

High Intensity Drug Trafficking Area (HIDTA) is a designation made by the United States government for areas of the country that experience a particularly high volume of drug trafficking. HIDTA programs are intended to help law enforcement agencies in the fight against drug crime but also serve to inform organizations, such as financial institutions, that must deal with associated criminal activities such as money laundering.
Given the increased AML/CFT risk of doing business in HIDTAs, or with customers from HIDTAs, it is important that firms understand what the designation entails and how to implement a suitable AML response
The High Intensity Drug Trafficking Area program was established by US congress with the passage of the Anti-Drug Abuse Act of 1988 with the goal of enhancing the United States’ national fight against drug crime. The program is run by the Office of National Drug Control Policy (ONDCP) and serves to aid and provide funding to ‘federal, state, local, and tribal law enforcement agencies operating in areas determined to be critical drug trafficking regions of the United States.’The program currently designates 29 HIDTAs across all 50 states, the District of Columbia, Puerto Rico, and the US Virgin Islands. HIDTAs take in 19.6% of all US counties and 67% of the total population and are usually located around a major city or border crossing.
In practice, the HIDTA program aims to ‘reduce drug trafficking and production’ by helping law enforcement agencies coordinate with each other. According to the ONDCP, this involves:
To achieve those objectives, HIDTA provides funding for hundreds of law enforcement initiatives throughout the US that are dedicated to enforcement, investigation and prosecution, intelligence gathering and information sharing, and drug abuse prevention and treatment.
HIDTA Risk Locations: While HIDTA programs are implemented across the US, some locations represent elevated levels of risk:
Following FATF recommendations, US financial regulations require banks, financial institutions, and other obligated entities to take a risk-based approach to AML/CFT compliance. With that in mind, the operation of a HIDTA program should inform the risk assessments that firms conduct as part of their AML/CFT obligations: customers with connections to HIDTAs present an elevated risk of involvement in money laundering activities that are related to drug offences and that risk should be reflected in the AML response.
Accordingly, firms should be aware of certain red flag characteristics of drug related money laundering, these include:
HIDTA Penalties: The risk considerations of HIDTAs directly concern compliance with the Bank Secrecy Act (BSA). Under BSA regulations, firms must adjust their AML response in proportion to the level of AML risk they face: compliance failures may be punished by fines of up to $250,000 or prison sentences of up to 5 years, or both.
Banks, financial institutions and other obligated entities must be able to develop and implement an AML program that takes HIDTA risk factors into account. Accordingly, an effective HIDTA-focused AML program should feature the following controls and measures:
Smart technology: Capturing the risk data linked to HIDTAs involves the analysis of vast amounts of customer data. Since manual analysis of that risk data is unfeasible, and carries the possibility of costly human errors, firms should seek to integrate smart technology tools that add automated speed, efficiency and accuracy to the compliance process.
Smart technology integration is particularly useful for HIDTA related AML risks because artificial intelligence and machine learning systems offer significant AML compliance advantages. Smart tools can be used to detect drug related red flag behaviors such as unusual transaction patterns or sudden changes in expected behaviors, and can also speed up the remediation process when suspicious activity is detected.
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