De-Risking Web Seminar held on 9/26/16 by Stanley Foodman of Foodman CPAs & Advisors and Global Radar to discuss the impact of de-risking on financial institutions
The document discusses several pieces of US legislation aimed at combating money laundering and other financial crimes. It outlines laws such as the Bank Secrecy Act of 1970, Money Laundering Control Act of 1986, Anti-Drug Abuse Act of 1988, and the USA PATRIOT Act of 2001. These laws established reporting requirements for financial institutions, made money laundering a federal crime, increased penalties for noncompliance, and enhanced anti-money laundering efforts. The document also discusses the role of the Office of Foreign Assets Control (OFAC) in administering sanctions and publishing restricted lists.
Anti Money Laundering's regulation: current aspects and future forecastsclaudiotarulli3
Presentazione della Tesi "Anti Money Laundering's regulation: current aspects and future forecasts" presentata per il Master in "Antiriciclaggio e Compliance" presso la European School of Banking Management.
This document outlines responsibilities of US persons for taxation purposes, including citizenship vs residency based taxation. It discusses recent media coverage of former FIFA and Guardian executives being investigated by the IRS. It also summarizes the Foreign Account Tax Compliance Act (FATCA) which requires foreign financial institutions to identify and report US persons holding assets abroad to avoid tax obligations, and the impact on governments, financial institutions, and individuals.
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.
The document discusses AML/CFT compliance services in the UAE. It notes that governments are increasing scrutiny of AML/CFT processes to fight financial crimes. Firms must comply with minimum standards or face penalties. In 2020, the UAE formed an Executive Office of Anti-Money Laundering to follow international requirements. HLB HAMT provides AML/CFT compliance assessments and advisory services to help organizations develop, implement, and enhance their compliance regimes across multiple sectors. Key services include AML compliance advisory to help financial institutions and designated non-financial businesses comply with changing regulations.
In this powerpoint presentation, tax attorney Mike DeBlis discusses the mechanics of FATCA, the ripple effect that this law has had on those with unreported foreign assets, and why it is one of the most controversial laws that no one has ever even heard about.
Financial institutions play a key role in detecting, preventing, and controlling money laundering and terrorism financing through continuous monitoring of customer relationships and timely reporting of suspicious activities. They must follow know-your-customer procedures and report currency transactions, funds transfers, and other activity to the Financial Crimes Enforcement Network. This helps law enforcement maintain security and integrity in the global financial system.
The FATF is an inter-governmental body that establishes standards for combating money laundering and terrorist financing. It comprises over 200 member countries that have committed to implementing the FATF Recommendations. The Recommendations establish global standards for anti-money laundering and counter-terrorist financing systems. Implementing the Recommendations effectively helps secure financial systems, build terrorism financing tracing capacity, and avoid sanctions.
The document discusses several pieces of US legislation aimed at combating money laundering and other financial crimes. It outlines laws such as the Bank Secrecy Act of 1970, Money Laundering Control Act of 1986, Anti-Drug Abuse Act of 1988, and the USA PATRIOT Act of 2001. These laws established reporting requirements for financial institutions, made money laundering a federal crime, increased penalties for noncompliance, and enhanced anti-money laundering efforts. The document also discusses the role of the Office of Foreign Assets Control (OFAC) in administering sanctions and publishing restricted lists.
Anti Money Laundering's regulation: current aspects and future forecastsclaudiotarulli3
Presentazione della Tesi "Anti Money Laundering's regulation: current aspects and future forecasts" presentata per il Master in "Antiriciclaggio e Compliance" presso la European School of Banking Management.
This document outlines responsibilities of US persons for taxation purposes, including citizenship vs residency based taxation. It discusses recent media coverage of former FIFA and Guardian executives being investigated by the IRS. It also summarizes the Foreign Account Tax Compliance Act (FATCA) which requires foreign financial institutions to identify and report US persons holding assets abroad to avoid tax obligations, and the impact on governments, financial institutions, and individuals.
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.
The document discusses AML/CFT compliance services in the UAE. It notes that governments are increasing scrutiny of AML/CFT processes to fight financial crimes. Firms must comply with minimum standards or face penalties. In 2020, the UAE formed an Executive Office of Anti-Money Laundering to follow international requirements. HLB HAMT provides AML/CFT compliance assessments and advisory services to help organizations develop, implement, and enhance their compliance regimes across multiple sectors. Key services include AML compliance advisory to help financial institutions and designated non-financial businesses comply with changing regulations.
In this powerpoint presentation, tax attorney Mike DeBlis discusses the mechanics of FATCA, the ripple effect that this law has had on those with unreported foreign assets, and why it is one of the most controversial laws that no one has ever even heard about.
Financial institutions play a key role in detecting, preventing, and controlling money laundering and terrorism financing through continuous monitoring of customer relationships and timely reporting of suspicious activities. They must follow know-your-customer procedures and report currency transactions, funds transfers, and other activity to the Financial Crimes Enforcement Network. This helps law enforcement maintain security and integrity in the global financial system.
The FATF is an inter-governmental body that establishes standards for combating money laundering and terrorist financing. It comprises over 200 member countries that have committed to implementing the FATF Recommendations. The Recommendations establish global standards for anti-money laundering and counter-terrorist financing systems. Implementing the Recommendations effectively helps secure financial systems, build terrorism financing tracing capacity, and avoid sanctions.
Presentation given for Crowe Horwath Auditor's training session on 26/03/2016.
AML regulations are applicable to professional service providers also. See the presentation for more information
Money laundering involves disguising illegally obtained money to make it appear legitimate. It typically involves three steps: placement, layering, and integration. Money laundering can undermine the legitimacy and integrity of financial markets and lead to economic instability. Governments and international organizations have established laws and recommendations to prevent money laundering, including know-your-customer compliance, cash transaction reporting, and monitoring by groups like the Financial Action Task Force. New technologies also pose evolving threats, requiring advanced anti-money laundering mechanisms.
