It’s time for America to think differently about money laundering and risk assessment

There is a robust international network working to prevent money laundering. It’s called the FATF (Financial Action Task Force). It has headquarters in Paris and works through nine regional satellite organizations on every continent except Antarctica. It provides guidance to more than 100 countries on anti-money laundering best-practices, and it puts offenders and scofflaws on either a greylist (naughty) or blacklist (criminal) as a way to herd all these cats.

Now, the US has stepped back from its leadership role in the fight against financial crime. For an administration that is in the first inning, it is a breathtaking list of reversals. 

For example, the administration, through executive order, declared in February that the Foreign Corrupt Practices Act hinders our ability to pay bribes and thus compete. Then FinCEN (Financial Crimes Enforcement Network) issued a rule revision that removes the requirement for most U.S.-based companies to disclose their beneficial owners. So now US entities can hide their owners, while foreign entities must disclose. And a recent Wall Street Journal article stated that “Trump Administration Retreats From White-Collar Crime Enforcement.”

To you, this might feel like just another adjustment in regulatory burdens. But on the world stage, this kind of shift raises alarms and could lead to serious adverse consequences. In Paris, Le Monde called the suspension of the FCPA a “license to bribe.” Germany and other countries throughout the EU have expressed similar concerns.

Why should we care what the French have to say?

Your global reputation matters

Back in 2008, Bill Matthews, my good friend, started the SAFE Act, and thus was born the NMLS licensing system. It gave every loan officer a national reputation and elevated the position of loan officer to one more approximating other licensed professionals.

In the same spirit, FATF is a method by which international reputations are created, guarded or destroyed, rebuilt or ignored. The FATF works to identify countries that have serious strategic deficiencies when attempting to counter money laundering. They keep a blacklist of the real bad guys – North Korea, Iran and Myanmar are examples. The FATF calls on all nations to exercise enhanced due diligence and to apply “counter-measures” when dealing with these “blacklisted” countries. 

For those countries, so to speak, that are committing misdemeanors not felonies, they don’t end up on the blacklist, but on the greylist – just a little less bad. These countries are deemed by FATF to be defective but working on it. Fat but on a diet. Behind but working with a tutor. These nations include, among others, Algeria, Haiti, Syria, and Venezuela. They are at least trying.

And what are their deficiencies, most commonly? Their AML rules are ineffective. That’s the heart of it.

But now, the US has now taken positions on white-collar prosecutions, on bribery, on beneficial owners that make US anti-money laundering efforts much less ineffective. And at risk is our international reputation.

Greylisting is not just symbolic

So what happens now? We actually don’t need to guess what happens when the FATF loses confidence in a country. Just look at Turkey and the UAE, both of which were greylisted in recent years.

In 2022, Turkey was placed on the greylist for its money laundering deficiencies. As a result, they endured on-site inspections across all sectors and were required to conduct more financial investigations into potential money laundering. Turkey saw a sharp drop in foreign investment. Banking relationships with EU and U.S. institutions became more strained, and many correspondent banks took a magnifying glass to every single transaction done with them. Miserable.

Or consider the UAE, where despite being a global financial hub, they faced serious ramifications for ineffective AML regulations. It was removed from the greylist in 2024, and Moody’s commented that part of getting off the greylist required the UAE to ”boost international cooperation,” step up “investigations and prosecutions” and address the risk of “shell companies.”

If the U.S. were greylisted—Then what?

So these things the UAE needed to fix, these are exactly the three areas that the US is stepping away from – cooperation, prosecutions, shell companies.

And although it is unlikely that FATF would greylist the U.S. tomorrow, if you’re someone responsible for assessing institutional risk, you have to game this out:

1. What happens to U.S. interest rates if international banks begin pricing in higher reputational risk?

2. Will global investors hesitate before deploying capital into U.S. real estate markets?

3. Could home sales be affected, particularly in high-dollar markets where foreign buyers (via LLCs or trusts) play a large role?

4. Will international institutions begin applying stricter due diligence on U.S. clients and counterparties?

You don’t have to believe this will happen next week, but you should absolutely recognize it as a real and growing risk. You would be negligent in your risk assessment if you did not at least address the potential of international blow-back for these new US positions vis-à-vis AML protocols.

Conclusion:

In 1997, Apple’s ad campaign used the slogan “Think Different,” intentionally substituting the adjective for the correct adverb – differently. “Think different.” Perfect.

We all have to “think different.” None of this is normal.

As a BSA officer, your job is to assess risk. And currently, I would suggest that you resist the pre-programming in your brain that says, “nah, that can’t happen.” 

What could happen here if the US makes the greylist? Impaired ability to wire funds? Constricted foreign capital? China a memory? Increased burden on US companies doing business abroad? 

If you are inclined to disregard all this due to your heartfelt jingoism, think what would happen if another country like Venezuela or Mexico had made the moves we’ve just made. Other nations would punish them.

And though the US has through our “soft-power” created a substantial amount of goodwill around the world, that goodwill is not unlimited, and is, in this environment, arguably greatly reduced. Given tariffs and threats of tariffs, there may be a great number of nations that would like to see us hoisted by our own petard.”

If you are responsible for BSA/AML compliance, or if you are in risk assessment, you have to mentally go to some pretty dark places right now. 

Think different.

Bob Simpson is the CEO of DaylightAML
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the editor responsible for this piece: zeb@hwmedia.com.