- •Contents
- •Abbreviations and acronyms
- •Introduction
- •1.1. A brief history of money laundering
- •1. Al Capone, 1920–30s
- •2. Meyer Lansky, 1930–50s
- •3. Watergate Scandal, 1973
- •1.2. The first stage: Al Capone tax evasion charges
- •Illicit earnings were mingled with receipts from the laundromat business and then paid back to the mobsters, making an impression of legitimate income
- •1.3. The subsequent stages: better hiding techniques
- •1.4. The appearance of “money laundering” expression in the legal context
- •1.5. Further development of the international aml/cft standards.
- •2.1. Basic concept of money laundering
- •2.2. Predicate offences: the scope and methods of description
- •2.3. Definition of money laundering in the narrow sense
- •2.4. Definition of money laundering in the broad sense
- •2.5. Anti-money laundering measures of combating organized crime
- •2.6. The process of money laundering
- •3.1. Key institutions of a national aml/cft regime
- •Investigation and field operations, e.G. Making searches, taking witness statements
- •3.2. Methodology bases of a risk-based approach and national coordination
- •Identify
- •Implementation
- •3.3. Financial institutions: general definition and their activities and operations related to managing clients’ assets
- •Individual
- •3.4. Financial institutions: other activities and operations
- •3.6. Risk-assessment obligations and decisions for countries
- •Information necessary for conducting aml/cft risk assessments
- •Including changes to
- •4.1. An extension liability for money laundering to the predicate offence perpetrator: the adverse implications for the economy
- •I. The perpetrator of the predicate offence is not held liable for laundering the proceeds
- •II. The perpetrator of the predicate offence is held liable for laundering the proceeds
- •4.2. Dual criminality for offences committed internationally
- •In Beta this conduct is a predicate offence for money laundering
- •In Alpha this conduct is not a predicate offence for money laundering
- •In Beta this conduct is not a predicate offence for money laundering
- •In Alpha this conduct is a predicate offence for money laundering
- •4.3. “State of mind” connected with a money laundering offence
- •Vienna Convention, Art. 2.3
- •4.4. Confiscation and provisional measures
- •Vienna Convention
- •5.1. Social and economic origins of terrorism
- •5.2. Basic concept of terrorist financing
- •5.3. Legal definition of terrorism and terrorist financing
- •Indirectly
- •Its purpose is
- •It is intended to cause
- •5.4. Characteristics of the terrorist financing offence
- •5 .5. Targeted financial sanctions related to terrorism, terrorist financing and proliferation
- •6.1. The United Nations bodies of the international aml/cft framework
- •1. The United Nations Security Council (unsc)
- •2. The United Nations Office on Drugs and Crime (unodc)
- •It is responsible for carrying out the Global Program against Money Laundering (gpml est. 1997)
- •6.2. The United Nations organizations of the international aml/cft framework
- •1. The International Monetary Fund (imf)
- •2. The World Bank
- •6.3. Main functions of the Financial Action Taskforce
- •Identifying current money laundering and terrorist financing threats
- •Identification of high-risk and non-cooperative jurisdictions, release of relevant public documents
- •6.6. The Wolfsberg Group of banks and its documents
- •It is an association of eleven global private banks that came together in 2000 to develop aml/cft industry standards
- •7.1. General requirements for aml/cft programs of financial institutions and groups of financial institutions
- •Including appropriate compliance management arrangements
- •Intra-group sharing of information (on customers, accounts and transactions) is required for the purposes of cdd and ml/tf risk management
- •7.2. Methodology approach to customer due diligence
- •Information accompanying wire transfers (r. 16, in)
- •Veracity
- •Verifying the customer’s identity
- •Information
- •7.3. Additional features of the customer due diligence
- •It must be ensured that documents, data and information collected are kept up-to-date
- •It may be permitted to complete the verification as soon as practically possible
- •7.4. Customer due diligence measures for legal persons and their arrangements
- •It should be required to understand the following in relation to customers that are legal persons or legal arrangements, r. 10, in, (c)
- •If different, a principal place of business
- •7.5. Actions of financial institutions in case of inability to comply with customer due diligence requirements
- •If it is not possible for a financial institution to comply with the cdd requirements
- •If there are reasonable grounds to suspect that funds are proceeds of criminal activity or are related to terrorist financing, r. 20
- •If they report their suspicions in good faith, even if they do not know precisely what the underlying activity was (they do not know whether activity was criminal)
- •7.6. Record-keeping requirements for financial institutions
- •Information obtained through the cdd measures
- •8.1. Reliance on customer due diligence information received from third parties
- •8.2. Potentially higher-risk situations for enhanced customer due diligence measures
- •It is mandatory to apply enhanced cdd measures when the fatf calls for it, r. 19
- •It was identified by a mutual evaluation, assessment or published in a follow up report
- •8.3. Lower-risk situations for simplified customer due diligence measures
- •If these requirements can ensure adequate transparence of beneficial ownership
- •It was identified by a mutual evaluation
- •8.4. Enhanced customer due diligence measures
- •Information from public databases
- •Volume of assets
- •Increasing the number and timing of controls applied
- •8.5. Simplified customer due diligence measures
- •Verify the identity of
- •Inferring the purpose and nature of the business relationship
- •9.1. Aml/cft requirements for cross-border correspondent banking relationships
- •Including whether the institution has been subject to a money laundering or terrorist financing investigation or regulatory action
- •9.2. Definition of wire transfers and activities of involved parties
- •Initiates the wire transfer and transfers the funds on behalf of the originator
- •Intermediary financial institution(s)
- •Irrespective of whether the originator and the beneficiary are the same person