Anti-money Laundering:-
The process of disguising the proceeds of crime in an effort to conceal their illicit origins and legitimize their future use. Its main objective is to conceal true ownership and origin of the proceeds, a desire to maintain control, a need to change the form of the proceeds.Techniques used can be simple, diverse, complex, but secret.
it was a project assignment by our banking teacher related to an article published in dawn news paper kindly give your suggestions fa first time try :)
Money Laundering and Its Fall-out - REGULATION OF MONEY LAUNDERING: INDIA - ...Resurgent India
The document discusses money laundering regulation in India. It notes that while India has strict foreign exchange laws, it remains vulnerable to money laundering due to its status as a regional financial center and large informal money flows. Common sources of illegal proceeds in India include drug trafficking, wildlife trafficking, and tax evasion. The document outlines India's anti-money laundering regulations and efforts to strengthen compliance with FATF standards, but notes ongoing challenges including corruption and money laundering through countries like Mauritius and Sri Lanka.
Anti money laundering laws Pakistan with comparison of International lawsShehroz Adil
The document discusses anti-money laundering laws and regulations. It defines money laundering and outlines the process. It estimates that $800 billion to $2 trillion may be laundered annually worldwide. Several international bodies work to combat money laundering, including the UN, FATF, IMF, and World Bank. Pakistan has passed several acts and an ordinance to comply with FATF standards and amend its anti-money laundering laws. The document also discusses specific cases of alleged money laundering and international laws and requirements regarding anti-money laundering.
This document provides an overview of money laundering and combating the financing of terrorism. It discusses what money laundering is, the stages of money laundering (placement, layering, integration), and how it works. It also discusses terrorist financing. International efforts to combat money laundering and terrorist financing through organizations like the UN, FATF, and Egmont Group are overviewed. The roles and functions of India's Financial Intelligence Unit (FIU-IND) are described. The document also outlines India's Prevention of Money Laundering Act (PMLA) and its provisions, including scheduled offenses, punishments, and authorities for enforcement. Obligations of banks and financial institutions under PMLA around client identification,
The document discusses new US international reporting requirements including the Foreign Account Tax Compliance Act (FATCA), which requires foreign financial institutions and entities to report US persons' foreign accounts and ownership information to the IRS. It provides an overview of FATCA requirements such as foreign entity agreements with the IRS, withholding taxes, reporting thresholds, and penalties. Additionally, it briefly outlines other reporting regimes like the Qualified Intermediary regime, currency transaction reports, and suspicious activity reports.
An appraisal of legal and administrative framework for combating terrorist fi...Alexander Decker
This document analyzes Nigeria's legal and administrative frameworks for combating terrorist financing and money laundering. It discusses international conventions and frameworks, as well as relevant Nigerian laws like the Money Laundering (Prohibition) Act and Economic and Financial Crimes Act. While Nigeria has demonstrated commitment by implementing these laws and frameworks, the author notes that terrorist financing and money laundering continue due to professional criminals and loopholes in the laws. Key issues include vague definitions of suspicious transactions, asset forfeiture processes, and gaps in addressing nonprofit misuse and proliferation financing. The author aims to clarify terms, appraise the frameworks, and provide recommendations to strengthen Nigeria's anti-money laundering and counterterrorist financing regimes.
Money laundering is the process of concealing the origin of money obtained from illegitimate sources by passing it through complex sequence of financial transactions and making it appear to be originated from legal activity.
Illegal arm sales, terrorism funding, smuggling, drug trafficking, insider trading, fraud schemes, bribery etc. are some examples of illegal activities prohibited by law.
In simpler terms, money laundering means cleaning of dirty money.
Process of Money Laundering
Placement – Placing illegal cash proceeds with banks and other financial institutions onshore and offshore in smaller denominations.
Layering – Creating complex layers of financial transactions to make it difficult to trace the origin of money. The transactions might be channelled through purchase & sales of financial securities.
Integration – Integrating the money into legal system by investing into business, real estates and luxury assets.
Methods of Money Laundering
Structuring / Smurfing – It is a method of placement where the illegal money collected is broken into smaller deposits to place at different banks. This is done to avoid any suspicion of origin of money.
Shell Companies – This involves creation of fake companies that are registered and exist in papers but hold neither physical location nor operational activities are done.
Bulk Cash Smuggling – This involves smuggling cash to foreign countries to deposit illegal money in offshore bank which hold greater secrecy; generally countries considered as tax haven.
Round Tripping – Shipping back the money deposited in offshore financial institutions as foreign direct investment.
Act -
Financial Action Task Force – Formed in 1989 by G7 countries to develop and ensure an international response to combat money laundering. The objectives of the FATF were to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
PMLA (Prevention of Money Laundering Act) 2002 – The act passed to stop money laundering and punish those involved directly or indirectly in illegal activity. As per this act whoever commits money laundering shall be punishable with imprisonment of about 3 to 10 years and shall also be liable to pay fine.
Thank you for watching
Subscribe to DevTech Finance
Money laundering refers to disguising illegally obtained money to make it appear legitimate. It involves three steps: placement, layering, and integration. Placement involves depositing dirty money into banks to enter the financial system. Layering involves moving funds through transactions to obscure the origin. Integration reintroduces laundered money as clean funds. Money laundering has significant negative economic effects like distorting markets and undermining financial integrity. Global initiatives like the Vienna Convention and EU Money Laundering Directive aim to prevent it. The Prevention of Money Laundering Act in India establishes obligations for banks and financial penalties for violations.
The document discusses money laundering, including the stages of money laundering (placement, layering, integration). It notes that the Prevention of Money Laundering Act was enforced in India in 2002. High risk countries for money laundering are listed as those linked to terrorism, drug production, and corruption. Effects of money laundering include increased crime and loss of tax revenue. Anti-money laundering regulations and efforts in various countries are outlined, including know-your-customer (KYC) requirements which help financial institutions understand customer sources of funds and business activities.
If you would like to understand about the roots of the FCPA, what it entails, forbids, and what can companies do about it - enjoy this brief introduction, courtesy of ACURUS Business Consulting.
