The Federal Reserve regulates many of the large financial institutions that process cross border transactions; and our examiners spend significant resources on making sure that these banks have effective internal monitoring systems to identify, detect and report suspicious activities via Suspicious Activity Reports to the Financial Crimes Enforcement Network (FinCEN), the Financial Intelligence Unit of the United States. The rule of law is necessary for the operation of a safe and effective international financial system. That is why countries around the globe are following Financial Action Task Force (FATF) guidelines and expect their financial institutions to use a risk-based approach to monitor financial transactions for illicit conduct and financial crimes. Bribery involving government officials is particularly troubling because it directly hurts the very people the officials should be protecting. Around the globe, governments are constantly seeking to procure goods and services to sustain and improve their physical infrastructure in order to help their citizens and their countries. Governments often rely on a competitive bidding process to ensure that their expenditure of public funds is well-controlled and cost-effective. Unfortunately, corrupt officials and complicit companies have found ways to subvert the bidding process and squander limited public funds – funds which could have otherwise been used to help citizens lead better and more productive lives. Complicit companies overbid and then overcharge the government to fund bribes or kickbacks to government officials in order to obtain necessary approvals for infrastructure projects or contracts.

And undoubtedly, they thought the chances of getting caught were slim. However, when the scheme to inflate contracts and pay the associated bribes are made in U.S. dollars, the settlement of those transactions will usually be routed through the United States. This means that U.S. prosecutors will be able to take action against those involved – even if their local governments will not or cannot pursue criminal or civil cases in their home country. Many of the schemes I just mentioned were identified by banks around the globe and reported to authorities via Suspicious Activity Reports (SARs). Those banks helped root out international corruption schemes. The United States has robust anti-money laundering laws that date back to 1970. But every so often the U.S. makes major changes to its laws and regulations in response to a significant event or risks. The most prominent was the PATRIOT ACT after the 9-11 attacks in 2001. One year ago, the U.S. passed another significant piece of legislation – the Anti-Money Laundering Act of 2020, which has strengthened the position of the U.S. government to act against many financial crimes. Some of the measures include:  2/3  BIS central bankers' speeches  The unmasking of the true owners and controlling members of shell companies in the United States will establish transparency that is so vitally needed in our financial system. The increased obligations of foreign respondent banks that maintain accounts in the U.S. to comply with requests for information from U.S. agencies and commensurate penalties for ignoring those requests.