- •ABBREVIATIONS AND ACRONYMS
- •INTRODUCTION
- •1. The evolution of money laundering and AML/CFT measures
- •1.1. A brief history of money laundering
- •1.2. The first stage of ML evolution: Al Capone tax evasion charges
- •1.3. The subsequent stages of ML evolution: 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. An overview of money laundering and AML regime goals
- •2.1. Basic concept of money laundering
- •2.2. Predicate offences: the scope and methods of AML/CFT 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 and modeling of its phases
- •3. Applying a risk-based approach to a model AML/CFT regime
- •3.1. Key institutions of a national AML/CFT regime
- •3.2. Methodology bases of a risk-based approach and national AML/CFT coordination
- •3.3. Financial institutions: definition for AML/CFT purposes through activities and operations related to managing clients’ assets
- •3.4. Definition of financial institutions for AML/CFT purposes through activities and operations other then managing clients’ assets
- •3.5. AML/CFT definition of designated non-financial businesses and professions
- •3.6. AML/CFT risk-assessment obligations and decisions for countries
- •4. Legal requirements for a national AML/CFT regime
- •4.1. An extension of liability for money laundering to the predicate offence perpetrator: the adverse implications for the economy
- •4.2. Dual criminality for money laundering offences committed internationally
- •4.3. “State of mind” connected with a money laundering offence
- •4.4. Confiscation and provisional measures related to AML/CFT
- •4.5. Non-conviction based confiscation and corporate liability for money laundering
- •5. Explanations of terrorism and the financing of terrorism
- •5.1. Social and economic origins of terrorism
- •5.2. Basic concept of terrorist financing
- •5.3. Legal definition of terrorism and terrorist financing
- •5.4. Characteristics of the terrorist financing offence and legal capacity to prosecute persons that finance terrorism
- •5.5. Targeted financial sanctions related to terrorism, terrorist financing and proliferation
- •6. Institutional bases of the international AML/CFT framework
- •6.1. The United Nations bodies of the international AML/CFT framework
- •6.2. The United Nations organizations of the international AML/CFT framework
- •6.3. Main functions of the Financial Action Taskforce
- •6.4. The Financial Action Task Force associate members and observers
- •6.5. The Egmont Group of financial intelligence units and international AML/CFT standard setters in banking, securities and insurance sectors
- •6.6. The Wolfsberg Group of banks and its AML/CFT documents
- •7. Customer due diligence measures undertaken by financial institutions
- •7.1. General requirements for AML/CFT programs of financial institutions and groups of financial institutions
- •7.2. Methodology approach to customer due diligence
- •7.3. Additional features of customer due diligence
- •7.4. Customer due diligence measures for legal persons and their arrangements
- •7.5. Actions of financial institutions in case of inability to comply with customer due diligence requirements
- •7.6. AML/CFT-related record-keeping requirements for financial institutions
- •8. Risk-based approach pursued by financial institutions in customer due diligence
- •8.1. Reliance on customer due diligence information received from third parties
- •8.2. Potentially higher-risk situations for enhanced customer due diligence measures
- •8.3. Lower-risk situations for simplified customer due diligence measures
- •8.4. Enhanced customer due diligence measures
- •8.5. Simplified customer due diligence measures
- •9. Additional AML/CFT measures for specific activities of financial institutions
- •9.1. AML/CFT requirements for cross-border correspondent banking relationships
- •9.2. Definition of wire transfers and activities of involved parties
- •9.3. The scope of applying AML/CFT measures to wire transfers
- •9.4. AML/CFT measures of information gathering related to wire transfers
- •9.6. AML/CFT obligations for persons that provide money or value transfer services
- •10. Additional AML/CFT measures for specific customers, entities and professions
- •10.1. Definition of politically exposed persons and the scope of applying AML/CFT measures
- •10.2. Additional AML/CFT measures for politically exposed persons
- •10.3. AML/CFT requirements for financial institutions with foreign operations
- •10.4. Customer due diligence and record-keeping requirements for designated non-financial businesses and professions
- •10.5. Other AML/CFT requirements for designated non-financial businesses and professions
- •11. Competent authorities of a national AML/CFT system
- •11.1. General requirements for government agencies with an AML/CFT function
- •11.2. Approaches to AML/CFT-related regulation and supervision
- •11.3. Financial intelligence unit and its core functions
- •11.4. AML/CFT responsibilities of law enforcement and investigative authorities
- •11.5. Detecting and countering activities of cash couriers for the AML/CFT purposes
- •12. Additional requirements for a national AML/CFT regime and issues of international cooperation
- •12.1. Transparency and beneficial ownership of legal persons and their arrangements
- •12.2. Prevention of using non-profit organizations for the purpose of terrorist financing
- •12.3. General principles of AML/CFT mutual legal assistance
- •12.4. Mutual legal assistance: freezing and confiscation of assets related to money laundering and terrorist financing
- •12.5. Extradition in relation to money laundering and terrorist financing
- •12.6. International exchange of information between government agencies with an AML/CFT function
1.3. The subsequent stages of ML evolution: better hiding techniques
The second stage. Meyer Lansky was |
A franchise for several gambling |
born in 1902. By 1930s he became |
tables in the casino of Hotel Na- |
the “Mob’s Accountant”. |
tional in Havana (Cuba) |
Commission of predicate offences |
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in the U.S. (drug trafficking, pros- |
Havana, Cuba |
titution, blackmailing, etc.) |
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Proceeds from crime |
A bank in Switzerland |
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originated in Florida |
Havana, Cuba |
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Florida
Money is repatriated to the mafia’s accounts in the U.S. as legitimate earnings on investments abroad
Meyer Lansky was fined only $2500. He died in 1983 in Miami Beach. The
FBI believed he left behind over $300 million. They never found the money.
