ANTI MONEY LAUNDERING BRIEFING TO AML COURSE WORK Presented by: Besart Qerimi firstname.lastname@example.org 2011
SESSION OBJECTIVESBriefing on:• Money Laundering• Financing of Terrorism
DEFINITION OF MONEY LAUNDERING“Money Laundering has been described as the process bywhich the proceeds of crime are put through a series oftransactions which disguise their illicit origins, and make themappear to have come from a legitimate source” UN Vienna Convention 1988“Money laundering is any action taken to conceal, arrange, useor possess the proceeds of any criminal conduct” Serious Organised Crime Agency UK
PREDICATE CRIMES Corruption and Bribery Fraud Drug trafficking Organized crime Money Human trafficking laundering Predicate Crimes Other serious Arms trafficking crimes… Environmental Smuggling crime Terrorism
THE GLOBAL SCALE OF MONEY LAUNDERING• World-wide money laundering could amount to 2 – 5% global GDP ($590 billion - $1.5 trillion) (IMF & World Bank)• £25 billion of criminal assets are laundered through the UK financial system every year (UK Government estimate)
MONEY LAUNDERING PROCESS Placement Layering 1 2 Integration 3
MONEY LAUNDERING PROCESS INTEGRATION •Initial introduction of criminal •Involves distancing the money proceeds into the stream of from its criminal source: commerce •The last stage in the laundering •movements of $ into different •Most vulnerable stage of process. accounts money laundering process •Occurs when the laundered •movements of money to proceeds are distributed back to different countries the criminal. •Increasingly difficult to detect •Creates appearance of legitimate wealth PLACEMENT LAYERINGSome steps may also be absent, depending on thecircumstances (e.g. non-cash proceeds, being already inthe financial system, do not require placement)
FINANCING OF TERRORISM• Terrorist financing refers to the processing of funds to sponsor or facilitate terrorist activity. The financial support, in any form, of terrorism or of those who encourage, plan or engage in it.• To move their funds, terrorists use the formal banking system, informal systems know as Hawala system and the physical transportation of cash.
LEGAL SOURCES OF TERRORIST FINANCING• Collection of membership dues• Sale of publications• Cultural of social events• Government sponsorship• Door to door solicitation within community• Request to wealthy members of the community• Donation
ILLEGAL SOURCES• Kidnap and extortion• Smuggling• Fraud including credit card fraud• Misuse of non-profit organizations and charities fraud• Thefts and robbery• Drug trafficking• Arms trafficking
MONEY LAUNDERING METHODS• Structuring deposits – SMURFING• Bank transactions• Cash smuggling• Real estate• The catering industry• Investing in legitimate businesses• Casinos• Insurance market• Acquisition of luxury goods, gold and diamond
MONEY LAUNDERING EFFECTS• Economic effects of money laundering• Socioeconomic costs (is a global threat, Is fuel to expand criminal enterprise, helps hide corrupt payments)• Reputational, credit and operational risk, market risk.
ANTI MONEY LAUNDERINGORGANIZATIONS AND INITIATIVES• Financial Action Task Force• International Monetary Fund• World Bank• Egmont Group• FIU.NET• European Union & European Council• United Nations Office on Drugs and Crime• OFAC - Office of Foreign Assets Control
WHERE ARE WE IN 2013?• Tighter controls on AML globally• Fewer secrecy havens• Greater international cooperation and pressure to adopt international standards (FATF, IMF, WB, WORLSBERG)• Private sector generally proactive in monitoring their business relationships• Cybercrime exploitation• Lack on economic development• No database of Money Laundering Cases
WHAT ARE SOME OF THE CHALLENGES?• Developing political will at senior levels of government• Implementation of FATF 40+9 Recommendations• Timely response to emerging ML/TF trends• Building capacity for investigation and prosecution• Knowing your client is not always easy• Globalization• Developments in Cybercrimes system• Exploitation of drug trafficking• Coordination among countries law enforcement, financial intelligence units, regulators, and judiciaries• Application of AML regime in a cash based economy.