ACURUS Business Consulting - Business risk consulting focused on bridging complexity to simplicity, balancing business ethics, listening to understand, and providing customised solutions.
@acurusgta | www.acurus.ca | sid.joshi@acurus.ca | 1-416-577-8488
Those involved in business formations may unknowingly be violating professional conduct rules. As compliance requirements evolve to protect against money laundering, terrorism, and tax evasion, it has become harder for attorneys to keep up. But those who fail to comply can face serious fines and may even lose their license altogether.
Join this on-demand webinar to safeguard against ethical violations. Attendees will have a better understanding of compliance requirements, new and emerging legislation, and best practices for new client due diligence.
Learn about:
- The intersection of business formation and money laundering/terrorism/tax evasion
- How attorney-client privilege is impacted by current and emerging legislation
- Penalties for doing business with certain risk groups
- The ABA's Gatekeeper initiative that offers risk-based guidance
- Ethical considerations of potential anti-money laundering requirements for lawyers
- Due Diligence guidelines to prevent ethical dilemmas
Meet our expert:
Garth Jacobson, Esq. – CT Government Relations and Regional Attorney
Garth B. Jacobson serves as a Senior Government Relations Attorney for CT Corporation. Prior to this position, he worked at Preston Gates and Ellis LLP. Previously, he held the position of Chief Legal Counsel to the Montana Secretary of State where he successfully litigated election law cases before the state trial and appellant courts and federal courts. During that tenure, he served on the state bar committees that drafted business entity legislation including profit and nonprofit corporate acts, revisions to the partnership laws and the limited liability company act. Additionally, he developed and administered alternative dispute resolution of business name infringements. He served on the Montana Ethics Advisory Commission. He also served on the Board of Trustees of the State Bar of Montana and was also the president of the First Judicial District Bar Association.
The document defines security as freedom from risk or danger, and liberty as freedom from oppressive restrictions imposed by authorities. It explains that the Patriot Act was signed into law after 9/11 to unite and strengthen America by providing tools to intercept and obstruct terrorism. The Act reduced restrictions on searching communications and financial records, and expanded intelligence gathering and authorities' discretion in detaining immigrants suspected of terrorism.
Combating money laundering & terror financing case of nigeria- adv. chitengi...cjnsipho
This document discusses money laundering from a legal perspective. It begins by outlining the role of central banks and commercial banks in combating money laundering as possible intermediaries in the laundering process or effective points of curbing the issue. It then provides definitions of money laundering from legal and UN perspectives. The document also examines the historical development of money laundering, techniques used, participants involved, and controversies around criminalizing the offense.
How to Improve Anti-Money Laundering Investigation using Neo4jNeo4j
This document outlines how Neo4j can help improve anti-money laundering investigations. It begins with defining money laundering and providing examples of entities that may engage in it. It then discusses relevant anti-money laundering regulations and typical problems investigators face, such as high false positive rates and difficulty connecting related data points. The presentation demonstrates how Neo4j can help by connecting disparate data using graph patterns, making it easier to spot suspicious behavior and money laundering rings.
The document discusses the potential impact of the Foreign Account Tax Compliance Act (FATCA) on Caribbean nations. FATCA requires foreign financial institutions to report financial information of U.S. account holders to the IRS or face penalties. While FATCA aims to prevent tax evasion, it may conflict with privacy laws of Caribbean nations and impose high costs of compliance. The optimal approach for Caribbean nations is to enter intergovernmental agreements that promote economic stability and low compliance costs while avoiding violations of domestic laws.
Foreign bank account reporting requirements were established in 1970 to address concerns about US persons hiding assets and evading taxes through foreign accounts. In recent years, the IRS has stepped up enforcement of these FBAR reporting requirements, including increasing penalties, expanding the definition of foreign accounts, and collaborating with foreign governments like Switzerland to obtain client names. Tax preparers must also exercise due diligence in inquiring about foreign accounts to avoid penalties for themselves.
Presentation given for Crowe Horwath Auditor's training session on 26/03/2016.
AML regulations are applicable to professional service providers also. See the presentation for more information
Money laundering involves disguising illegally obtained money to make it appear legitimate. It typically involves three steps: placement, layering, and integration. Money laundering can undermine the legitimacy and integrity of financial markets and lead to economic instability. Governments and international organizations have established laws and recommendations to prevent money laundering, including know-your-customer compliance, cash transaction reporting, and monitoring by groups like the Financial Action Task Force. New technologies also pose evolving threats, requiring advanced anti-money laundering mechanisms.
Anti-money Laundering:-
The process of disguising the proceeds of crime in an effort to conceal their illicit origins and legitimize their future use. Its main objective is to conceal true ownership and origin of the proceeds, a desire to maintain control, a need to change the form of the proceeds.Techniques used can be simple, diverse, complex, but secret.
it was a project assignment by our banking teacher related to an article published in dawn news paper kindly give your suggestions fa first time try :)
Money Laundering and Its Fall-out - REGULATION OF MONEY LAUNDERING: INDIA - ...Resurgent India
The document discusses money laundering regulation in India. It notes that while India has strict foreign exchange laws, it remains vulnerable to money laundering due to its status as a regional financial center and large informal money flows. Common sources of illegal proceeds in India include drug trafficking, wildlife trafficking, and tax evasion. The document outlines India's anti-money laundering regulations and efforts to strengthen compliance with FATF standards, but notes ongoing challenges including corruption and money laundering through countries like Mauritius and Sri Lanka.
Anti money laundering laws Pakistan with comparison of International lawsShehroz Adil
The document discusses anti-money laundering laws and regulations. It defines money laundering and outlines the process. It estimates that $800 billion to $2 trillion may be laundered annually worldwide. Several international bodies work to combat money laundering, including the UN, FATF, IMF, and World Bank. Pakistan has passed several acts and an ordinance to comply with FATF standards and amend its anti-money laundering laws. The document also discusses specific cases of alleged money laundering and international laws and requirements regarding anti-money laundering.
