Financial institutions should pay special attention to all complex, unusual large 

transactions, and all unusual patterns of transactions, which have no apparent economic or visible lawful purpose. The 

background and purpose of such transactions should, as far as possible, be examined, the findings established in writing, 

and be available to help competent authorities and auditors.

12 Customer due diligence and record keeping for designated nonfinancial businesses and professions: The customer due 

diligence and recordkeeping requirements set out in Recommendations 5, 6, and 8 to 11 apply to designated non-financial 

businesses and professions in...[certain] situations. [Note: These entities include casinos; real estate agents; dealers in

precious metals and stones; lawyers, notaries, other independent legal professionals and accountants; and trust and 

company service providers.] 

13 Suspicious transaction reporting: If a financial institution suspects or has reasonable grounds to suspect that funds are the 

proceeds of a criminal activity, or are related to terrorist financing, it should be required, directly by law or regulation, to 

report promptly its suspicions to the financial intelligence unit. 

14 Protection for suspicious transaction reporting/tipping off: Financial institutions, their directors, officers, and employees 

should be (a) protected by legal provisions from criminal and civil liability for breach of any restriction on disclosure of 

information imposed by contract or by any legislative, regulatory, or administrative provision, if they report their suspicion in 

good faith to the financial intelligence unit, even if they did not know precisely what the underlying criminal activity was, and 

regardless of whether illegal activity actually occurred and (b) prohibited by law from disclosing the fact that a suspicious 

transaction report or related information is being reported to the financial intelligence unit 

15 Internal policies and controls/screening, training, audit: Financial institutions should develop programs against money 

laundering and terrorist financing. These programs should include (a) the development of internal policies, procedures, and 

controls, including appropriate compliance management arrangements, and adequate screening procedures to ensure high 

standards when hiring employees; (b) an ongoing employee training program; and (c) an audit function to test the system. 

16 Suspicious transaction reporting and internal controls for designated non-financial businesses and professions: The 

requirements set out in Recommendations 13 to 15 and 21 apply to all designated non-financial businesses and 

professions, subject to... certain] qualifications. 

17 Sanctions: Countries should ensure that effective, proportionate, and dissuasive sanctions, whether criminal, civil, or 

administrative, are available to deal with natural or legal persons covered by these Recommendations that fail to comply

with anti-money laundering or terrorist financing requirements. 

18 Shell banks: Countries should not approve the establishment or accept the continued operation of shell banks. Financial

institutions should refuse to enter into, or continue, a correspondent banking relationship with shell banks. Financial 

institutions should also guard against establishing relations with respondent foreign financial institutions that permit their

accounts to be used by shell banks. 

19 Cross-border transportation of currency: Countries should consider the feasibility and utility of a system where banks and 

other financial institutions and intermediaries would report all domestic and international currency transactions above a fixed

amount, to a national central agency with a computerized data base, available to competent authorities for use in money 

laundering or terrorist financing cases, subject to strict safeguards to ensure proper use of the information. 

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Number Recommendation

20 Application to other businesses and professions: Countries should consider applying the FATF Recommendations to 

businesses and professions, other than designated non-financial businesses and professions, that pose a money 

laundering or terrorist financing risk. Countries should further encourage the development of modern and secure techniques 

of money management that are less vulnerable to money laundering. 

21 Attention to transactions with problem countries: Financial institutions should give special attention to business relationships 

and transactions with persons, including companies and financial institutions, from countries which do not or insufficiently 

apply the FATF Recommendations. Whenever these transactions have no apparent economic or visible lawful purpose, 

their background and purpose should, as far as possible, be examined, the findings established in writing, and be available 

to help competent authorities. Where such country continues not to apply or insufficiently applies the FATF

Recommendations, countries should be able to apply appropriate counter-measures. 

22 Application to branches and subsidiaries: Financial institutions should ensure that the principles applicable to financial 

institutions, which are mentioned above, are also applied to branches and majority-owned subsidiaries located abroad, 

especially in countries which do not or insufficiently apply the FATF Recommendations, to the extent that local applicable

laws and regulations permit. When local applicable laws and regulations prohibit this implementation, competent authorities 

in the country of the parent institution should be informed by the financial institutions that they cannot apply the FATF

Recommendations. 

