Security Brief: Illicit Finance and Economic Threats Week of June 28, 2021
Week of Monday, June 28, 2021 | Issue 36
Michelle Kaplun and Emma Palmberg, Illicit Finance and Economic Threats (IFET) Team
United States Dollar
Date: Wednesday, June 30, 2021
Location: United States (US)
Parties involved: Financial Crimes and Enforcement Network (FinCEN); US Department of the Treasury
The event: On Wednesday, June 30, 2021, FinCEN issued the first government-wide priorities for anti-money laundering and countering the financing of terrorism (AML/CFT) policy (the “Priorities”), following consultation with other relevant Department of the Treasury offices, as well as Federal and State regulators, law enforcement, and national security agencies. The priorities identify and describe the most significant AML/CFT threats in the US. These threats include corruption, cybercrime, domestic and international terrorist financing, fraud, transnational criminal organizations, drug trafficking organizations, human trafficking, and human smuggling, and proliferation financing.
The release of these government-wide priorities will likely allow for a more cohesive approach to financial crime by the federal government. This step must be taken as one in the right direction for the US, as it shows FinCEN’s seriousness in combating both money laundering and terrorist financing.
If successful, diverse state and local governments will likely adopt the priorities, which will improve the US’ defensive position against such crimes. As well, it is possible that other national governments will look to adopt similar priorities, especially if the “Priorities” prove to be successful.
Date: Thursday, July 1, 2021
Location: United States (US)
Parties involved: US Department of State; US Representative Eliot Engel; Central American presidential aides, top judges, and former presidents
The event: On Thursday, July 1, 2021, Central American presidential aides, top judges, and former presidents were added to a list that names individuals the US government accuses of corruption, obstructing justice, or undermining democracy. The list, called “Engel List,” was created under a law sponsored by then-US Representative Eliot Engel and endorsed by Congress in December 2020. The enactment required the State Department to assemble within 180 days a list of high profile individuals it regarded as corrupt in the Northern Triangle countries of El Salvador, Honduras, and Guatemala.
The compilation of this list will likely assist in current and future investigations into corruption in Central and South America, including possible investigations into issues such as drug trafficking, money laundering, bribery, and political subversion.
With the publication of this list, there is a potential for political shifts in the governments of El Salvador, Honduras, and Guatemala, with the possible resignations and prosecution of individuals who are on the list.
Date: Friday, July 2, 2021
Parties involved: Tasnim News Agency; Iranian Parliament Commission on Economy; Central Bank of Iran
The event: A new bill drafted by the Iranian Parliament Commission on Economy aims to restrict the use of cryptocurrencies within the country while providing a more transparent legal framework for miners. According to a report on Friday, July 2, 2021, by the Tasnim News Agency, Iranian lawmakers drafted a bill titled “Support for cryptocurrency mining and organizing the domestic market for exchanges,” which the country’s parliament first announced on June 23. If passed, the legislation would make Iran’s central bank the regulatory authority for the exchange of cryptocurrencies in the country. Under the bill, all cryptocurrencies could be prohibited within Iran for payments except for a "national" one — purportedly a central bank digital currency or tokens minted in the private sector.
If Iran’s parliament passes this bill, it could reduce foreign trading in Iran, leading to fewer economic opportunities for growth and expansion into the international market, possibly having a negative effect on Iran’s economy.
While the proposed means of better regulating cryptocurrency could potentially result in fewer issues with illicit financing, the Iranian Central Bank itself has been known to be heavily involved in the government as a whole, including in matters of corruption. If this legislation is passed, there is a chance that the policies would provide the means for the Central Bank to have power over cryptocurrency for illicit purposes.
Date: Saturday, July 3, 2021
Parties involved: On Saturday, July 3, 2021, former boxer-turned-senator Manny Pacquiao claimed that more than $204 million USD in pandemic aid, intended for low-income families, is unaccounted for, adding that this was just one of the discoveries in his corruption investigation. On Thursday, July 1, 2021, Pacquiao accepted Philippine President Rodrigo Duterte's challenge to show evidence of corruption in his government, and the boxing superstar said his findings of missing funds were the tip of the iceberg.
If the aid from the US was used for corrupt purposes on the part of Duterte, it is likely it will have ramifications on US aid in the future, not only towards the Philippines but possibly towards other countries where there is concern about financial corruption. Less assistance is likely to be sent, with a lengthier process of verifying that aid is used for its correct purpose.
If this corruption is as far-reaching as Pacquiao states, then it is likely that the Philippines’ government has intentionally underfunded several aid-based projects. This means that the corruption would not have had only a direct impact on pandemic relief for low-income families, but had an indirect impact as several initiatives to raise living standards were also likely underfunded during the pandemic.
Human rights organizations have heavily documented the corruption and violence associated with Duterte’s “war on drugs” in the Philippines. Yet little has been done in the international community to pressure Duterte’s administration to protect human rights. If these corruption charges are proven true, they may be the final incentive for the international community to look more closely into not only newer cases of corruption but the long-lasting impacts of the “war on drugs” plaguing the Philippines.
 FinCEN Issues First National AML/CFT Priorities and Accompanying Statements, Financial Crimes Enforcement Network (FinCEN), June 2021, https://www.fincen.gov/news/news-releases/fincen-issues-first-national-amlcft-priorities-and-accompanying-statements
 Central American officials blacklisted by U.S. as part of corruption crackdown, Reuters, July 2021, https://www.reuters.com/world/americas/central-american-aides-judges-former-presidents-us-corruption-list-2021-07-01/
 Proposed bill in Iran could ban all foreign-mined cryptocurrencies, CoinTelegraph, July 2021, https://cointelegraph.com/news/proposed-bill-in-iran-could-ban-all-foreign-mined-cryptocurrencies
 Boxer Pacquiao backs corruption claims with missing public funds allegation, Reuters, July 2021, https://www.reuters.com/world/europe/boxer-pacquiao-backs-corruption-claims-with-missing-public-funds-allegation-2021-07-03/