Money laundering Laws by country

Afghanistan

The Financial Transactions and Reports Analysis Center of Afghanistan (FinTRACA) was established as a Financial Intelligence Unit (FIU) under the Anti Money Laundering and Proceeds of Crime Law passed by decree late in 2004. The main purpose of this law is to protect the integrity of the Afghan financial system and to gain compliance with international treaties and conventions. The Financial Intelligence Unit is a semi-independent body that is administratively housed within the Central Bank of Afghanistan (Da Afghanistan Bank).The main objective of FinTRACA is to deny the use of the Afghan financial system to those who obtained funds as the result of illegal activity, and to those who would use it to support terrorist activities. http://fintraca.gov.af/ In order to meet its objectives, the FinTRACA collects and analyzes information from a variety of sources. These sources include entities with legal obligations to submit reports to the FinTRACA when a suspicious activity is detected, as well as reports of cash transactions above a threshold amount specified by regulation. Also, FinTRACA has access to all related Afghani government information and databases. When the analysis of this information supports the supposition of illegal use of the financial system, the FinTRACA works closely with law enforcement to investigate and prosecute the illegal activity. FinTRACA also cooperates internationally in support of its own analyses and investigations and to support the analyses and investigations of foreign counterparts, to the extent allowed by law. Other functions include training of those entities with legal obligations to report information, development of laws and regulations to support national-level AML objectives, and international and regional cooperation in the development of AML typologies and countermeasures.

Bangladesh

In Bangladesh, this issue has been dealt with by the Prevention of Money Laundering Act, 2002 (Act No. VII of 2002). In terms of section 2, "Money Laundering means (a) Properties acquired or earned directly or indirectly through illegal means; (b) Illegal transfer, conversion, concealment of location or assistance in the above act of the properties acquired or earned directly of indirectly through legal or illegal means." In this Act, “Properties means movable or immovable properties of any nature and description”. To prevent these Illegal uses of money Bangladesh Govt. has introduced the Money Laundering Prevention Act. The Act was last amended in the year 2009 and all the Financial Institutes are following this act. Till today there are 26 Circulars issued by Bangladesh Bank under this act. To prevent Money laundering a banker must do the following:

While opening a new account, the account opening form should be duly filled up by all the information of the Customer.

The KYC has to be properly filled up

The TP (Transaction Profile) is mandatory for a client to understand his/her transactions. If needed, the TP has to be updated at the Client’s consent.

All other necessary papers should be properly collected along with the Voter ID card.

If there is any suspicious transaction is notified, the BAMLCO (Branch Anti Money Laundering Compliance Officer) has to be notified and accordingly the STR (Suspicious Transaction Report) reporting has to be done.

The Cash department should be aware of the Transactions. It has to be noted if suddenly a big amount of money is deposited in any account. Proper documents will be required if any Client does this type of transaction.

Structuring, over/ under Invoicing is another way to do Money Laundering. The Foreign Exchange Department should look into this matter cautiously.

If in any account there is a transaction exceeding 7.00 lac in a single day that has to be reported as CTR (cash Transaction report)

All the Bank Officials must go through all the 26 Circulars and must use in doing the Banking.

European Union

The EU directive 2005/60/EC"on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing" tries to prevent such crime by requiring banks, real estate agents and many more companies to investigate and report usage of cash in excess of €15,000. The earlier EU directives 91/308/EEC and 2001/97/EC also relates to money laundering.

India

The Prevention of Money-Laundering Act, 2002 came into effect on 1 July 2005.

Section 12 (1) prescribes the obligations on banks, financial institutions and intermediaries (a) to maintain records detailing the nature and value of transactions which may be prescribed, whether such transactions comprise of a single transaction or a series of transactions integrally connected to each other, and where such series of transactions take place within a month; (b) to furnish information of transactions referred to in clause (a) to the Director within such time as may be prescribed and t records of the identity of all its clients. Section 12 (2) prescribes that the records referred to in sub-section (1) as mentioned above, must be maintained for ten years after the transactions finished.

The provisions of the Act are frequently reviewed and various amendments have been passed from time to time.

The recent activity in money laundering in India is through political parties corporate companies and share market.

United Kingdom

Money laundering and terrorist funding legislation in the UK is governed by four Acts of primary legislation

Terrorism Act 2000

Anti-terrorism, Crime and Security Act 2001

Proceeds of Crime Act 2002

Serious Organised Crime and Police Act 2005

The Proceeds of Crime Act 2002 contains the primary UK anti-money laundering legislation, including provisions requiring businesses within the 'regulated sector' (banking, investment, money transmission, certain professions, etc.) to report to the authorities suspicions of money laundering by customers or others.

