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Financial Services Law Insights and Observations

FinCEN issues advisory on connection between politically exposed persons and financial facilitators

Financial Crimes FinCEN Sanctions International Anti-Money Laundering SARs

Financial Crimes

On June 12, the Financial Crimes Enforcement Network (FinCEN) issued an advisory to U.S. financial institutions to increase awareness of the connection between high-level political corruption and human rights abuses. The advisory highlights the use of financial facilitators as a means to gain access to global financial systems for the purpose of moving or hiding illicit proceeds and evading U.S. and global sanctions. Among other things, the advisory, which is designed to assist financial institutions in identifying and reporting suspicious activity, provides typologies used by “politically exposed persons” (PEPs) to access the U.S. financial system and obscure illicit activity. FinCEN also provides several red flags outlining various types of suspected schemes that may be indicators of suspicious activity. The advisory’s regulatory guidance further reminds financial institutions of their risk-based, due diligence obligations, which include (i) identifying legal entities owned or controlled by PEPs (as required by FinCEN’s Customer Due Diligence Rule); (ii) complying with anti-money laundering program obligations; and (iii) filing Suspicious Activity Reports related to illegal activity undertaken by senior foreign political figures.

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