Anti Money Laundering

1. Prevention of Money Laundering
Presentation By
ABDULLAH AL MASUM
Manager, Monitoring & Quality Assurance

2. OBJECTIVES
• Enabling you to increase your awareness of
anti-money laundering.
• Explaining your responsibilities under Money
Laundering Prevention Act-2008 and to meet
the regulatory requirements.
• Consequences of non-compliance.
• Answering your queries which you may have in
implementing the AML/ KYC procedures of
the Bank.

3. Penalties/Do U Agree?
 Imprisonment (Land you in jail)
 Can get you fired
 Fines (Individual & Org)
 Revocation of license
 Public Censure
 Threaten your life and career, as you know it.

4. Overview
• 1970 - US enacted ‘the Bank Secrecy Act’ - required reporting of large currency
transactions that were previously impossible to track.
• 1986 - In 1986, the U.S. became the first country in the world to criminalize the “laundering”
of the proceeds of criminal activity with the enactment of the Money Laundering Control Act
of 1986. Since enacting the law, the U.S. Congress has increased its coverage, reach and
scope, making it the broadest, strongest and most far-reaching money laundering law in the
world.
• 1988 - 140 countries signed the Vienna Convention, which called for fighting M/L and
enacting laws to combat it. In December 1988, the G-10's Basle Committee on Banking
Supervision issued a "statement of principles" with which the international banks of member
states are expected to comply. These principles cover identifying customers, avoiding
suspicious transactions, and cooperating with law enforcement agencies. In issuing these
principles, the committee noted the risk to public confidence in banks, and thus to their
stability, that can arise if they inadvertently become associated with money laundering.

5. • 1989 - Financial Action Task Force (FATF) was formed with members of G-7,
EC and eight other countries. It’s an inter-govt. body whose purpose is the
development and promotion of policies to combat M/L. Currently, consists of
29 countries plus 2 int’l org. (EC. & GCC). FATF assembled 40
recommendations for AML efforts designed to be at universal applications.
• 2002 - Bangladesh along with 140 countries was a signatory to the 1988
Vienna Convention, which called for fighting M/L and enacting laws to
combat it. Govt. of Bangladesh recognized the necessity of enacting
legislation in line with International Standards -- Money laundering Protirodh
Ain – 2002
• AML Act-2008 replaced AML Act 2002

6. What is Money Laundering
• Please refer section 2 ta AML Act-2008

7. Money from Predicate Offence
Robbery/Theft Bribe/Corruption
Dowry
Smuggling
Illegal Arms Dealing
Terrorism
Business in theft Goods Child & Women
Kidnap/Murder/Assault Trafficking
Forgery (Deed/Currency)
Illicit traffic in Narcotic Drug
Extortion/Graft Case

8. Why Money Laundering is done?
Criminals engage in money laundering for three main reasons:
1. First, money represents the lifeblood of the organization that engages in
criminal conduct for financial gain because it covers operating expenses,
replenishes inventories, purchases the services of corrupt officials to escape
detection and further the interests of the illegal enterprise, and pays for an
extravagant lifestyle. To spend money in these ways, criminals must make
the money they derived illegally appear legitimate.
2. Second, a trail of money from an offense to criminals can become
incriminating evidence. Criminals must obscure or hide the source of their
wealth or alternatively disguise ownership or control to ensure that illicit
proceeds are not used to prosecute them.
3. Third, the proceeds from crime often become the target of investigation and
seizure. To shield ill-gotten gains from suspicion and protect them from
seizure, criminals must conceal their existence or, alternatively, make them
look legitimate.

10. Money Laundering Process :
Placement :
Dirty Money Physical disposal of CASH
Integration :
Layered funds are brought Layering :
back into legitimate use Attempts to disguise/hide
origin of initial deposits
Asset Asset Asset

11. Placement
Physical disposal of cash through:
• Financial institutions
• Securities brokers
• Purchase of assets
• Mixing funds with BANKS
legitimate earnings,
• Currency smuggling, etc.

12. Layering
Disguise/hide origin of initial deposit through :
• Multiple transfers (by TT, by different a/cs),
• Foreign Currency exchange,
• Pay up loans, trade finance facilities, mortgage
• Pay up trade payments incurred from false trades,
• Purchase of Travelers cheques,
• Multiple purchase & sale of assets (property, shares,
business, etc.