Money laundering is widely defined in the UK. In effect any handling or involvement with any proceeds of any crime (or monies or assets representing the proceeds of crime) can be a money laundering offence. An offender's possession of the proceeds of his own crime falls within the UK definition of money laundering. The definition also covers activities which would fall within the traditional definition of money laundering as a process by which proceeds of crime are concealed or disguised so that they may be made to appear to be of legitimate origin.

Unlike certain other jurisdictions (notably the USA and much of Europe), UK money laundering offences are not limited to the proceeds of serious crimes, nor are there any monetary limits, nor is there any necessity for there to be a money laundering design or purpose to an action for it to amount to a money laundering offence. A money laundering offence under UK legislation need not involve money, since the money laundering legislation covers assets of any description. In consequence any person who commits an acquisitive crime (i.e. one from which he obtains some benefit in the form of money or an asset of any description) in the UK will inevitably also commit a money laundering offence under UK legislation.

This applies also to a person who, by criminal conduct, evades a liability (such as a taxation liability) – referred to by lawyers as "obtaining a pecuniary advantage" – as he is deemed thereby to obtain a sum of money equal in value to the liability evaded.

The principal money laundering offences carry a maximum penalty of 14 years imprisonment.

Secondary regulation is provided by the Money Laundering Regulations 2003 and 2007. They are directly based on the EU directives 91/308/EEC, 2001/97/EC and 2005/60/EC.

One consequence of the Act is that solicitors, accountants, and insolvency practitioners who suspect (as a consequence of information received in the course of their work) that their clients (or others) have engaged in tax evasion or other criminal conduct from which a benefit has been obtained, are now required to report their suspicions to the authorities (since these entail suspicions of money laundering). In most circumstances it would be an offence, 'tipping-off', for the reporter to inform the subject of his report that a report has been made. These provisions do not however require disclosure to the authorities of information received by certain professionals in privileged circumstances or where the information is subject to legal professional privilege.

Professional guidance (which is submitted to and approved by the UK Treasury) is provided by industry groups including the Joint Money Laundering Steering Group and the Law Society.

However there is no obligation on banking institutions to routinely report monetary deposits or transfers above a specified value. Instead reports have to be made of all suspicious deposits or transfers, irrespective of their value.

The reporting obligations include reporting suspicions relating to gains from conduct carried out in other countries which would be criminal if it took place in the UK. Exceptions were later added to exempt certain activities which were legal in the location where they took place, such as bullfighting in Spain.

There are more than 200,000 reports of suspected money laundering submitted annually to the authorities in the UK (there were 240,582 reports in the year ended 30 September 2010 – an increase from the 228,834 reports submitted in the previous year). Most of these reports are submitted by banks and similar financial institutions (there were 186,897 reports from the banking sector in the year ended 30 September 2010).

Although 5,108 different organisations submitted suspicious activity reports to the authorities in the year ended 30 September 2010 just four organisations submitted approximately half of all reports, and the top 20 reporting organisations accounted for three-quarters of all reports.

The offence of failing to report a suspicion of money laundering by another person carries a maximum penalty of 5 years imprisonment

Bureaux de change

All UK Bureaux de change are registered with Her Majesty's Revenue and Customs which issues a trading licence for each location. Bureaux de change and money transmitters, such as Western Union outlets, in the UK fall within the 'regulated sector' and are required to comply with the Money Laundering Regulations 2007. Checks can be carried out by HMRC on all Money Service Businesses.

United States

The approach in the United States to stopping money laundering is usefully broken into two areas: preventive (regulatory) measures and criminal measures.

Preventive

In an attempt to prevent dirty money from entering the US financial system in the first place, the United States Congress passed a series of laws, starting in 1970, collectively known as the Bank Secrecy Act. These laws, contained in sections 5311 through 5332 of Title 31 of the United States Code, require financial institutions, which under the current definition include a broad array of entities, including banks, credit card companies, life insurers, money service businesses and broker-dealers in securities, to report certain transactions to the United States Treasury. Cash transactions in excess of $10,000 must be reported on a Currency Transaction Report (CTR), identifying the individual making the transaction as well as the source of the cash. The US is one of the few countries in the world to require reporting of all cash transactions over a certain limit, although certain businesses can be exempt from the requirement. Additionally, financial institutions must report transaction on a Suspicious Activity Report (SAR) that they deem “suspicious,” defined as a knowing or suspecting that the funds come from illegal activity or disguise funds from illegal activity, that it is structured to evade BSA requirements or appears to serve no known business or apparent lawful purpose; or that the institution is being used to facilitate criminal activity. Attempts by customers to circumvent the BSA, generally by structuring cash deposits to amounts lower than $10,000 by breaking them up and depositing them on different days or at different locations also violates the law.