This document provides an overview of money laundering and combating the financing of terrorism. It discusses what money laundering is, the stages of money laundering (placement, layering, integration), and how it works. It also discusses terrorist financing. International efforts to combat money laundering and terrorist financing through organizations like the UN, FATF, and Egmont Group are overviewed. The roles and functions of India's Financial Intelligence Unit (FIU-IND) are described. The document also outlines India's Prevention of Money Laundering Act (PMLA) and its provisions, including scheduled offenses, punishments, and authorities for enforcement. Obligations of banks and financial institutions under PMLA around client identification,
The document discusses new US international reporting requirements including the Foreign Account Tax Compliance Act (FATCA), which requires foreign financial institutions and entities to report US persons' foreign accounts and ownership information to the IRS. It provides an overview of FATCA requirements such as foreign entity agreements with the IRS, withholding taxes, reporting thresholds, and penalties. Additionally, it briefly outlines other reporting regimes like the Qualified Intermediary regime, currency transaction reports, and suspicious activity reports.
An appraisal of legal and administrative framework for combating terrorist fi...Alexander Decker
This document analyzes Nigeria's legal and administrative frameworks for combating terrorist financing and money laundering. It discusses international conventions and frameworks, as well as relevant Nigerian laws like the Money Laundering (Prohibition) Act and Economic and Financial Crimes Act. While Nigeria has demonstrated commitment by implementing these laws and frameworks, the author notes that terrorist financing and money laundering continue due to professional criminals and loopholes in the laws. Key issues include vague definitions of suspicious transactions, asset forfeiture processes, and gaps in addressing nonprofit misuse and proliferation financing. The author aims to clarify terms, appraise the frameworks, and provide recommendations to strengthen Nigeria's anti-money laundering and counterterrorist financing regimes.
Money laundering is the process of concealing the origin of money obtained from illegitimate sources by passing it through complex sequence of financial transactions and making it appear to be originated from legal activity.
Illegal arm sales, terrorism funding, smuggling, drug trafficking, insider trading, fraud schemes, bribery etc. are some examples of illegal activities prohibited by law.
In simpler terms, money laundering means cleaning of dirty money.
Process of Money Laundering
Placement – Placing illegal cash proceeds with banks and other financial institutions onshore and offshore in smaller denominations.
Layering – Creating complex layers of financial transactions to make it difficult to trace the origin of money. The transactions might be channelled through purchase & sales of financial securities.
Integration – Integrating the money into legal system by investing into business, real estates and luxury assets.
Methods of Money Laundering
Structuring / Smurfing – It is a method of placement where the illegal money collected is broken into smaller deposits to place at different banks. This is done to avoid any suspicion of origin of money.
Shell Companies – This involves creation of fake companies that are registered and exist in papers but hold neither physical location nor operational activities are done.
Bulk Cash Smuggling – This involves smuggling cash to foreign countries to deposit illegal money in offshore bank which hold greater secrecy; generally countries considered as tax haven.
Round Tripping – Shipping back the money deposited in offshore financial institutions as foreign direct investment.
Act -
Financial Action Task Force – Formed in 1989 by G7 countries to develop and ensure an international response to combat money laundering. The objectives of the FATF were to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
PMLA (Prevention of Money Laundering Act) 2002 – The act passed to stop money laundering and punish those involved directly or indirectly in illegal activity. As per this act whoever commits money laundering shall be punishable with imprisonment of about 3 to 10 years and shall also be liable to pay fine.
Thank you for watching
Subscribe to DevTech Finance
Money laundering refers to disguising illegally obtained money to make it appear legitimate. It involves three steps: placement, layering, and integration. Placement involves depositing dirty money into banks to enter the financial system. Layering involves moving funds through transactions to obscure the origin. Integration reintroduces laundered money as clean funds. Money laundering has significant negative economic effects like distorting markets and undermining financial integrity. Global initiatives like the Vienna Convention and EU Money Laundering Directive aim to prevent it. The Prevention of Money Laundering Act in India establishes obligations for banks and financial penalties for violations.
The document discusses money laundering, including the stages of money laundering (placement, layering, integration). It notes that the Prevention of Money Laundering Act was enforced in India in 2002. High risk countries for money laundering are listed as those linked to terrorism, drug production, and corruption. Effects of money laundering include increased crime and loss of tax revenue. Anti-money laundering regulations and efforts in various countries are outlined, including know-your-customer (KYC) requirements which help financial institutions understand customer sources of funds and business activities.
If you would like to understand about the roots of the FCPA, what it entails, forbids, and what can companies do about it - enjoy this brief introduction, courtesy of ACURUS Business Consulting.
ACURUS Business Consulting - Business risk consulting focused on bridging complexity to simplicity, balancing business ethics, listening to understand, and providing customised solutions.
@acurusgta | www.acurus.ca | sid.joshi@acurus.ca | 1-416-577-8488
Those involved in business formations may unknowingly be violating professional conduct rules. As compliance requirements evolve to protect against money laundering, terrorism, and tax evasion, it has become harder for attorneys to keep up. But those who fail to comply can face serious fines and may even lose their license altogether.
Join this on-demand webinar to safeguard against ethical violations. Attendees will have a better understanding of compliance requirements, new and emerging legislation, and best practices for new client due diligence.
Learn about:
- The intersection of business formation and money laundering/terrorism/tax evasion
- How attorney-client privilege is impacted by current and emerging legislation
- Penalties for doing business with certain risk groups
- The ABA's Gatekeeper initiative that offers risk-based guidance
- Ethical considerations of potential anti-money laundering requirements for lawyers
- Due Diligence guidelines to prevent ethical dilemmas
Meet our expert:
Garth Jacobson, Esq. – CT Government Relations and Regional Attorney
Garth B. Jacobson serves as a Senior Government Relations Attorney for CT Corporation. Prior to this position, he worked at Preston Gates and Ellis LLP. Previously, he held the position of Chief Legal Counsel to the Montana Secretary of State where he successfully litigated election law cases before the state trial and appellant courts and federal courts. During that tenure, he served on the state bar committees that drafted business entity legislation including profit and nonprofit corporate acts, revisions to the partnership laws and the limited liability company act. Additionally, he developed and administered alternative dispute resolution of business name infringements. He served on the Montana Ethics Advisory Commission. He also served on the Board of Trustees of the State Bar of Montana and was also the president of the First Judicial District Bar Association.