23 Supervision/regulation; prevention of criminals from positions: Countries should ensure that financial institutions are subject 

to adequate regulation and supervision and are effectively implementing the FATF Recommendations. Competent 

authorities should take the necessary legal or regulatory measure to prevent criminals or their associates from holding or

being the beneficial owner of a significant or controlling interest or holding a management function in a financial institution. 

24 Supervision/regulation for designated non-financial businesses and professions: Designated non-financial businesses and 

professions should be subject to regulatory and supervisory measures ... Casinos should be subject to a comprehensive

regulatory and supervisory regime that ensures that they have effectively implemented the necessary anti-money 

laundering and terrorist-financing measures....Countries should ensure that the other categories of designated non-financial 

businesses and professions are subject to effective systems for monitoring and ensuring their compliance with requirements 

to combat money laundering and terrorist financing. 

25 Guidelines for detecting suspicious transactions/providing feedback: The competent authorities should establish guidelines 

and provide feedback which will assist financial institutions and designated non-financial businesses and professions in

applying national measures to combat money laundering and terrorist financing, and in particular, in detecting and reporting 

suspicious transactions. 

26 Financial intelligence unit establishment/powers: Countries should establish a financial intelligence unit that serves as a

national center for the receiving (and, as permitted, requesting), analysis, and dissemination of suspicious transaction

reports and other information regarding potential money laundering or terrorist financing. The financial intelligence unit 

should have access, directly or indirectly, on a timely basis to the financial, administrative, and law enforcement information

that it requires to properly undertake its functions, including the analysis of suspicious transaction reports. 

27 Designated law enforcement resources; investigative techniques: Countries should ensure that designated law enforcement 

authorities have responsibility for money laundering and terrorist financing investigations. Countries are encouraged to 

support and develop, as far as possible, special investigative techniques suitable for the investigation of money laundering, 

such as controlled delivery, undercover operations, and other relevant techniques. Countries are also encouraged to use

other effective mechanisms such as the use of permanent or temporary groups specialized in asset investigation, and 

cooperative investigations with appropriate competent authorities in other countries. 

28 Document production, search and seizure powers: When conducting investigations of money laundering and underlying 

predicate offenses, competent authorities should be able to obtain documents and information for use in those 

investigations, and in prosecutions and related actions. This should include powers to use compulsory measures for the 

production of records held by financial institutions and other persons, for the search of persons and premises, and for the 

seizure and obtaining of evidence. 

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Number Recommendation

29 Supervisory powers to monitor: Supervisors should have adequate powers to monitor and ensure compliance by financial 

institutions with requirements to combat money laundering and terrorist financing, including the authority to conduct 

inspections. They should be authorized to compel production of any information from financial institutions that is relevant to 

monitoring such compliance, and to impose adequate administrative sanctions for failure to comply with such requirements. 

“Supervisors” refers to designated competent authorities responsible for ensuring compliance by financial institutions with 

requirements to combat money laundering and terrorist financing. 

30 Adequate resources for competent authorities: Countries should provide their competent authorities involved in combating 

money laundering and terrorist financing with adequate financial, human, and technical resources. Countries should have in 

place processes to ensure that the staff of those authorities are of high integrity. 

31 Domestic cooperation: Countries should ensure that policymakers, the financial intelligence, law enforcement and 

supervisors have effective mechanisms in place which enable them to cooperate, and where appropriate coordinate 

domestically with each other concerning the development and implementation of policies and activities to combat money 

laundering and terrorist financing. 

32 Maintenance of statistics: Countries should ensure that their competent authorities can review the effectiveness of their 

systems to combat money laundering and terrorist financing systems by maintaining comprehensive statistics on matters 

relevant to the effectiveness and efficiency of such systems. This should include statistics on the suspicious transaction

reports received and disseminated; on money laundering and terrorist financing investigations, prosecutions, and 

convictions; on property frozen, seized, and confiscated; and on mutual legal assistance or other international requests for 

cooperation. 