13. Integration
Layered funds are brought back into
legitimate use:
Fixed Assets
Business Assets Layered Funds Crimes
Money Assets

14. How does M/L affect business ?
• Makes crime a profitable business.
• Damages market integrity.
• Deters foreign investment
• Diminish Govt. Tax revenue.
• Corruption undermines good governance
• Contaminates the industry
• Risks for financial institutions
• Distorts assets & commodity prices and leads to
misallocation of resources.
• Uneven playing field for honest businesses

15. Benefits –Prevention of ML
• Crime is perpetrated to Make Money
• Criminals succeed only if they can convert “Dirty”
Money into respectable funds, to spend
legitimately
• If criminals can not do this, then they have
difficulty storing and spending their ill-gotten
gains
• If this situation can prevail , then such crimes may
eventually become less worthwhile for the
criminals

16. Offences & Punishment
 Sec.4. for involvement by any means with M/L 6 mon. to 7 yrs
imprisonment with fine of max. The amount of the money
involved with the crime will be confiscated.
 Sec.5 for violating attachment order or Freezing order’- –
either min.1yr. imprisonment or fine min.Tk.5K or both
Sec.6 for divulging info. for impeding the investigation either
min.2yr. imprisonment or fine of min. Tk 10K or both

17. Offences & Punishment
 Sec.7 for refusing to assist or co-operate with authorized
investigating officer, without any reasonable ground : either min.
1yr imprisonment or a fine of min. Tk5K or both.
 Sec.8. for providing false information on source & identity of the
client or nominee knowingly: either min. 1yr imprisonment or a
fine of min. Tk50K or both.
 Sec.25 failure by Banks/ Fin. institutions to preserve and supply
the required data information – max.Tk 5 lac fine with a min. of
Tk.10K. Even cancellation of license

18. Effective Tools For Prevention of ML
KYC
OBJECTIVE
 Customer identification evidence:
Reason for the relationship
Determine the source of wealth /funds are derived from
legitimate sources: (anticipated volume& type of activity, source of
funds,underlying source of wealth)
Document relevant information about the customer:
Have all necessary information to deliver excellent service,
satisfy regulatory and best practice requirements.

19. Purpose
• To deter and detect attempts to use our institution, to Place, Layer
or Integrate proceeds of criminal activity thru any of its products
or services.
• Confirm identity of and obtain sufficient information about
customers to satisfy yourself that they are involved in legitimate
business activities.
• Determine that income & source of wealth are derived from
legitimate sources.
• Document information about the customer.
• Develop a profile of anticipated transactions to determine cust.
financial service requirements, suitability/ risk tolerance and
anticipated bakg. activity & product needs.
• Monitor trns. to ensure they are consistent with profiles.

20. Through KYC, Bank expects to:
• Be compliant with all applicable statutes and
regulations
• Adhere to sound banking practices.
• Decrease likelihood that the bank will become
associated with or a victim of illegal activities of its
customers.
• Protect and enhance the good name and reputation of
the Bank.

21. KYC-Checklist
Basic information requirements
• Mandatory checks for all parties to the a/c.
• Status verification
• Name ,DOB & Nationality
• Address, Purpose of account,
• Source of funds,
• Anticipated volume & type of activity
• Relationship between parties/ signatories to the a/c.
• Special Customers – check
• Source of wealth.

22. Verification (identity) process of Customers/ beneficial
owners/Agents.
 Exact type of evidence used to verify identity
 Evidence of identity and address.
 Depending on the risk associated with an a/c, more
detailed due diligence about the customer & their
business.
 KYC is an ongoing process, does not end when a/c is
completed.

23. IDENTITY Info.
As a min. the following info. must be obtained and i & ii
verified reliable evidence.
For Personal accounts
• Name, date of birth & nationality
• Residential address, (PO Box not reliable)
• Occupation/ name of business
• Purpose of account
For Non-Personal Accounts
• Full legal name- if applicable regtrn. No.
• Regd. & operating addresses
• Nature of business
• Purpose of account
• Info. of individuals controlling the account or acting on
behalf of another.

