Treasury Strikes Gold: Big Changes Ahead for FinCEN, Others?

With international money laundering figures on the rise, the United States government is currently weighing its options with respect to bolstering the federal budget with increased allowances for national financial intelligence and sanctions units. The Treasury Department’s Office of Terrorism and Financial Intelligence, as well as their Financial Crimes Enforcement Network (FinCEN), are both expected to receive significant boosts in their overall funding, should their recent proposals be accepted. As of early last week, the U.S. Treasury Department has requested a whopping $212 million to upgrade its foreign intelligence, sanctions and anti-terrorism protocols in the fiscal year of 2023 – a 14.5% increase over 2022’s mere 5.8% raise in funding. The request comes upon the completion of a lengthy Treasury-led audit of U.S. sanctions policy that found its overall sanctions implementation and follow-through processes as grossly unfavorable. The Wall Street Journal writes that the results of the audit published in October hinted that the agency would need to “adapt and modernize its underlying operational architecture to meet the emerging challenges that could potentially reduce the efficacy of sanctions, including cybercrimes, technological innovations such as digital currencies and new methods of hiding cross-border transactions”³

            While FinCEN has evolved into arguably the most critical government bureau with respect to maintaining the integrity of both the American and international financial marketplace, the agency’s funding and staffing levels have not adequately kept pace with its expanding scope. Many in Washington have taken notice of these developments, including U.S. Deputy Treasury Secretary Wally Adeyemo, who called for more funding and staff for his department as a whole to better combat pervasive threats to national security, most notably those posed by increasingly sophisticated ransomware attacks and growing cryptocurrency markets. Adeyemo also backed the implementation of newer and more comprehensive anti-money laundering laws to protect United States interests from bad actors who have successfully exploited the global financial system with little resistance over the last decade. In wake of Adeyemo’s plea, President Biden has requested to increase the budget for the bureau by nearly 30% to $210 million (from $161 million) in 2022. The proposals would “increase oversight of the financial sector, strengthen corporate accountability, and provide adequate support to law enforcement and investigative entities” and modernize the sanctions process, the request says.² It would also nearly double the size of FinCEN’s staff to approximately 420 employees.

            While these financial boosts are largely expected to make these divisions far more effective, some anti-money laundering (AML) experts are not convinced that this will be enough. Tom Cardamone, president and chief executive of nonprofit anti-corruption group Global Financial Integrity (GFI), believes these moves are doing the bare minimum. “The budget boost will help FinCEN catch up; it won’t help them get where they need to be,” Carmadone told the International Consortium of Investigative Journalists (ICIJ).² Cardamone also raised concerns that many top AML/CFT analysts have already shared about FinCEN: they are severely understaffed, underfunded, and overwhelmed. A report published by GFI last year expressed as much, stating, “It is an agency that is struggling … to meet the nation’s emerging money laundering challenges of the coming decade and beyond.” Also adding that the U.S. government “should not see these realities as acceptable and impervious to change.”¹

                        The Biden administration already has a reputation with its detractors for what is seen as reckless spending, so this large increase in funding in the midst of a period of ongoing humanitarian and economic crises will do them no favors. Time will tell however if these investments will ultimately pay off for the U.S. government in its ongoing crusade against financial crime.

Citations

1. Hudson, Michael, and Ben Hallman. “Major Reforms Needed at ‘Struggling’ Us Agency That Leads Dirty Money Fight, Report Says.” ICIJ, 1 Mar. 2021. 
2. Sadek, Nicole.  “US Budget Proposal Seeks to Modernize Fincen and Sanctions Policy.” ICIJ, 30 Mar. 2022. 
3. Sun, Mengqi. “New Federal Budget Seeks Increases for Financial Intelligence and Sanctions Units.” The Wall Street Journal, Dow Jones & Company, 29 Mar. 2022.