The document defines security as freedom from risk or danger, and liberty as freedom from oppressive restrictions imposed by authorities. It explains that the Patriot Act was signed into law after 9/11 to unite and strengthen America by providing tools to intercept and obstruct terrorism. The Act reduced restrictions on searching communications and financial records, and expanded intelligence gathering and authorities' discretion in detaining immigrants suspected of terrorism.
Combating money laundering & terror financing case of nigeria- adv. chitengi...cjnsipho
This document discusses money laundering from a legal perspective. It begins by outlining the role of central banks and commercial banks in combating money laundering as possible intermediaries in the laundering process or effective points of curbing the issue. It then provides definitions of money laundering from legal and UN perspectives. The document also examines the historical development of money laundering, techniques used, participants involved, and controversies around criminalizing the offense.
How to Improve Anti-Money Laundering Investigation using Neo4jNeo4j
This document outlines how Neo4j can help improve anti-money laundering investigations. It begins with defining money laundering and providing examples of entities that may engage in it. It then discusses relevant anti-money laundering regulations and typical problems investigators face, such as high false positive rates and difficulty connecting related data points. The presentation demonstrates how Neo4j can help by connecting disparate data using graph patterns, making it easier to spot suspicious behavior and money laundering rings.
The document discusses the potential impact of the Foreign Account Tax Compliance Act (FATCA) on Caribbean nations. FATCA requires foreign financial institutions to report financial information of U.S. account holders to the IRS or face penalties. While FATCA aims to prevent tax evasion, it may conflict with privacy laws of Caribbean nations and impose high costs of compliance. The optimal approach for Caribbean nations is to enter intergovernmental agreements that promote economic stability and low compliance costs while avoiding violations of domestic laws.
Foreign bank account reporting requirements were established in 1970 to address concerns about US persons hiding assets and evading taxes through foreign accounts. In recent years, the IRS has stepped up enforcement of these FBAR reporting requirements, including increasing penalties, expanding the definition of foreign accounts, and collaborating with foreign governments like Switzerland to obtain client names. Tax preparers must also exercise due diligence in inquiring about foreign accounts to avoid penalties for themselves.
The Cost of Doing Business? Laws Against Bribery of Foreign Public OfficialsNow Dentons
In this presentation, Alan Monk looks at the laws against bribery of foreign Public Officials. Giving an overview of the Corruption of Foreign Public Officials Act (Canada), the Foreign Corrupt Practices Act (United States), and the Bribery Act (United Kingdom) as well as what companies can do in response to the legislation.
The document discusses Geographic Targeting Orders (GTOs) issued by the Financial Crimes Enforcement Network (FinCEN) to combat money laundering in specific geographic areas. It provides details on:
1) Recent GTOs targeting real estate transactions in cities like New York, Los Angeles, and Miami requiring reporting of cash purchases over $1-3 million.
2) How past GTOs disrupted drug money flows to Colombia by requiring reporting of remittances over $750, reducing flows by 30%.
3) Proposals to expand GTO powers to extend duration and cover wire transfers, though concerns remain about wide national implementation versus local intelligence-based targeting.
This document summarizes some frequently asked ethics questions regarding client trust accounts. It provides concise answers to questions about determining if a financial institution is approved to hold trust accounts, how to handle payments that contain both earned and advance fees, what to do with excess funds paid by a third party, and whether fees due to another attorney under a division of fees agreement can be held in a lawyer's trust account. The summary addresses key issues lawyers often have about complying with rules regarding proper handling of client funds.
The document discusses several laws related to anti-money laundering efforts including the Money Laundering Control Act of 1986, the Anti-Drug Abuse Act of 1988, and the USA PATRIOT Act of 2001. These laws reinforced anti-money laundering efforts, required verification of identities for large monetary transactions, and created new criminal offenses related to money laundering through financial institutions.
National Money Laundering Strategy 2007 A ReviewVicky_Lee_NY
The 2007 U.S. National Money Laundering Strategy focuses on key anti-money laundering initiatives to address prevalent money laundering techniques used in criminal activities like drug trafficking and tax evasion. While terrorism financing remains a threat, other aspects of money laundering require equal attention due to their importance in other crimes such as bribery, illegal gambling, and prostitution. The strategy identifies domestic and international money laundering trends involving new technologies, money service businesses, smuggling cash across borders, trade-based money laundering, using legal entities to hide wealth, casinos, insurance products, and asset forfeiture programs. Financial institutions can help by continuing to file suspicious activity reports to recognize money laundering patterns.
FinCEN was created in 1990 as part of the Treasury Department to support law enforcement efforts against money laundering and other financial crimes. It collects and analyzes financial transaction reports under the Bank Secrecy Act to identify patterns indicating money laundering, terrorist financing, and other illicit activities. FinCEN regulates over 100,000 financial institutions and provides intelligence and case support to federal, state and local law enforcement agencies through over 6,500 reports annually. It also works with international partners to combat financial crimes globally and help other countries establish similar financial intelligence units.
The document discusses anti-money laundering laws and regulations in the Philippines. It begins with a definition of money laundering and an overview of the history and origins of anti-money laundering efforts. It then outlines key entities like the Financial Action Task Force (FATF) and their recommendations. The document explains the three stages of money laundering and how it relates to other crimes. It also defines key terms like suspicious transactions, covered institutions, and the roles and functions of the Anti-Money Laundering Council (AMLC) established under the Anti-Money Laundering Act of 2001.
The document discusses new US international reporting requirements including the Foreign Account Tax Compliance Act (FATCA). FATCA requires foreign financial institutions and entities to report US persons' foreign accounts and identify US substantial owners to the IRS. It also requires withholding on US-source payments if no agreement is in place. Other reporting requirements covered include the FBAR, currency transaction reports, and suspicious activity reports. Typologies of money laundering through securities, trade, counterfeiting, and other means are also summarized. Predictive modeling techniques for analyzing transaction data are mentioned.