24. Suspicious Activity/Transaction Reporting
(SAR/STR)
• What is it?
It is the prompt report of suspicious transactions, or
proposed transactions, through the appropriate
internal channels and, where required or permitted
by local legislation, to the relevant authorities

25. SAR/STR - Process
Notices Line Manager
suspicious conducts
transactions necessary Line Manager CAMLCO
–reports investigation reports the reports the
directly to or instruct case to case to local
the responsible CAMLCO* authorities
BAMLCO/BM person to do
/LM the same
Mr. Rais Uddin Ahmad, CAMLCO: Country Anti Money Laundering Compliance Officer, BRA
Bank Ltd

26. Reporting
The suspicious Transaction will be reported immediately
Bangladesh Bank – AMLU
(BB-Anti Money Laundering Unit)
CAMLCO
(Chief Anti Money Laundering Compliance Officer)
BAMLCO
(Branch Anti Money Laundering Compliance Officer)
Branch Officer/Staff

27. Suspicious Activity – What is It?
• Suspicious Activity will often be one which is inconsistent with
the customer’s known, legitimate business or personal activities or
with the normal business for that type of account
• The first key to recognition is knowing enough about the
customer’s business to recognize that a transaction, or series of
transactions, is unusual and large
– ‘Unusual and large’ – Transactions with context to the account,
which have no apparent genuine economic or lawful purpose

28. GENERAL CAUSES FOR SUSPICIONS.
• Gaps in critical information
• Inconsistencies in information/ explanations
• Inability to explain
• Attempt to conceal
• Unnecessarily complex structures
• Excessive request for secrecy
• Unnecessary use of intermediaries

29. Monitoring Points
• Customers declared TP is consistent with
his transaction.
• Customers Profession commensurate with
his declared TP or transaction.
• Purpose of Account is understandable
• Funds coming into the account is from
legitimate source

30. SAR – Important Points
 NOTE
• Nobody can prevent you from filing a SAR
• You can consult your line manager but the decision to file a SAR
should be yours, depending entirely on your suspicion
• Disciplinary action can be taken if an employee willfully fails to
report a very obvious suspicious activity
• Disciplinary action will be taken against anybody including
supervisors if they dissuade or prevent an employee from filing a
SAR

31. SAR/STR – Important Points
 NOTE
• No action will be taken against a person for filing a SAR even if it
later turned out to be a genuine transaction if the person acted in
good faith without any mala-fide intent
• Do not alert the customer about your suspicion or about filing of
the SAR. (Putting hard holds on accounts can result in a tip-off)
• Once a SAR is filed, act as per the instructions of the CMLPO or
the authorities, if external disclosure has been made
• CAMLCO is the only authority in the Bank who is empowered to
take a decision on a SAR, including external disclosure

32. Warning !
Do not :
• Overstate income/wealth
• Mis-describe source of funds
• Misstate purpose of loan
• Exaggerate business connections/interest
• Speculate about intents/objectives
• Omit important details
• Forget to check references who know or
recommend the client

33. Guiding Principles:
Each one of us is personally responsible for :
• Understanding and maintaining high ethical standards,
including the standards and policies of the bank we work for
• Understanding and complying with local laws, rules and
regulations that apply to your jobs.
• Consulting with managers and compliance officers, when
you have questions regarding compliance or compliance
failures/ violations or situations where there may be
confusion as to applicability of any regulations.
• Ignorance of applicable laws & regulations is not an excuse
for failure to comply.

37. Address Verification
1. Address Visited: ………………………………………………..
2. Date of Visit: ……………………………………………………
3. Time of Visit: ……………………………………………………
4. Person’s Visited: …………………………………………………
5. Other Comments: …………………………………………………
………………………………. ……………………………….
Signature of DSE Signature of Sales Team Leader
Name: Name:
Date: Date:
Note: This template will be used only by DSEs in events they are not able
to obtain ‘Proof of Address’.

38. Customer’s Meeting/Interview
• A customer is interviewed by BM/CSM
when he/she comes to open an account in
the Branch
• When an account is opened through Sales
Centre the customer is interviewed by the
Sales Team Leader

39. Periodical Return
• Monthly: CTR & STR ( Cash Transaction Tk.7,00,000/
and above)
• Bi monthly: Deposit amount Tk. 1.00crore and above
in NR Taka a/c – Statement-2
– Unusual Transaction –Statement-3
– Ref:BRPD(P)760/29/2002 dt 25.06.2002
– Quarterly:Unusual/Suspicious Transaction- Appendix
Gha
– Ref: ML Circular # 2

40. What’s in your
Mind ?