WASHINGTON DC, January 3 (IPS) – The writer is Director of Policy for Global Financial Integrity (GFI), a Washington, DC-based think tank that specializes in research, advocacy, and services. advise. Over the past decades, private equity has grown into a trillion-dollar industry. Private equity funds are vulnerable to money laundering because they contain many structural risk factors that help disguise illegal behavior.
A leaked 2020 bulletin from the Federal Bureau of Investigation (FBI) found that criminals were using “privately issued funds consisting of investments held by private equity firms and provided by hedge funds, to circumvent the anti-money laundering (AML) programs of other financial institutions and money laundering. money.”
New Global Financial Integrity (GFI) Report Private Equity Funds in Latin America: Money Laundering & Corruption Risks examine the money laundering risk factors associated with these private equity funds in Latin America.
It analyzes the circle of actors and supporters involved, the communication methods used by the perpetrators, and the channels used to transfer illicit funds. The report provides a series of case studies and regulatory analysis of AML by private equity funds in four countries; Brazil, Mexico, Chile and Argentina.
Tom Cardamone, President and CEO of GFI said: “Despite the huge size of the assets under management, the ‘family office’ has virtually no regulatory oversight in most jurisdictions. places in the world. “This is particularly relevant in relation to the close relationship between wealth and corruption in many parts of the world. The unregulated nature of these funds makes them a particularly useful means of concealing proceeds from corruption or money laundering.” Besides, Private equity funds in Latin America uses a series of case studies to highlight how the risks of money laundering, corruption and organized crime exist in private equity funds in Latin America.
Risk factors include a client base that typically includes wealthy individuals, including those with political connections; close relationship between fund managers and their clients (i.e. investors); the use of shell companies and trusts to manage investments; outsourcing operations and risk management; weak transparency on the source of wealth and money; and investment structures may include multiple accounts in different jurisdictions, including crypto and tax havens, with funds moving through a centralized account. The GFI in this report makes the following key recommendations:
- • The Brazilian government, which has the largest assets under management in the region, should be the first to adopt AML regulations to address future risks as they arise. Just as regulators pay more attention to family office structures and conduct industry risk assessments • Latin American regulators should consider regulating intermediaries and support professions for AML/CFT due diligence as they play an important role in allowing illicit money to move through the regional financial system but also to be invested in private equity funds abroad. • The United States, Switzerland, the Cayman Islands, Malta and other countries in the European Union should conduct a robust money laundering risk assessment for their private equity sector. • Latin American law enforcement agencies involved in investigating corruption, drug trafficking and organized crime need training in the intricacies of private equity funds and how they can be manipulated. used to conceal illegal assets.
Global Financial Integrity is a think tank based in Washington, DC that provides high-quality analysis of illicit financial flows, advising developing country governments on effective policy solutions. efficiency and promote pragmatic transparency measures in the financial system to promote global security and development.
IPS UN Office
Follow @IPSNewsUNBureau
Follow IPS News UN Office on Instagram
© Inter Press Service (2023) — All rights reservedOrigin: Inter Press Service