33 Use of legal persons; beneficial ownership: Countries should take measures to prevent the unlawful use of legal persons by 

money launderers. Countries should ensure that there is adequate, accurate, and timely information on the beneficial 

ownership and control of legal persons that can be obtained or accessed in a timely fashion by competent authorities. In

particular, countries that have legal persons that are able to issue bearer shares should take appropriate measures to 

ensure that they are not misused for money laundering and be able to demonstrate the adequacy of those measures. 

Countries could consider measures to facilitate access to beneficial ownership and control information to financial 

institutions undertaking the requirements set out in Recommendation 5. 

34 Transparency for legal arrangements/trusts: Countries should take measures to prevent the unlawful use of legal 

arrangements by money launderers. In particular, countries should ensure that there is adequate, accurate, and timely 

information on express trusts, including information on the settler, trustee, and beneficiaries, that can be obtained or 

accessed in a timely fashion by competent authorities. Countries should consider measures to facilitate access to beneficial 

ownership and control information to financial institutions undertaking the requirements set out in Recommendation 5.

35 International conventions: Countries should take immediate steps to become a party to and implement fully the Vienna 

Convention, the Palermo Convention, and the 1999 United Nations International Convention for the Suppression of the

Financing of Terrorism. Countries are also encouraged to ratify and implement other relevant international conventions, 

such as the 1990 Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from 

Crime, and the 2002 Inter-American Convention against Terrorism. 

36 Mutual legal assistance: Countries should rapidly, constructively, and effectively provide the widest possible range of mutual 

legal assistance in relation to money laundering and terrorist financing investigations, prosecutions, and related

proceedings. In particular, countries should (a) not prohibit or place unreasonable or unduly restrictive conditions on the 

provision of mutual legal assistance, (b) ensure that they have clear and efficient processes for the execution of mutual

legal assistance requests, (c) not refuse to execute a request for mutual legal assistance on the sole ground that the 

offense is also considered to involve fiscal matters, and (d) not refuse to execute a request for mutual legal assistance on 

the grounds that laws require financial institutions to maintain secrecy or confidentiality. Countries should ensure that the 

powers of their competent authorities required under Recommendation 28 are also available for use in response to requests 

for mutual legal assistance, and if consistent with their domestic framework, in response to direct requests from foreign 

judicial or law enforcement authorities to domestic counterparts. To avoid conflicts of jurisdiction, consideration should be 

given to devising and applying mechanisms for determining the best venue for prosecution of defendants in the interests of 

justice in cases that are subject to prosecution in more than one country. 

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Forty Recommendations on Money Laundering 

Number Recommendation

37 Provision of mutual legal assistance without dual criminality: Countries should, to the greatest extent possible, render 

mutual legal assistance notwithstanding the absence of dual criminality. Where dual criminality is required for mutual legal 

assistance or extradition, that requirement should be deemed to be satisfied regardless of whether both countries place the 

offense within the same category of offense or denominate the offense by the same terminology, provided that both 

countries criminalize the conduct underlying the offense. 

38 Freezing, seizing, and confiscating at foreign request; sharing confiscated assets: There should be authority to take 

expeditious action in response to requests by foreign countries to identify, freeze, seize, and confiscate property laundered, 

proceeds from money laundering or predicate offenses, instrumentalities used in or intended for use in the commission of 

these offenses, or property of corresponding value. There should also be arrangements for coordinating seizure and 

confiscation proceedings, which may include the sharing of confiscated assets. 

39 Extradition: Countries should recognize money laundering as an extraditable offense. Each country should either extradite 

its own nationals, or where a country does not do so solely on the grounds of nationality, that country should, at the request 

of the country seeking extradition, submit the case without delay to its competent authorities for the purpose of prosecution 

of the offenses set forth in the request. Those authorities should take their decision and conduct their proceedings in the 

same manner as in the case of any other offense of a serious nature under the domestic law of that country. The countries 

concerned should cooperate with each other, in particular on procedural and evidentiary aspects, to ensure the efficiency of 

such prosecutions. Subject to their legal frameworks, countries may consider simplifying extradition by allowing direct 

transmission of extradition requests between appropriate ministries, extraditing persons based only on warrants of arrests or 

judgments, and/or introducing a simplified extradition of consenting persons who waive formal extradition proceedings. 

