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GLOBAL TRENDS
The emerging global trends in money laundering point towards three directions:
Increasing Sophistication Of Money Launderers:
Banks, Insurance companies and other financial sector institutions remain the primary gateway to the financial system of any country. Once illegal proceeds get into a depository institution, they can be moved instantly by wire or disguised through commingling with legitimate funds. With the advent of Internet and remote banking, depository institutions face increased challenges identifying customers and their customers’ sources of funds.
Often the most complex money laundering methods involve the use of international trade to disguise funds transfers. Trade-based money laundering takes many forms including the Black Market Peso Exchange, which separates the crime from the cash early in the money laundering process. Under this scheme, drug dealers are able to hand off their illicit dollars in the country to professional money launderers who make clean funds available outside that country.
Legal entities, including corporations, limited liability companies and trusts, serve many legitimate purposes but also can be used for money laundering. Criminals who are able to hide their control of a company or trust can disguise their money laundering activity as commercial transactions. Minimal registration requirements and lax oversight can make it difficult to determine who owns and operates legal entities. Casinos are cash-intensive businesses that often provide financial services and money laundering opportunities. The exchange of cash for casino chips and related money transfer and account services make casinos vulnerable to money laundering. The number of gaming establishments for instance in the U.S. is growing, driven by Native American tribes. Casinos on Indian reservations today bring in more money than Las Vegas and Atlantic City combined.
Third Generation Anti-Money Laundering (AML) Technology:
While many AML solutions have been in place for some time within the financial community, the efficiency by which these older AML solutions were able to detect, alert and prevent potential money laundering schemes was dependent on the quality of data collected by the financial institution, and the capabilities of the tools that are tasked with analyzing that data.
The second generation AML solutions that are now available provide a superior means of detecting new money laundering schemes. These solutions go beyond earlier systems by completely analyzing all related financial data in a greater level of detail by scrutinizing smaller transactions and profiling and detecting account behaviors. This minimizes transaction risks ensuring full compliance with federal money laundering regulations.
It is the third generation Enterprise Wide Compliance & Risk Management solutions, that are truly capable of combating dynamic scenario of money laundering and terrorist financing. These newer solutions are architected around Risk based approach and FATF’s 40 anti-money laundering and 9 combating financing of terrorism. Such end-user centric solutions are strongly recommended as a vital part of any strategic anti-money laundering plan that is part of the financial information infrastructure.
Regulatory Approach Towards Money Laundering:
Criminal elements in today’s technology driven society are using every means available at their disposal to launder the proceeds from their illegal activities. Now that government are using a host of counter intelligence resources in an effort to thwart these activities, they are also leveraging their legal resources to ensure that the financial community is able to assist them in their investigative efforts. Failure for any financial institution to ensure full compliance with these new ant-money laundering and anti-terrorist financing laws and not being to able establish comprehensive compliance processes for detecting & reporting suspicious transactions, can result in stiff financial, public relations, and customer satisfaction related penalties.
REGIONAL TRENDS
Malaysia
Bank Negara Malaysia under the Anti-Money Laundering Act 2001 (AMLA), issued revised AML/CFT Guidelines in November 2006 to the banking & insurance institutions. These revised AML/CFT Guidelines are in line with the Financial Action Task Force on Money Laundering (FATF)’s 40+9 Recommendations. These revised guidelines place significant emphasis on effective oversight by the Board of Directors to ensure that the policies and procedures adopted by the financial institutions in Malaysia are in compliance with the AMLA and the related regulatory requirements.
Thus far, the Attorney-General’s Chambers of Malaysia has prosecuted 21 money laundering cases, of which two cases were convicted in 2005 and 2007 respectively. The other 19 cases are at various stages of prosecution. These cases involved a 738 charges of money laundering offences with total amount of RM262.1 million.
