Money laundering

Criminals use the financial system to put money which has been obtained illegally into legal businesses and bank accounts, so that they can hide it or use it. These activities are commonly referred to as money laundering. In January 1989 the Basle Statement of Principles on Money Laundering was circulated to all institutions authorised under the Banking Act. The Statement of Principles does not restrict itself to drug related money laundering, but extends to all aspects of laundering through the banking system, i.e. the deposit, transfer and / or concealment of money derived from illicit activities whether robbery, terrorism, fraud or drugs. The Statement of Principles seeks to deny to those involved in money laundering by the application of the following principles: (a) Know your customer — banks should make reasonable efforts to determine the customer’s true identity, and have effective procedures for verifying the bona fides of new customers, that is, they are who they say they are. (b) Compliance with laws — banks should ensure that business is conducted in conformity with high ethical standards and laws; that a service is not provided where there is good reason to suppose that transactions are associated with laundering activities. (c) Co-operation with law enforcement agencies — within any constraints imposed by rules relating to customer confidentiality, banks should co-operate fully with national law enforcement agencies including, where there are reasonable grounds for suspecting money laundering, taking appropriate measures which are consistent with the law.

1) What is commonly referred to as money laundering? 2) What was circulated to all banks in 1989? 3) What does the Statement of Principles extend to? 4) How many principles are included in the Statement of Principles? 5) What is the first one? 6) What is the second one? 7) What is the third one?

VI. Agree or disagree with the following statements.

1) Banks should determine the customer’s mistaken identity. 2) Banks should not check the bona fides of new customers. 3) If you check someone's bona fides, you check that they are who they say they are. 4) Banks should ensure that business is conducted in a way that obeys rules. 5) Banks should make it certain that a service is not provided where there are laundering activities. 6) Banks should disobey law enforcement agencies. 7) Banks should take correct or suitable measures against money laundering.

VII. Translate the following words, phrases and statements from Russian into English.

Ошибочное опознание личности; применение; разумный; подлинный; опознание личности; удостоверять подлинность; добросовестность; соблюдение закона; обеспечивать; соответствие; предоставлять; предполагать; распространять; трансферт; утаивание; незаконный; мошенничество; искать; не допускать; сделка; отмывание денег; узаконить; отмытые деньги; ограничивать; ассоциироваться; полицейский орган; ограничения; конфиденциальность; согласующийся.

Отмытые деньги — это средства, посланные последовательно через большое число депозитарных институтов в попытке скрыть источник денег. Гангстеры отмывают деньги для придания видимости легальности нелегальным источникам своего обогащения.

VIII. Complete the following statements.

1) Criminals use … 2) These activities are referred to as … 3) … was circulated to … 4) The Statement of Principles does not restrict … but extends to … 5) Banks should make … 6) Banks should have … for verifying … 7) Banks should ensure that business is … 8) Banks should ensure that a service is … 9) Banks should co-operate … including taking …