40 International cooperation and exchange of information: Countries should ensure that their competent authorities provide the 

widest possible range of international cooperation to their foreign counterparts. There should be clear and effective 

gateways to facilitate the prompt and constructive exchange directly between counterparts, either spontaneously or upon 

requests, of information relating to both money laundering and the underlying predicate offenses. Exchanges should be

permitted without unduly restrictive conditions. In particular, (a) competent authorities should not refuse a request for 

assistance on the sole ground that the request is also considered to involve fiscal matters; (b) countries should not invoke 

laws that require financial institutions to maintain secrecy or confidentiality as a ground for refusing to provide cooperation; 

and (c) competent authorities should be able to conduct inquiries and, where possible, investigations on behalf of foreign 

counterparts. Where the ability to obtain information sought by a foreign competent authority is not within the mandate of its 

counterparts, countries are also encouraged to permit a prompt and constructive exchange of information with noncounterparts. Cooperation with foreign authorities other than counterparts could occur directly or indirectly. When uncertain 

about the appropriate avenue to follow, competent authorities should first contact their foreign counterparts for assistance. 

Countries should also establish controls and safeguards to ensure that information exchanged by competent authorities is 

used only in an authorized manner, consistent with their obligations concerning privacy and data protection. 

Nine Special Recommendations on Terrorist Financing

Number Recommendations

I Ratification and implementation of UN instruments: Each country should take immediate steps to ratify and to implement 

fully the1999 United Nations International Convention for the Suppression of the Financing of Terrorism. Countries should 

also immediately implement the United Nations resolutions relating to the prevention and suppression of the financing of 

terrorist acts, particularly United Nations Security Council Resolution 1373. 

II Criminalizing the financing of terrorism and associated money laundering: Each country should criminalize the financing of 

terrorism, terrorist acts, and terrorist organizations. Countries should ensure that such offenses are designated as money 

laundering predicate offenses. 

III Freezing and confiscating terrorist assets: Each country should implement measures to freeze without delay funds or other 

assets of terrorists, those who finance terrorism and terrorist organizations in accordance with the United Nations 

resolutions relating to the prevention and suppression of the financing of terrorist acts. Each country should also adopt and 

implement measures, including legislative ones, which would enable the competent authorities to seize and confiscate

property that is the proceeds of, or used in, or intended or allocated for use in, the financing of terrorism, terrorist acts, or 

terrorist organizations. 

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IV Reporting suspicious transactions related to terrorism: If financial institutions, or other businesses or entities subject to antimoney laundering obligations, suspect or have reasonable grounds to suspect that funds are linked or related to, or are to 

be used for terrorism, terrorist acts or by terrorist organizations, they should be required to report promptly their suspicions 

to the competent authorities. 

V International cooperation: Each country should afford another country, on the basis of a treaty, arrangement, or other 

mechanism for mutual legal assistance or information exchange, the greatest possible measure of assistance in connection 

with criminal, civil enforcement, and administrative investigations, inquiries, and proceedings relating to the financing of 

terrorism, terrorist acts, and terrorist organizations. Countries should also take all possible measures to ensure that they do

not provide safe havens for individuals charged with the financing of terrorism, terrorist acts, or terrorist organizations, and 

should have procedures in place to extradite, where possible, such individuals. 

VI Alternative remittance: Each country should take measures to ensure that persons or legal entities, including agents, that 

provide a service for the transmission of money or value, including transmission through an informal money or value transfer 

system or network, should be licensed or registered and subject to all the FATF recommendations that apply to banks and 

non-bank financial institutions. Each country should ensure that persons or legal entities that carry out this service illegally 

are subject to administrative, civil, or criminal sanctions. 

VII Wire transfers: Countries should take measures to require financial institutions, including money remitters, to include 

accurate and meaningful originator information (name, address, and account number) on funds transfers and related 

messages that are sent, and the information should remain with the transfer or related message through the payment chain. 

Countries should take measures to ensure that financial institutions, including money remitters, conduct enhanced scrutiny 

of and monitor for suspicious activity funds transfers which do not contain complete originator information (name, address, 

and account number). 