The extension of the AMLA provision has been undertaken in two stages beginning with the invocation of the reporting of suspicious transactions, followed by the remaining provisions under Part IV of the AMLA that deal with Customer Due Diligence (CDD) and Compliance programme.
Cash threshold reporting (CTR) requirement of RM50,000 and above in a day was invoked in September 2006. The invocation of the CTR complements the mandatory legal obligation imposed on banking institutions and other categories of reporting institutions to submit suspicious transaction reports (STR) to the financial intelligence conducted by Bank Negara Malaysia. To know more about EWC&RM and how it could be rolled out at your institution as per your country's regulatory recommendations to combat dynamic scenario of money laundering and terrorist financing, please click on Know More.
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Nigeria
Mr. Nuhu Ribadu, head of Nigeria's Economic and Financial Crimes Commission (EFCC) who visited the World Bank in Washington recently highlighted on the country's spirited efforts to overcome its reputation as a haven for fraud, embezzlement and money laundering. Further, Mr. Wakili Mohammed, Head of Operations, EFCC on April 15, 2007 reminded the local banks, insurers and other financial institutions about the mandate to comply with international standards for reporting on suspicious transactions. To know more about EWC&RM and how it could be rolled out at your institution as per your country's regulatory recommendations to combat dynamic scenario of money laundering and terrorist financing, please click on Know More.
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Singapore
On 29 December 2006, Monetary Authority of Singapore had issued MAS Notice & Guidelines # 626 to banking institutions and # 314 to Life Insurers on Prevention of Money Laundering and Countering the Financing of Terrorism. These were subsequently revised and amended at the end of February 2007.
Constantly changing as well as tightening anti-money laundering regulations not only in Singapore but across the other countries, makes it essential for financial institutions to put in place automated compliance processes to avoid financial and legal consequences in the short run. If left unattended, these compliance issues, could affect your institution’s reputation, and in some cases lead to imposition of sanctions on your operations in those countries.
Singapore maintains its reputation as a least corrupt country in Asia and therefore would seem to be least prone from within, to money laundering of ill gotten money. The risk is posed from the outsiders from other countries. Foreign nationals from the neighboring countries, who have profited from corruption, have been parking their dirty money in Singapore’s clean economy. According to a recent report, 'Many wealthy Indonesians, for example, have invested heavily in Singapore real estate and are using Singapore's growing private banking industry to protect and invest their assets.' To know more about EWC&RM and how it could be rolled out at your institution as per your country's regulatory recommendations to combat dynamic scenario of money laundering and terrorist financing, please click on Know More.
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UAE
In 2002, the UAE passed an anti-money-laundering law, imposing restrictions on money transfers, while making the maximum penalty for money-laundering, seven years in jail along with 10 million dirham (US$2.72 million) in fine. In a major follow-up action, during the first week of March, 2007, the UAE government ordered local banks to freeze the accounts of 21 individuals and nine businesses suspected of involvement in money-laundering and dealing in suspect money.
In another parallel development, the Central Bank of the UAE has registered 220 hawala brokers (hawaladars) since the registration system came into force on April 1, 2003, as reported by Mr. Abdulrahim Al Awadi, assistant executive director and head of Anti-Money Laundering and Suspicious Cases Unit (AMLSCU) at the UAE Central Bank.
Additionally, there are host of regulations that have been put in place in UAE by Ministry of Economy & Planning for Insurance Companies, Brokers, Accountants, Auditors, detailing customers identification and suspicious transactions reporting requirements. Securities and Commodities Authority of the UAE has also issued a regulation concerning procedures for Anti-Money Laundering. Settlement of transactions amounting to AED 40,000/- and above are required to be duly documented and the investors’ identity has to be verified with original identification documents with copies thereof kept on record. Suspicious Transactions needs to be reported to AMLSCU.
To know more about EWC&RM and how it could be rolled out at your institution as per your country's regulatory recommendations to combat dynamic scenario of money laundering and terrorist financing, please click on Know More.
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