Money laundering is the process of making illegally obtained money appear legal. This document discusses how criminals first place illegal funds into the financial system through various techniques like structuring deposits to avoid reporting requirements, using alternative remittance systems, or purchasing assets or insurance policies. It then explains how launderers further layer the funds by moving them through many transactions to obscure their source and make the money harder to trace back to criminal activity. Kenya's new anti-money laundering law aims to regulate these processes but questions remain over successful implementation.
The washington perspective enforcement is on the riseMayer Brown LLP
The US Justice Department is aggressively enforcing anti-money laundering and bank integrity laws against both large and small financial institutions. The AAG warned that criminal indictments of banks and their executives will increase, as will seizures of assets. Banks are urged to re-examine their compliance programs, increase compliance resources, and learn from recent cases like HSBC and Wachovia that resulted in billions in fines due to deficiencies allowing money laundering. Maintaining good relationships with regulators and law enforcement is also advised to prevent costly investigations and prosecutions.
This document summarizes international reporting penalties for failing to comply with various IRS reporting requirements related to foreign financial assets. It discusses penalties for failing to file the FBAR (Report of Foreign Bank and Financial Accounts), Form 8938, and various other forms. Non-willful FBAR violations can result in penalties of up to $10,000 per violation, while willful violations can result in penalties of up to $100,000 or 50% of the account balance. Criminal penalties are also possible, including fines and imprisonment. The document provides guidance on determining willful vs non-willful violations and discusses reasonable cause as a defense.
The Offshore Financial Centres - Conceiling the beneficial ownerFrank Erkens
Faced with the threat that the public may lose its confidence in the financial world, the international community has decided to uncover the numerous disguises used by criminals. This two-part series focuses on a number of important disguises, and the initiatives taken to resolve the problem of the concealment of beneficial owners. In the first part, we will look at the Offshore Financial Centres. This two-part series centres around the US legislative proposal HR3886. The aim of this legislative proposal is to facilitate the identification of the beneficial owner. Of course, the question remains whether this aim will be achieved or whether, as it appears now, the problem will simply relocate.
Reporting Requirements for US Citizens with Foreign Assetsgppcpa
The presentation reviews the reporting requirements for US citizens with foreign assets and the remedies for non-compliance. You will view the appropriate tax forms needed for reporting, due dates and penalty amounts. Te difference between willful and non-willful will be explained.
The document discusses money laundering prevention. It outlines the objectives of increasing awareness of anti-money laundering responsibilities and regulations. Non-compliance can result in penalties like imprisonment, fines, license revocation and more. Key aspects of money laundering prevention covered include know-your-customer procedures, suspicious transaction reporting, and the importance of monitoring transactions for consistency with customer profiles.
ManchesterCF Analytics – September 2014
Plunging Into Darkness
Recent regulatory actions against foreign banks operating in the US have resulted in billions of dollars in fines and penalties. For individuals, corporations, charities and financial institutions
residing outside the US, transacting in dollars will come at an increased cost due to a compliance
premium for dollar-denominated transactions.
1) The document provides definitions and explanations of key concepts related to banking including the definition of banking, banking companies, statutes governing banking companies, and functions of banks.
2) It explains that banking companies accept deposits and use the money to make loans. Their main function is to channel money from savers to borrowers. Various laws at both the federal and state level regulate banking companies.
3) The document also describes the system of bookkeeping used in banks including the general ledger, subsidiary books like cash books, purchase books and sales books, as well as bills receivable and payable books. Maintaining accurate accounting records is important for banks.
Anti-money laundering (AML) controls require financial institutions to monitor transactions and identify suspicious activity that could be related to money laundering. Most financial institutions must perform customer due diligence to verify identities and monitor transactions, using software and third-party services. United States law related to money laundering is implemented under the Bank Secrecy Act and subsequent amendments. Financial institutions must also have written AML procedures that include policies for customer acceptance, customer identification, and transaction monitoring.
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2. 2
Stanley Foodman
CEO & Founder
Foodman CPAs & Advisors
www.foodmanpa.com
Tel: 1(305) 365-1111
Email: stanley@foodmanpa.com
Stanley Foodman, CPA, CFE, CFF, CAMS, CGMA is CEO of
Foodman CPAs & Advisors. Mr. Foodman has extensive
experience representing U.S. and non-U.S. taxpayers with U.S.
and cross border tax reporting and governmental controversies.
Mr. Foodman uses his law enforcement background, extensive
experience as a forensic accountant and expert witness to
represent clients in resolving their tax disputes. He has
represented numerous U.S. taxpayers through the U.S.
Offshore Voluntary Disclosure Programs. Mr. Foodman along
with his team of CPA’s also represent clients with a full range of
accounting and tax services including corporate and individual
taxation, estate and trust taxation, wealth planning and banking
regulatory compliance. Foodman CPAs & Advisors
consistently rank as one of the top accounting firms in South
Florida with offices also in the Caribbean, Central and Latin
America. Foodman CPAs & Advisors represent individuals and
businesses from around the world including the United States,
the Caribbean region, Latin America, Europe and the Middle
East.
3. Bank Secrecy Act of 1970
• Requires U.S. financial institutions to assist U.S. government agencies to detect and prevent money laundering
by keeping records of cash purchases of negotiable instruments, and file reports of cash purchases of these
negotiable instruments of more than $10,000 (daily aggregate amount), and to report suspicious activity that
might signify money laundering, tax evasion, or other criminal activities.
– Amended several times since, including provisions in title III of the USA PATRIOT Act. (See 31 USC
5311–5330 and 31 CFR Chapter X.)
– The BSA is sometimes referred to as an "anti-money laundering" law ("AML") or jointly as "BSA/AML".
• Require all financial institutions to submit five types of reports to the government.