The financial database created by these reports is administered by the U.S.’s Financial Intelligence Unit (FIU), called the Financial Crimes Enforcement Network (FinCEN), which is located in Vienna, Virginia. These reports are made available to US criminal investigators, as well as other FIU’s around the globe, and FinCEN will conduct computer assisted analyses of these reports to determine trends and refer investigations.

The BSA requires financial institutions to engage in customer due diligence, which is sometimes known in the parlance as “know your customer.” This includes obtaining satisfactory identification to give assurance that the account is in the customer’s true name, and having an understanding of the expected nature and source of the money that will flow through her accounts. Other classes of customers, such as those with private banking accounts and those of foreign government officials, are subjected to enhanced due diligence because the law deems that those types of accounts are a higher risk for money laundering. All accounts are subject to ongoing monitoring, in which internal bank software scrutinizes transactions and flags for manual inspection those that fall outside certain parameters. If a manual inspection reveals that the transaction is suspicious, the institution should file a Suspicious Activity Report.

The regulators of the industries involved are responsible to ensure that the financial institutions comply with the BSA. For example, the Federal Reserve and the Office of the Comptroller of the Currency regularly inspect banks, and may impose civil fines or refer matters for criminal prosecution for non-compliance. A number of banks have been fined and prosecuted for failure to comply with the BSA. Most famously, Riggs Bank, in Washington D.C., was prosecuted and functionally driven out of business as a result of its failure to apply proper money laundering controls, particularly as it related to foreign political figures.

In addition to the BSA, the U.S. imposes controls on the movement of currency across its borders, requiring individuals to report the transportation of cash in excess of $10,000 on a form called Report of International Transportation of Currency or Monetary Instruments (known as a CMIR).Likewise, businesses, such as automobile dealerships, that receive cash in excess of $10,000 must likewise file a Form 8300 with the Internal Revenue Service, identifying the source of the cash.

[edit]Criminal sanctions

Money laundering has been criminalized in the United States since the Money Laundering Control Act of 1986. That legislation, contained at section 1956 of Title 18 of the United States Code, prohibits individuals from engaging in a financial transaction with proceeds that were generated from certain specific crimes, known as “specified unlawful activities” (SUAs). Additionally, the law requires that an individual specifically intend in making the transaction to conceal the source, ownership or control of the funds. There is no minimum threshold of money, nor is there the requirement that the transaction succeed in actually disguising the money. Moreover, a “financial transaction” has been broadly defined, and need not involve a financial institution, or even a business. Merely passing money from one person to another, so long as it is done with the intent to disguise the source, ownership, location or control of the money, has been deemed a financial transaction under the law. However, the lone possession of money without either a financial transaction or an intent to conceal is not a crime in the United States.

In addition to money laundering, the law, contained in section 1957 of Title 18 of the United States Code, prohibits spending in excess of $10,000 derived from an SUA, regardless of whether the individual wishes to disguise it. This carries a lesser penalty than money laundering, and unlike the money laundering statute, requires that the money pass through a financial institution.

According to the records compiled by the United States Sentencing Commission, in 2009, the United States Department of Justice typically convicted a little over 81,000 people; of this, approximately 800 are convicted of money laundering as the primary or most serious charge.

Notable cases

Bank of New York: $7 billion of Russian capital flight laundered through accounts controlled by bank executives, late 1990s

Nauru: $70 billion of Russian capital flight laundered through unregulated Nauru offshore shell banks, late 1990s

Sani Abacha: $2–5 billion of government assets laundered through banks in the U.K.,Luxembourg, Jersey (Channel Islands), and Switzerland, by president of Nigeria.

Bank of Credit and Commerce International: Unknown amount, estimated in billions, of criminal proceeds, including drug trafficking money, laundered during the mid-1980s.

Popular culture

"The Shawshank Redemption" — Andy Dufresne laundered kickback money for Prison Warden Samuel Norton, then obtained it from a few Portland, ME banks after his escape.

"Mickey Blue Eyes" — Michael is given paintings to sell by a crime family which was later revealed to be money laundering by the FBI when they spoke to him.

"Wall Street: Money Never Sleeps" — Jake is asked by Gordon Gekko, his future father-in-law, to help him obtain his daughter Winnie's signature in order to transport over $100 million which Jake stated was laundering.

"Breaking Bad" — Skyler White helps her husband, Walter, launder his drug money

Money laundering in its literal sense

At Westin St. Francis' Hotel in San Francisco all coins are cleaned since 1938 in a special machine. This practice was introduced in order to avoid dirt on white gloves of the ladies.