- •Includes wire transfers that take place entirely with the borders of the European Economic Area (eea)
- •9.4. Aml/cft measures of information gathering related to wire transfers
- •In the absence of an account
- •9.5. Aml/cft responsibilities of financial institutions performing wire transfers
- •9.6. Aml/cft obligations for persons that provide money or value transfer services
- •If these institutions are subject to aml/cft requirements
- •10.1. Definition of politically exposed persons
- •Individuals who are (have been) entrusted with prominent public functions such as
- •It covers family members and close associates of pePs
- •It does not cover middle ranking or more junior individuals
- •10.2. Additional measures for politically exposed persons
- •In case of a higher risk
- •10.3. Aml/cft requirements for financial institutions with foreign operations
- •If aml/cft legislature of the host country does not permit the implementation of
- •If these measures are not sufficient
- •10.4. Customer due diligence and record-keeping requirements for designated non-financial businesses and professions
- •Independent legal professionals
- •Independent accountants
- •10.5. Other aml/cft requirements for designated non-financial businesses and professions
NATIONAL RESEARCH NUCLEAR UNIVERSITY MEPhI
INSTITUTE OF FINANCIAL AND ECONOMIC SECURITY
A.L. SAPUNTSOV
THE INTERNATIONAL AML/CFT FRAMEWORK:
CHALLENGES FOR FINANCIAL TRANSNATIONAL CORPORATIONS FROM DEVELOPING COUNTRIES
A textbook in tables and diagrams
Moscow
MEPhi Publishing House
2012
Annotation
The book generalizes approaches to setting up the international standards on anti-money laundering and countering the financing of terrorism (AML/CFT). It covers the evolution of AML measures against organized crime, contemporary sources of international AML/CFT legislature, and the institutional bases of the relevant global framework. AML/CFT requirements for private sector entities, as well as methods of competent authorities operations, are covered.
Designed for university students taking the course on the international AML/CFT framework in English as a foreign language. Visualization materials may be used as reference or training materials by professors and scientists, as well as by staff of financial intelligence units, law enforcement, supervisory agencies, or relevant private entities.
Contents
Abbreviations and acronyms
Introduction
The evolution of money laundering and AML/CFT measures
A brief history of money laundering
The first stage: Al Capone tax evasion charges
The subsequent stages: better hiding techniques
The appearance of “money laundering” expression in the legal context
Further development of the international AML/CFT standards
An overview of money laundering and AML regime goals
Basic concept of money laundering
Predicate offences: the scope and methods of description
Definition of money laundering in the narrow sense
Definition of money laundering in the broad sense
Anti-money laundering measures of combating organized crime
The process of money laundering
Applying a risk-based approach to a model AML/CFT regime
Key institutions of a national AML/CFT regime
Methodology bases of a risk-based approach and national coordination
Financial institutions: general definition and their activities and operations related to managing clients’ assets
Financial institutions: other activities and operations
Definition of designated non-financial businesses and professions
Risk-assessment obligations and decisions for countries
Legal requirements for a national AML/CFT regime
An extension liability for money laundering to the predicate offence perpetrator: the adverse implications for the economy
Dual criminality for offences committed internationally
“State of mind” connected with a money laundering offence
Confiscation and provisional measures
Non-conviction based confiscation and corporate liability
Explanations of terrorism and the financing of terrorism
Social and economic origins of terrorism
Basic concept of terrorist financing
Legal definition of terrorism and terrorist financing
Characteristics of the terrorist financing offence
Targeted financial sanctions related to terrorism, terrorist financing and proliferation
Institutional bases of the international AML/CFT framework
The United Nations bodies of the international AML/CFT framework
The United Nations organizations of the international AML/CFT framework
Main functions of the Financial Action Taskforce
The FATF observers and FATF-style regional bodies
The Egmont Group and international standard setters in banking, securities, and insurance sectors
The Wolfsberg group of banks and its documents
Customer due diligence measures undertaken by financial institutions
General requirements for AML/CFT programs of financial institutions and groups of financial institutions
Methodology approach to customer due diligence
Additional features of the customer due diligence
Customer due diligence measures for legal persons and their arrangements
Actions of financial institutions in case of inability to comply with customer due diligence requirements
Record-keeping requirements for financial institutions
Risk-based approach pursued by financial institutions in customer due diligence
Reliance on customer due diligence information received from third parties
Potentially higher-risk situations for enhanced customer due diligence measures
Lower-risk situations for simplified customer due diligence measures
Enhanced customer due diligence measures
Simplified customer due diligence measures
Additional AML/CFT measures for specific activities of financial institutions
AML/CFT requirements for cross-border correspondent banking relationships
Definition of wire transfers and activities of involved parties
The scope of applying AMC/CFT measures to wire transfers
AML/CFT measures of information gathering related to wire transfers
AML/CFT responsibilities of financial institutions performing wire transfers
AML/CFT obligations for persons that provide money or value transfer services
Additional measures for specific customers, entities, and professions
Definition of politically exposed persons
Additional measures for politically exposed persons
AML/CFT requirements for financial institutions with foreign operations.
Customer due diligence and record-keeping requirements for designated non-financial businesses and professions
Other AML/CFT requirements for designated non-financial businesses and professions