VIII Non-profit organizations: Countries should review the adequacy of laws and regulations that relate to entities that can be 

abused for the financing of terrorism. Non-profit organizations are particularly vulnerable, and countries should ensure that 

they cannot be misused (a) by terrorist organizations posing as legitimate entities; (b) to exploit legitimate entities as 

conduits for terrorist financing, including for the purpose of escaping asset freezing measures; and (c) to conceal or obscure 

the clandestine diversion of funds intended for legitimate purposes to terrorist organizations. 

IX Cash couriers: Countries should have measures in place to detect the physical cross-border transportation of currency and 

bearer negotiable instruments, including a declaration system or other disclosure obligation. Countries should ensure that 

their competent authorities have the legal authority to stop or restrain currency or bearer negotiable instruments that are 

suspected to be related to terrorist financing or money laundering, or that are falsely declared or disclosed. Countries 

should ensure that effective, proportionate, and dissuasive sanctions are available to deal with persons who make false 

declaration(s) or disclosure(s). In cases where the currency or bearer negotiable instruments are related to terrorist 

financing or money laundering, countries should also adopt measures, including legislative ones consistent with 

Recommendation 3 and Special Recommendation III, which would enable the confiscation of such currency or instruments. 

Source: GAO, based on review of FATF materials.

Collectively, these “40 plus 9” recommendations issued by FATF are 

recognized as the international standards for combating money laundering

and terrorist financing. Although the FATF recommendations do not 

constitute a binding international convention, many countries—e.g., 

member nations of FATF and the FATF-style regional bodies—have made

a political commitment to combat money laundering and terrorist 

financing by implementing the recommendations. Moreover, the 

international community has recognized the need for monitoring to ensure 

that countries effectively implement the FATF recommendations. 

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One of the means for monitoring compliance with FATF recommendations 

is a mutual evaluation process whereby a team of experts conducts on-site 

visits to assess the progress of member countries. To guide the assessment 

of a country’s compliance with international standards, a widely adopted 

methodology is used—Methodology for Assessing Compliance with the

FATF 40 Recommendations and the FATF 9 Special Recommendations

(updated as of February 2005).2

 In addition to its use by FATF mutual 

evaluation teams, the Methodology has also been approved or endorsed by

the FATF-style regional bodies and the Executive Boards of the 

International Monetary Fund and the World Bank. 

A Widely Adopted 

Methodology Is Used 

for Monitoring 

Compliance with 

Financial Action Task 

Force 

Recommendations 

The Methodology reflects the principles and follows the structure of the 

FATF recommendations. For each of the recommendations, the 

Methodology enumerates elements (“essential criteria”) that should be 

present for full compliance. For instance, table 3 shows the essential 

criteria used for assessing implementation of FATF Recommendation 26, 

which calls for each nation to establish and empower a financial 

intelligence unit. 

 2

Copy available at www.fatf-gafi.org. 

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Table 3: Essential Criteria Used in the Methodology for Monitoring Implementation of FATF Recommendation 26

Essential criterion

reference number Subject of the essential criteria 

26.1 Countries should establish an FIU that serves as a national center for receiving (and if permitted, requesting), 

analyzing, and disseminating disclosures of suspicious transaction reports and other relevant information

concerning suspected money laundering or financing of terrorism activities. The FIU can be established either 

as an independent governmental authority or within an existing authority or authorities. 

26.2 The FIU or another competent authority should provide financial institutions and other reporting parties with

guidance regarding the manner of reporting, including the specification of reporting forms and the procedures 

that should be followed when reporting. 

26.3 The FIU should have access, directly or indirectly, on a timely basis to the financial, administrative, and law

enforcement information that it requires to properly undertake its functions, including the analysis of suspicious 

transaction reports. 

26.4 The FIU, either directly or through another competent authority, should be authorized to obtain from reporting 

parities additional information needed to properly undertake its functions.

26.5 The FIU should be authorized to disseminate financial information to domestic authorities for investigation or 

action when there are grounds to suspect money laundering or the financing of terrorism.

26.6 The FIU should have sufficient operational independence and autonomy to ensure that it is free from undue 

influence or interference. 

26.7 Information held by the FIU should be securely protected and disseminated only in accordance with the law. 

26.8 The FIU should publicly release periodic reports, and such reports should include statistics, typologies, and 

trends as well as information regarding its activities. 