– FinCEN Form 112 (formerly Form 104) Currency Transaction Report (CTR): A CTR must be filed for each
deposit, withdrawal, exchange of currency, or other payment or transfer, by, through or to a financial
institution, which involves a transaction in currency of more than $10,000.
• Multiple currency transactions must be treated as a single transaction if the financial institution has
knowledge that: (a) they are conducted by or on behalf of the same person; and, (b) they result in
cash received or disbursed by the financial institution of more than $10,000.
– FinCEN Form 105 Report of International Transportation of Currency or Monetary Instruments (CMIR):
Each person (including a bank) who physically transports, mails or ships, or causes to be physically
transported, mailed, shipped or received, currency, traveler's checks, and certain other monetary
instruments in an aggregate amount exceeding $10,000 into or out of the United States must file a CMIR.
– FinCEN Form 114 (formerly Treasury Department Form 90-22.1) Report of Foreign Bank and Financial
Accounts (FBAR): Each person (including a bank) subject to the jurisdiction of the United States having an
interest in, signature or other authority over, one or more bank, securities, or other financial accounts in a
foreign country must file an FBAR if the aggregate value of such accounts at any point in a calendar year
exceeds $10,000
De-risking 101
Some History
4. • A recent District Court case in the 10th Circuit has significantly expanded the definition of "interest
in" and "other Authority".
– Treasury Department Form 90-22.47 and OCC Form 8010-9, 8010-1 Suspicious Activity Report (SAR):
Banks must file a SAR for any suspicious transaction relevant to a possible violation of law or regulation.
– FinCEN Form 110 Designation of Exempt Person: Banks must file this form to designate an exempt
customer for the purpose of CTR reporting under the BSA. In addition, banks use this form biennially
(every two years) to renew exemptions for eligible non-listed business and payroll customers.
• It also requires any business receiving one or more related cash payments totaling more than $10,000 to file
IRS/FinCEN Form 8300.
• Requires every U.S. FI to maintain Monetary Instrument Log (MIL) that indicate cash purchases of monetary
instruments, such as money orders, cashier's checks and traveler's checks, in value totaling $3,000 to $10,000,
inclusive.
– This form is required to be kept on record at the FI and produced at the request of examiners or audit to
verify compliance.
– A FI must maintain a Monetary Instrument Log for five years.
De-risking 101
Some History
5. • Heavy penalties exist for individuals and FIs that fail to file CTRs, MILs, or SARs.
There are also penalties for a bank which discloses to its client that it has filed a
SAR about the client. Penalties include heavy fines and prison sentences.
• IRC §6038D requires that all U.S. persons, individuals, corporations (FIs are
both U.S. persons and corporations) partnerships, LLC’s and trusts, provide
timely information regarding their foreign accounts, otherwise a $10,000 penalty
will result for every month it is late (subject to a certain maximum penalty).
De-risking 101
Sanctions
6. • Consists of two sections, 18 U.S.C. § 1956 and 18 U.S.C. § 1957.
– The first time in the United States criminalized money laundering.
• Section 1956 prohibits individuals from engaging in a financial transaction with proceeds that were
generated from certain specific crimes, known as “specified unlawful activities” (SUAs).
• Requires that an individual specifically intends in making the transaction to conceal the source,
ownership or control of the funds.
• No minimum threshold of money, nor is there the requirement that the transaction succeed in
actually disguising the money.
• Broadly defined a “financial transaction”.
• 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.
• Section 1957 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.
Money Laundering Control Act of 1986
7. The USA PATRIOT Act
• Signed into law by President George W. Bush on October 26, 2001.
– Full title is "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001".
• President Barack Obama signed the PATRIOT Sunsets Extension Act of 2011 on May 26, 2011 a four-year
extension of three key provisions in the USA PATRIOT Act:
– roving wiretaps,
– searches of business records, and
– conducting surveillance of "lone wolves"—individuals suspected of terrorist-related activities not linked
to terrorist groups.
Title I: Enhancing domestic security against terrorism
• Established a fund for counter-terrorist activities and increased funding for the Terrorist Screening Center
which is administered by the FBI.
• Authorized the military was to provide assistance in some situations that involve weapons of mass destruction
when so requested by the Attorney General.
• Expanded National Electronic Crime Task Force was expanded and President's authority and abilities in
cases of terrorism.
• Condemned the discrimination against Arab and Muslim Americans that happened soon after the September
11 terrorist attacks
The USA PATRIOT Act
8. Title II: Surveillance procedures
• Allows government agencies to gather "foreign intelligence information" from both
U.S. and non-U.S. citizens, and
• Changed FISA to make gaining foreign intelligence information the significant
purpose of FISA-based surveillance, where previously it had been the primary
purpose.
• Expanded scope and availability of wiretapping and surveillance orders.
– Wiretaps were expanded to include addressing and routing information to
allow surveillance of packet switched networks.
• Established three controversial provisions:
– "Sneak and Peek" warrants,
– Roving wiretaps, and
– Ability of the FBI to gain access to documents that reveal the patterns of U.S.
citizens.
The USA PATRIOT Act
9. Title III: Anti-money-laundering to prevent terrorism
• Intended to facilitate prevention, detection and prosecution of international money laundering and the
financing of terrorism.
– Primarily amends portions of the Money Laundering Control Act of 1986 (MLCA) and the Bank Secrecy
Act of 1970 (BSA).
• Divided into three subtitles,
– The first dealing primarily with strengthening banking rules against money laundering,
especially on the international stage.
– The second attempts to improve communication between law enforcement agencies and
financial institutions, as well as expanding record keeping and reporting requirements.
– The third subtitle deals with currency smuggling and counterfeiting, including quadrupling
the maximum penalty for counterfeiting foreign currency.
• Tightened the record keeping requirements for FIs
– Must record aggregate amounts of transactions processed from areas of the world where money
laundering is a concern to the U.S. government.
– Made FIs institutions put reasonable steps in place to identify beneficial owners of bank accounts and
those who are authorized to use or route funds through payable-through accounts.
– The U.S. Treasury was charged with formulating regulations intended to foster information sharing
between financial institutions to prevent money-laundering.
