Anti-money laundering

Anti money laundering (AML) is a term mainly used in the financial and legal industries to describe the legal controls that require financial institutions and other regulated entities to prevent or report money laundering activities. Anti-money laundering guidelines came into prominence globally after the September 11, 2001 attacks and the subsequent enactment of the USA PATRIOT Act.

Today, most financial institutions globally, and many non-financial institutions, are required to identify and report transactions of a suspicious nature to the financial intelligence unit in the respective country. For example, a bank must perform due diligence by verifying a customer's identity and monitor transactions for suspicious activity. To do this, many financial institutions utilize the services of special software to gather information about high risk individuals and organizations.United States federal law related to money laundering is implemented under the Bank Secrecy Act of 1970 as amended by anti-money laundering acts up to the present. Many people[who?] have confused Anti-Money Laundering (AML) with Anti-Terrorist Financing (ATF). Under the Bank Secrecy Act of USA, Money Laundering and Terrorist Financing are classified when financial institutions file Suspicious Activity Reports (SAR) to Financial Crimes Enforcement Network (FinCEN) which is a US government agency. To effectively implement AML and ATF measures, The US government encourages financial institutions to work together for AML and ATF purposes in accordance with Section 314(b) of the USA PATRIOT Act. However, since financial institutions are required by law to protect the privacy of their clients, section 314(b) cooperation has not been generally adopted by financial institutions. To overcome this obstacle, the United Crimes Elimination Network (UCEN) has been established by AML and ATF professionals[who?] to achieve this global cooperation goal in compliance with the privacy laws of most countries.

Different countries, depending on the activity, demand different actions. For example; in the US a deposit of US$10,000 or more requires a CTR (Currency Transaction Report), in Europe it is EUR 15,000, and in Switzerland it is CHF 25,000. In some countries there is no CTR requirement. Suspicion of ML activity in the US requires the submission of a SAR, while in Switzerland a SAR will only get filed if that activity can be proved. As a result, thousands of SARs are filed daily in the US, while in Switzerland the rate is much lower.

The United Nations Office on Drugs and Crime maintains the International Money Laundering Information Network, a website that provides information and software for anti-money laundering data collection and analysis. The World Bank has a website in which it provides policy advice and best practices to governments and the private sector on anti-money laundering issues.

United States

On September 1, 2010, the Financial Crimes Enforcement Network issued an advisory on "Informal Value Transfer Systems" referencing United States v. Banki.

Canada

FINTRAC (Financial Transaction and Reports Analysis Centre of Canada) is responsible for investigation of money laundering and terrorist financing cases that are originating or destined for Canada. The financial intelligence unit was created by the amendment of the Proceeds of Crime (Money Laundering) Act in December 2001 (via Bill C-25) and created the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

Financial institutions in Canada are required to track large cash transactions (daily total greater than CAD$10,000.00 or equivalent value in other currencies) that can be used to finance terrorist activities in and beyond Canada's borders and report them to FINTRAC.

FATF: Financial Action Task Force against Money Laundering

For the main article, see Financial Action Task Force on Money Laundering.

Formed in 1989 by the G-7 countries, the Financial Action Task Force on Money Laundering (FATF) is an intergovernmental body whose purpose is to develop and promote an international response to combat money laundering. In October 2001, FATF expanded its mission to include combating the financing of terrorism. FATF is a policy-making body, which brings together legal, financial and law enforcement experts to achieve national legislation and regulatory AML and CFT reforms. Currently, its membership consists of 31 countries and territories and two regional organizations. In addition, FATF works in collaboration with a number of international bodies and organizations. These entities have observer status with FATF, which does not entitle them to vote, however permits full participation in plenary sessions and working groups. FATF’s three primary functions with regard to money laundering are:

i. Monitoring members’ progress in implementing anti-money laundering measures ii. Reviewing and reporting on laundering trends, techniques and countermeasures, and iii. Promoting the adoption and implementation of FATF anti-money laundering standards global The Financial Action Task Force on Money Laundering (FATF), also known by its French name Groupe d'action financière sur le blanchiment de capitaux (GAFI), is an inter-governmental body founded in 1989 by the G7. The purpose of the FATF is to develop policies to combat money laundering and terrorist financing. The FATF Secretariat is housed at the headquarters of the OECD in Paris. FATF Associate Members include

The FATF currently comprises 34 member jurisdictions and 2 regional organisations, representing most major financial centres in all parts of the globe.

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

Costs

The financial services industry has become increasingly vocal about the rising costs of anti-money laundering regulation, and the limited benefits that appears to bring. As one commentator expresses the issue:

“ It seems that the bigger the figure for money laundering the more likely it is to be quoted. Indeed, there is even a tendency to 'talk up' the figures as smaller estimates would not only invalidate the logic of the approach [of strict anti-money laundering regulation] but would possibly deter the levels of investment necessary for its operational impact. Without facts, legislation has been driven on rhetoric, driving by ill-guided activism responding to the need to be "seen to be doing something" rather than by an objective understanding of its impact on predicate crime. The social panic approach is justified by the language used - we talk of the battle against terrorism or the war on drugs) ”

The Economist newspaper has become increasingly vocal in its criticism of such regulation, particularly with reference to countering terrorist financing, referring to it as a "costly failure".

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