- •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
2. The World Bank
create country-specific laws on AML/CFT
set up effective institutional frameworks
foster the implementation of an AML/CFT regime
develop financial intelligence capacity
enhance the ability of the judiciary
The Financial Market Integrity Group with the World Bank supports countries through implementing the following AML/CFT programs
Bilateral Remittance Corridor Analysis
Stolen Asset Recovery Program
Governance in FIUs
Anti-Money Laundering Tools to Fight Corruption and Illegal Logging
Risk and Vulnerability Assessment Methodology and Tool
Handbooks for Bank and Securities Sector Supervisors
AML/CFT Transparency
Trade finance and AML
Tackling the Financing of Terrorism
Technical assistance
Assessments
Policy development
6.3. Main functions of the Financial Action Taskforce
The Group of Eight (G8) was originated in1975. Currently it is a forum for the governments of the world’s largest economies: Canada, France, Germany, Italy, Japan, Russia, the U.K. and the U.S.
The FATF secretariat is housed at The Organization for Economic Co-operation and Development (OECD) headquarters in Paris
The presidency is a one-year position held by a senior official from a FATF jurisdiction
The Financial Action Task Force (FATF)
Operating under a finite lifespan; the current mandate will expire in December 2012
The FATF was established by the 1989 G7 summit held in Paris
Main activities
Standard setting
Ensuring effective compliance with the standards (mutual evaluations)
Officials from member countries discuss AML/CFT issues
Identifying current money laundering and terrorist financing threats
Research of money laundering and terrorist financing methods and trends, release of typologies reports
Identification of high-risk and non-cooperative jurisdictions, release of relevant public documents
The FATF members (regional organizations are underlined)
Argentina
Australia
Austria
Belgium
Brazil
Canada
China
Denmark
European Commission
Finland
France
Germany
Greece
Gulf Co-operation Council
Hong Kong, China
Iceland
India
Ireland
Italy
Japan
Kingdom of the Netherlands
Luxembourg
Mexico
New Zealand
Norway
Portugal
Republic of Korea
Russian Federation
Singapore
South Africa
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
6.4. FATF associate members and observers
The following FATF observers have, among other functions, a specific AML/CFT mission or function
FATF-style regional bodies (FSRBs) are engaged in activities similar to ones of FATF; it provides for better inclusion of regional distinctive features
FATF
Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL)
Asia/Pacific Group on Money Laundering (APG)
Eurasian Group (EAG)
Caribbean Financial Action Task Force (CFATF)
Financial Action Task Force on Money Laundering in South America (GAFISUD)
Middle East and North Africa Financial Action Task Force (MENAFATF)
Groupe d’Action Contre le Blanchiment d’Argent en Afrique Centrale (GABAC)
Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG)
Inter Governmental Action Group against Money Laundering in West Africa (GIABA)
United Nations: UNODC, UNCTC, The Al-Qaida and Taliban Sanctions Committee (1267 Committee), World Bank, IMF
Egmont Group of FIUs, Anti-Money Laundering Liaison Committee of the Franc Zone (CLAB)
Basel Committee on Banking Supervision (BCBS), International Organization of Securities Commissions (IOSCO), International Association of Insurance Supervisors (IAIS)
Organization for Economic Co-operation and Development (OECD), Group of International Finance Centre Supervisors (GIFCS)
Interpol, World Customs Organization (WCO), Europol, Eurojust
European Central Bank (ECB), European Bank for Reconstruction and Development (EBRD), African Development Bank, Asian Development Bank, Inter-American Development Bank (IDB)
Organization of American States: Inter-American Committee Against Terrorism (OAS/CICTE) and Inter-American Drug Abuse Control Commission (OAS/CICAD); Commonwealth Secretariat
6.5. The Egmont Group of FIUs and international standard setters in banking, securities and insurance sectors
The Egmont Group of FIUs
Established in 1995, now is comprised of over 130 member FIUs
runs Egmont Secure Web (ESW) that facilitates communications among FIUs
offers training and personnel exchanges
promotes establishment of FIUs in developing countries
Allows member FIUs to cooperate in the areas of information exchange, sharing expertise and training
The Basel Committee on Banking Supervision (BCBS)
Established in 1974 to improve the quality of banking supervision worldwide
It has released the following documents:
Statement on prevention of criminal use of the banking system for the purpose of money laundering, 1988
Core principles for effective banking supervision (when first released in 1997 Principle 15 dealt with money laundering, including “know your customer” rules; it became Principle 18 in the 2006 edition and Principle 29 in the latest draft edition)
Customer due diligence for banks, 2001
Due diligence and transparency regarding cover payment messages related to cross-border wire transfers, 2009
The International Organization of Securities Commissions (IOSCO)
Established in 1983; with regard to AML/CFT it has passed several guidelines for securities traders, including the guidance for collective investment schemes, 2005
The International Association of Insurance Supervisors (IAIS)
Established in 1994; it has issued guidance papers on money laundering prevention in the insurance sector and a relevant typology report