The third stage. The Watergate Scandal, 1973.
$200 thousand illegal campaign contributions to U.S. President Richard Nixon
It was Britain’s Guardian newspaper that coined the term, referring to the process as “laundering”
Mexico
A company in Florida
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1.4. The appearance of “money laundering” expression in the legal context
1.U.S. Bank Secrecy Act (BSA, 1970).
Established requirements for recordkeeping and reporting by private individuals,
banks and other financial institutions.
Designed to help identify the source, volume, and movement of currency and other monetary instruments transported or transmitted into or out of the U.S. or deposited in financial institutions.
Required banks to (1) report cash transactions over $10,000 using the currency transaction report (CTR); (2) properly identify persons conducting transactions; and
(3) maintain a paper trail by keeping appropriate records of financial transactions.
2.The expression “money laundering” (ML) first appeared in a judicial or legal context in 1982 in the U.S.
3.U.S. Money Laundering Control Act (1986):
•established ML as a federal crime,
•prohibited structuring transactions to evade CTR filings,
•introduced civil and criminal forfeiture for BSA violations,
•directed banks to establish and maintain procedures to ensure and monitor compliance with the reporting and recordkeeping requirements of the BSA.
4.United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna Convention, 1988).
The term “anti-money laundering” (AML) was not used in the Convention and it is limited in scope to single predicate offence “drug trafficking”. However the Parties to the Vienna Convention introduce the AML approach by declaring the awareness that illicit traffic generates large financial profits and wealth, enabling transnational criminal organizations to penetrate, contaminate and corrupt the structures of government, legitimate commercial and financial business, and society at all its levels. Therefore the governments are determined to:
•deprive persons engaged in illicit traffic of the proceeds of their criminal activities and thereby eliminate their main incentive for so doing,
•eliminate the root causes of the problem of abuse of narcotic drugs and psychotropic substances, including the illicit demand for such drugs and substances and the enormous profits derived from illicit traffic.
Establishment of the Financial Ac- |
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Council of Europe Convention on |
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tion Task Force on Money Launder- |
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Laundering, Search, Seizure and Con- |
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ing (FATF, 1989). Its goal was to |
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fiscation of the Proceeds of Crime |
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set out AML measures. |
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(Strasbourg Convention, 1990) |
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The FATF 40 Recommendations (1990, revised later) – the international standard for anti-money laundering, it sets out minimal requirements for a national AML/CFT regime
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1.5. Further development of the international AML/CFT standards
Late 1990s to present time
United Nations Convention
Against Transnational Orga-
nized Crime (Palermo Con-
vention, 2000)
United Nations Convention
Against Corruption (Merida
Convention, 2003)
Warsaw Convention – Council of Europe Convention on
Laundering, Search, Seizure and Confiscation of the Pro-
ceeds from Crime and on the Financing of Terrorism
(2005) – an upgrade of the Strasbourg Convention
The United Nations Security
Council Resolution 1267 (1999) and subsequent resolu-
tions directed at countering the financing of terrorism
The International Convention for the Suppression of the Fi- nancing of terrorism – Terror-
ist Financing Convention
(signed in New York, 1999)
The FATF 9 Special Recommendations (2001 and 2003)
– the international standard for CFT
The FATF Recommendations
(2012) is a revised and integrated version of The FATF
40+9 Recommendations
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