Money laundering refers to the process of making illegally gained money appear legal. It involves three stages: placement, layering, and integration. Criminals launder money to hide wealth from authorities, avoid prosecution, evade taxes, increase profits by reinvesting funds, and provide legitimacy to businesses. Common criminals that launder money include drug dealers, mobsters, terrorists, corrupt politicians, embezzlers, and public officials. They employ techniques like structuring deposits, connected accounts, and investment products. Banks can prevent money laundering by reporting suspicious activities, knowing customers, maintaining records, and cooperating globally and through organizations like FATF.

1. A Presentation On
AML Frame Work
Presented by- Sambit

2. WHAT IS MONEY LAUNDERING ?
• The word “laundry” literallymeans “cleaning”,money launderingrefers to “cleaning of money”
Definition: 'Money Laundering' is the process by which illegal funds and
assets are converted into legitimate funds and assets.
Illegal / Dirty Money Legal / white Money

4. FRAMEWORK/STAGES OF MONEY LAUNDERING
Layering
Placement Integration

5. OBJECTIVES OF MONEY LAUNDERING
The main objectives of money launderers are thus to place their
funds in the financial system without arousing suspicion, to move
them around, often after a series of complex transactions crossing
multiple jurisdictions so that it becomes difficult to identify their
original sources, and finallyto move the funds back into the financial
and business systems so that they appear legitimate.

6. WHY DO CRIMINALS LAUNDER MONEY
• There are several reasons why people launder money.
• These include:
◦ hiding wealth: criminals can hide illegally accumulated wealth to
avoid its seizure by authorities
◦ avoiding prosecution: criminals can avoid prosecution by distancing
themselves from the illegal funds
◦ evading taxes: criminals can evade taxes that would be imposed on
earnings from the funds
◦ increasing profits: criminals can increase profits by reinvesting the
illegal funds in businesses
◦ becoming legitimate: criminals can use the laundered funds to
build up a business and provide legitimacy to this business

7. CRIMINALS OF MONEY LAUNDERING
Drug Dealers:
Drug dealersusuallydeal withlarge amount of cash,makingit
difficultfor authorities to makeapaper trail. Large amounts of cash
raise red flags.
Mobsters/ Gang members:
Likedrug dealers,these individuals(inagroup form) perform many
cash transactions while maintainingsafenetworks overseas.
Terrorists:
Terrorists arebigin money laundering.Terroristactivities must be
financed; otherwise explosives and other weaponry wouldnot be an
obtainable asset.

8. Bad Politicians: With greater accessto money and lobbyist networking, the act of money .
. laundering can seem to be one of the best wayto protect one'sassets.
Embezzlers: Caseshaveproven that people who havetaken money from an employeror their
own placeof business will normally partake in activitiesto hide these newlyacquired
assets.
Bad Public Officials: Mainly,anyonein aposition of authority whose actions normally go
unquestioned willtake advantageof an opportunity likethis

9. TYPOLOGIES/ TECHNIQUES EMPLOYED
 Deposit structuring or smurfing
 ConnectedAccounts
 Payable ThroughAccounts
 Loan back arrangements
 Forex Money Changers
 Credit/ Debit cards
 Investment Banking and the Securities Sector
 Insurance and Personal Investment Products
 Companies Trading and BusinessActivity
 Correspondent Banking
 Lawyers, Accountants & otherIntermediaries
 Misuse of Non-Profit Organizations

10. MONEY LAUNDERING RISKS:
 Reputational risk
 Legal risk
 Operational risk (failed internal processes, people and systems & technology)
 Concentration risk (either side of balance sheet).
All risks are inter-related and together have the potential of causing serious
threat to the survival of the bank

11. TECHNIQUES TO PREVENT MONEY LAUNDERING
 Providing misleading information / information not easily verifiable while opening an Account.
 Large cash withdrawals from: a dormant or inactive account or account with unexpected large
credit from abroad.
 Sudden increase in cash deposits of an individual with no justification.
 Employees leading lavish lifestyles that do not match their known income sources.
 Large cash deposits into same account.
 Substantial increase in turnover in a dormant account.
 Receipt or payment of large cash sums with no obvious purpose or relationship to Account holder
his business.
 Reluctance to provide normal information when opening an Account or providing minimal or
fictitious information.

12. RECOMMENDATIONS
 The truth is that no individual nation has the power to stop money laundering alone. If one country
is hostile to laundering, criminals simply look elsewhere for a place to clean their money. Therefore,
Global cooperation is essential.
 The most prominent international organization in this respect is probably the Financial Action Task
Force (FATF), whichhas 33member states and international organizations on its roster listasof 2005. The
FATFissued the "40 Recommendations" for banks that havebecome the anti-money-laundering standard.
 Report allsuspicious activity.(For example,ifabackground check revealed that depositor Aworksin asteel
factory,and he typicallydeposits $2,000 everytwo weeks,aseriesof 10$9,000 deposits over the course of
two weeksshould raiseared flag.)
 Haveappropriate riskmanagement systemsto determine whether the customer isapoliticallyexposed
person.
 Financialinstitutions should maintain, for at leastfiveyears,all necessaryrecords on transactions, both
domestic or international, to enable them to complyswiftlywith information
 If afinancialinstitution suspects or has reasonable grounds to suspect that funds are the proceeds of a
criminalactivity,or are related to terrorist financing, it should be required, directlyby lawor regulation, to
report promptly its suspicions to the financialintelligenceunit (FIU).

13. Thank You for your time…