26.9 Where a country has created an FIU, it should consider applying for membership in the Egmont Group. 

26.10 Countries should have regard to the Egmont Group Statement of Purpose and its Principles for Information 

Exchange Between Financial Intelligence Units for Money Laundering Cases. (These documents set out 

important guidance concerning the role and functions of FIUs and the mechanisms for exchanging information 

between FIUs.) 

Source: GAO, based on review of FATF materials. 

Page 52 GAO-06-483 Combating Money Laundering and Terrorist Financing
Appendix III: The Egmont 

Intelli

Group of Financial 

gence Units 

Page 53 GAO-06-483

Appendix III: The Egmont Group of Financial 

Intelligence Units 

This appendix presents summary information regarding the growth of the 

Egmont Group, which is an informal global association of governmental 

operating units created to support their respective nation’s or territory’s 

efforts to combat money laundering and terrorism financing. More 

detailed information about the purposes and functioning of the Egmont 

Group and its members is available at the entity’s Web site 

(www.egmontgroup.org).1

On June 9, 1995, representatives of various nations (including the United

States) and international organizations met at the Egmont-Arenberg palace 

in Brussels, Belgium, to discuss ways to enhance mutual cooperation in 

combating the global problem of money laundering. A result was creation 

of the Egmont Group, whose members are the specialized anti-moneylaundering organizations known as financial intelligence units. In 

attendance at the 1995 meeting were representatives of 14 of these 

governmental units (“disclosure-receiving agencies”) that became the first 

Egmont Group members. In the decade since 1995, the group’s 

membership has increased significantly, reaching a total of 101 

jurisdictions as of July 2005 (see table 8). 

The Egmont Group of 

Financial Intelligence 

Units Has Grown 

Significantly since 

1995 

 1

Another useful resource is a handbook prepared jointly by the International Monetary

Fund and the World Bank, Financial Intelligence Units: An Overview (2004). 

 Combating Money Laundering and Terrorist Financing
Appendix III: The Egmont Group of Financial 

Intelligence Units 

Table 8: Egmont Group Membership by Year and Jurisdiction

Financial intelligence units admitted into Egmont Group membership during the year 

Calendar 

year Number Jurisdiction (countries and territories) 

Cumulative number of

Egmont Group members

(as of year end)

1995 14 Australia, Austria, Belgium, France, Iceland, Luxembourg, Monaco, the 

Netherlands, Norway, Slovenia, Spain, Sweden, United Kingdom, and the 

United States 

14

1996 0 None 14

1997 14 Aruba, Chile, the Czech Republic, Denmark, Guernsey, Hong Kong, Hungary, 

Ireland, Isle of Man, Italy, Mexico, New Zealand, Panama, and Slovakia 

28

1998 10 Croatia, Cyprus, Finland, Greece, Jersey, the Netherlands Antilles, Paraguay, 

Switzerland, Taiwan, and Turkey 

38

1999 10 Bermuda, Bolivia, Brazil, British Virgin Islands, Bulgaria, Costa Rica, Latvia, 

Lithuania, Portugal, and Venezuela 

48

2000 5 Colombia, the Dominican Republic, Japan, Estonia, and Romania 53

2001 5 The Bahamas, Cayman Islands, El Salvador, Liechtenstein, and Thailand 58

2002 11 Andorra, Barbados, Canada, Israel, Marshall Islands, Poland, Russia, 

Singapore, South Korea, United Arab Emirates, and Vanuatu 

69

2003 

15 Albania, Anguilla, Antigua and Barbuda, Argentina, Bahrain, Dominica, 

Germany, Guatemala, Lebanon, Malaysia, Malta, Mauritius, Serbia, South 

Africa, and St. Vincent and the Grenadines 

84

2004 

10 Belize, Cook Islands, Egypt, Georgia, Gibraltar, Grenada, Indonesia, 

Macedonia, St. Kitts and Nevis, and Ukraine

94

2005a

7 Bosnia and Herzegovina, Honduras, Montenegro, Peru, Philippines, Qatar,

and San Marino. 

101

Source: FinCEN. 

a

The admissions in calendar year 2005 and the cumulative total are as of July 2005.

