U.S. CONSUL GENERAL GREGORY SLAYTON’S SPEECH to the
Navigant Anti-Money Laundering Conference
June 4, 2008

• Good morning and welcome to Navigant’s Anti-Money Laundering Conference.  Thanks again to Navigant for hosting this important Conference. I am honored to be here.
• Today I’ll be talking about the importance of guarding against money laundering and combating terrorist financing.
• What is money laundering?  Money laundering is the practice of engaging in financial transactions in order to conceal the identity, source, and/or destination of money, and is the lifeblood of:
      §  Terrorist financing
      §  Drug trafficking,
      §  Human trafficking
      §  Gun running
      §  Other large scale criminal activities (i.e. smuggling)
  
• Money laundering is like a cancer traveling through a host’s circulatory system.  It can pop up anywhere and its presence can be catastrophic
• It is big (illegal) business around the world, but by its very nature, it is impossible to produce a reliable estimate of the amount of money laundered.
• However, the International Monetary Fund stated that the aggregate size of money laundering in the world could be somewhere between two and five percent of the world’s gross domestic product, which in 2007 was estimated at almost $66 trillion dollars.
• That works out to be an estimated $1 to $3 trillion annually (at a minimum, roughly the value of the total GDP of an economy the size of Spain - $1.2 trillion in 2006.)
• In the United States – especially since 9/11 – a major focus of American foreign and domestic policy has been the promotion of global economic security.

 

To implement that policy domestically, the President’s 2009 Budget seeks to: 

• Modernize money laundering information collection and analysis

That works out to be an estimated $1 to $3 trillion annually (at a minimum, roughly the value of the total GDP of an economy the size of Spain - $1.2 trillion in 2006.

      - Reduce the cost of compliance with reporting requirements.

      - Improve the quality and timeliness of data submitted, resulting in more accurate analyses.    

• Facilitate industry compliance with anti-money laundering initiatives

       - Streamline reporting requirements for the industry

      - Expand outreach to other regulators and the industry

      - Apply requirements consistently.

In partnership with our international allies like Bermuda and the UK, the U.S. seeks to:

• Strengthen global anti-money laundering effort

          - Increase sharing of financial intelligence throughout the U.S. intelligence community and with the nation's international partners.

• Strengthen international coordination and partnership

           - Promote continued outreach and cooperation with major trading partners and emerging economies.

• Protect the integrity of the international financial system.

          - national governments need to work with others to ensure that launderers are not able to continue to operate merely by moving to another location in which money laundering is tolerated.

• Promote good governance and rule of law worldwide
    - Money laundering supports the world’s worst crimes

• Thwarting terrorism funding is dependent on the development of a robust anti-money laundering regime.

• The U.S. – through the coordination of the Department of Homeland Security, the State Department, the Department of Justice, and various other governmental agencies – continues to develop and update its own AML/CFT regime to meet new challenges, and encourages its friends and allies around the world to do likewise. 

• The US government also encourages non-governmental agencies, such as financial institutions, to work together to fulfill the AML purposes under the USA PATRIOT Act.
• A great deal can be done to fight money laundering, and, indeed, many governments – like Bermuda – have already established comprehensive anti-money laundering regimes. These regimes aim to increase awareness of the phenomenon – both within the government and the private business sector – and then to provide the necessary legal or regulatory tools to the authorities charged with combating the problem.

• Some of these tools include making the act of money laundering a crime; giving investigative agencies the authority to trace, seize and ultimately confiscate criminally derived assets; and building the necessary framework for permitting the agencies involved to exchange information with counterparts in other countries.

• It is also critically important that governments include all relevant voices in developing a national anti-money laundering program. They should, for example, bring law enforcement and financial regulatory authorities together with the private sector to enable financial institutions to play a role in dealing with the problem.

• Anti-money laundering measures often force launderers to move to parts of the economy with weak or ineffective measures to deal with the problem. Again, a national system must be flexible enough to be able to extend countermeasures to new areas of its own economy.
• It is in Bermuda’s best interests to model only the highest global financial standards if it wants to safeguard its reputation as a premier financial services/international business jurisdiction.

• Bermuda presents some unique challenges:
       §  Its large offshore financial services sector is attractive to money launderers.
       §  Regulations are ever-changing, so it’s not easy to remain up to date –    whereas money launderers are always looking for new avenues and technologies
       §  There is a dearth of human resources (AML experts).

• We do not agree with the recent comments of UK Parliamentarian Edward Leigh who labeled Bermuda’s anti-money laundering effort “appalling.”  However, there is definitely room for improvement at the legislative and prosecutorial levels as the recent IMF Report made clear
  o   Improving regulatory regimes isn’t easy, but as the Dep P said yesterday, it is necessary. And it is a normal challenge for all countries. It’s called “growth.”

• In the Throne Speech, Premier Brown committed to addressing these concerns as a priority and upgrade relevant legislation as soon as possible.

• We are very pleased to see that commitment in action
  o   For example: the recent attendance of a Bermuda delegation at the Caribbean Financial Action Task Force 

• The delegation presented a progress report on Bermuda’s plans to strengthen not only anti-money laundering legislation but also legislation to combat terrorist financing.  The AML team is working diligently to address the recommendations made by the International Monetary Fund pursuant to the IMF’s May 2007 assessment.

• Further, the government distributed a consultative package to key stakeholders on May 1, 2008, to solicit views on the changes that are being proposed to enhance the effectiveness of the AML/CFT regime.  I understand that the deadline for comments is June 10, and I urge all those with a stake in making Bermuda’s legislative framework consistent with global standards to make their voices heard.

• IN CONCLUSION:
  o   AML is critically important in the fight against global terrorism, human trafficking and the war on drugs
  o   An effective AML regime must be world-wide – and international financial centers like Bermuda must lead the way
  o   The USG stand ready to help our friends here in Bermuda in any way we can as they strengthen BOTH AML legislation AND prosecutorial powers – and we salute them for their commitment to battling this worldwide financial cancer
• Thanks again to Navigant for hosting this important Conference
• Thank you for your attention.  I’d be happy to take questions.