The common purpose of every FIU is to combat money laundering and 

terrorism financing. This purpose is reflected in the Egmont Group’s 

definition of an FIU, which is as follows: 

“A central, national agency responsible for receiving, (and as permitted, requesting), 

analyzing and disseminating to the competent authorities, disclosures of financial 

information: 

The Egmont Group 

Provides a Network 

for Exchanging 

Information 

I. concerning suspected proceeds of crime and potential financing of terrorism, or 

II. required by national legislation or regulation, in order to combat money laundering 

and terrorism financing.”2

 2

Egmont Group, Statement of Purpose of the Egmont Group of Financial Intelligence

Units, www.egmontgroup.org (2006). 

Page 54 GAO-06-483 Combating Money Laundering and Terrorist Financing
Appendix III: The Egmont Group of Financial 

Intelligence Units 

This definition, which was adopted in June 2004 at the Egmont Group’s 

plenary meeting in Guernsey, reflects an expansion of the role of FIUs to 

include combating terrorist financing. 

Facilitating cross-border information sharing is a core goal of the Egmont 

Group. To enhance such sharing and provide guidelines, the Egmont 

Group has generated two documents—(1) Principles for Information 

Exchange between Financial Intelligence Units for Money Laundering 

and Terrorism Financing Cases and (2) Best Practices for the Exchange 

of Information between Financial Intelligence Units. In part, the 

Principles document provides that 

• “FIUs should be able to exchange information freely with other FIUs on the basis of 

reciprocity or mutual agreement and consistent with procedures understood by the 

requested and requesting party. Such exchange, either upon request or spontaneously, 

should provide any available information that may be relevant to an analysis or 

investigation of financial transactions and other relevant information and the persons 

or companies involved.” 

• “An FIU requesting information should disclose, to the FIU that will process the 

request, at a minimum the reason for the request, the purpose for which the

information will be used and enough information to enable the receiving FIU to 

determine whether the request complies with its domestic law.” 

• “Information exchanged between FIUs may be used only for the specific purpose for 

which the information was sought or provided.” 

• “The requesting FIU may not transfer information shared by a disclosing FIU to a third 

party, nor make use of the information in an administrative, investigative, 

prosecutorial, or judicial purpose without the prior consent of the FIU that disclosed 

the information.” 

The Best Practices document specifies that “the exchange of information 

between FIUs should take place as informally and as rapidly as possible 

and with no excessive formal requirements, while guaranteeing protection 

of privacy and confidentiality of the shared data” and that, where 

appropriate, FIUs should use the Egmont Secure Web. Further, among 

other guidelines, the document provides that 

• “If necessary the requesting FIU should indicate the time by which it needs to receive 

an answer. Where a request is marked ‘urgent’ or a deadline is indicated, the reasons

for the urgency or deadline should be explained.” 

Page 55 GAO-06-483 Combating Money Laundering and Terrorist Financing
Appendix III: The Egmont Group of Financial 

Intelligence Units 

• “FIUs should give priority to urgent requests. If the receiving FIU has concerns about 

the classification of a request as urgent, it should contact the requesting FIU 

immediately in order to resolve the issue. Moreover, each request, whether or not 

marked as ‘urgent,’ should be processed in the same timely manner as domestic 

requests for information.” 

• “As a general principle, the requested FIU should strive to reply to a request for 

information, including an interim response, within 1 week from receipt in the following 

circumstances: 

• if it can provide a positive/negative answer to a request regarding information it has

direct access to; 

• if it is unable to provide an answer due to legal impediments.” 

• “Whenever the requested FIU needs to have external databases searched or query third 

parties (such as financial institutions), an answer should be provided within 1 month

after receipt of the request.” 

• “If the results of the enquiries are still not all available after 1 month, the requested FIU 

should provide the information it already has in its possession or at least give an 

indication of when it will be in a position to provide a complete answer. This may be 

done orally.”

• “FIUs should consider establishing mechanisms in order to monitor request-related 

information, enabling them to detect new information they receive regarding

transactions, STRs [suspicious transaction reports], etc., that are involved in previously 

received requests. Such a monitoring system would enable FIUs to inform former 

requesters of new and relevant material related to their prior request.” 

(440426) Page 56 GAO-06-483 Combating Money Laundering and Terrorist Financing
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