– Put new regulations into place to make it easier for authorities to identify money laundering activities
and to make it harder for money launderers to mask their identities.
• If money laundering was uncovered, the subtitle legislated for the forfeiture of assets of those suspected of
doing the money laundering.
The USA PATRIOT Act
10. Title III: Anti-money-laundering to prevent terrorism
• U.S. Treasury authorized to block mergers of bank holding companies and banks with other banks and bank
holding companies that had a bad history of preventing money laundering.
– Similarly, mergers between insured depository institutions and non-insured depository
institutions that have a bad track record in combating money-laundering could be blocked.
• Placed restrictions on accounts and foreign banks.
• Prohibits shell banks that are not an affiliate of a bank that has a physical presence in the U.S. or that are not
subject to supervision by a banking authority in a non-U.S. country.
• Prohibits or restricts the use of certain accounts held at financial institutions.
• Financial institutions must now undertake steps to identify the owners of any privately owned bank
outside the U.S. who have a correspondent account with them, along with the interests of each of
the owners in the bank.
•
• Banks must identify all the nominal and beneficial owners of any private bank account opened and
maintained in the U.S. by non-U.S. citizens.
– Expected that they must undertake enhanced scrutiny of an account owned by, or being
maintained on behalf of, any senior political figure where there is reasonable suspicion of
corruption.
• Deposits made from within the U.S. into foreign banks deemed deposited into any interbank
account the foreign bank may have in the U.S.
– Thus any restraining order, seizure warrant or arrest warrant may be made against the
funds in the interbank account held at a U.S. financial institution, up to the amount
deposited in the account at the foreign bank.
The USA PATRIOT Act
11. Title III: Anti-money-laundering to prevent terrorism
• Restrictions placed use of internal bank concentration accounts because such accounts do not
provide an effective audit trail for transactions, and this may be used to facilitate money
laundering.
– FIs prohibited from allowing clients to specifically direct them to move funds into, out of, or
through a concentration account, and they are also prohibited from informing their clients
about the existence of such accounts. Financial institutions are not allowed to provide any
information to clients that may identify such internal accounts.
– FIs required to document and follow methods of identifying where the funds are for each
customer in a concentration account that co-mingles funds belonging to one or more
customers.
• Definition of money laundering expanded to include;
• Financial transactions in the U.S. to commit a violent crime,
• Bribery of public officials and fraudulent dealing with public funds,
• Smuggling or illegal export of controlled munitions, and the importation or bringing in of any firearm or
ammunition not authorized by the U.S. Attorney General,
• Smuggling of any item controlled under the Export Administration Regulations,
• Any offense where the U.S. would be obligated under a mutual treaty with a foreign nation to extradite a
person, or where the U.S. would need to submit a case against a person for prosecution because of the
treaty,
• Import of falsely classified goods,
• Computer crime, and
• Felony violation of the Foreign Agents Registration Act of 1938.
The USA PATRIOT Act
12. Title III: Anti-money-laundering to prevent terrorism
• Allows forfeiture of any property within the jurisdiction of the United States gained as the result of an offense
against a foreign nation involving manufacture, importation, sale, or distribution of a controlled substance.
• Foreign nations may now seek to have a forfeiture or judgment notification enforced by a district court of the
United States.
• The Act also requires the Secretary of Treasury to take all reasonable steps to encourage foreign
governments make it a requirement to include the name of the originator in wire transfer instructions sent to
the United States and other countries, with the information to remain with the transfer from its origination until
the point of disbursement.
• The Secretary ordered to encourage international cooperation in investigations of money laundering, financial
crimes, and the finances of terrorist groups.
• The Act also introduced criminal penalties for corrupt officialdom.
• Penalties apply to financial institutions who do not comply with an order to terminate any corresponding
accounts within 10 days of being so ordered by the Attorney General or the Secretary of Treasury.
• The financial institution can be fined $10,000 for each day the account remains open after the 10-day limit has
expired.
• Money Services Businesses (MSBs) included in the definition of a FI.
• FinCEN made a bureau of the United States Department of Treasury.
• Financial institutions were ordered to establish anti-money laundering programs.
The USA PATRIOT Act
13. • The 2008 financial crisis prompted a significant change in the relationship between regulatory
authorities and the FIs.
• US Regulators have increased scrutiny and enforcement actions against FIs from a perception
that financial institutions had ineffective AML/CFT processes in place during the financial
crisis. Flow of monies derived from terrorist activity, tax evaders and drug lords was circulating
through the banking system.
• The crackdown on illicit activities during the crisis changed the worldwide banking regulatory
landscape; leading to the current state of heightened regulatory scrutiny.
• Regulation and Legislation to counter Money Laundering, Corruption and Tax Evasion
continues to be at the forefront of the US Department of Treasury.
• Increased attention from US Regulators to AML/CFT has coincided with the world wide focus
on “financial inclusion” – meaning, accessible, usable and affordable banking services to the
“underserved” and “underbanked”.
– According to World Bank Data, the “underbanked” are estimated to be 2.5 Billion
individuals residing primarily in the developing the countries.
– The “underserved” in the US alone are approximately 50 Million individuals.
• FIs play defense against the current regulatory environment by “de-risking” (or “de-banking”)
clients and relationships thereby reducing FI risk exposure (or appetite).
– FIs make the decision to close out an account/relationship due to the perception that the
client/relationship is “high risk”.
The De-Risking Puzzle
14. – FIs make the decision to close out an account/relationship due to account unprofitability.
• Rising compliance costs,
• Hard to understand complex corporate client structures,
• Fines and penalties,
• Shift from corporate responsibility to individual liability, and
• reputational concerns.
– Instead of “managing the risk” and related costs, FIs end customer relationships.
• The consequence of these account closures is that many clients/relationships are now “bank-
less”.
• Entire regional economies suffer and move back into cash economies (less transparency).
• According to the Global Center on Cooperative Security (GCCS), Global AML/CFT scrutiny
and a decline in risk appetite by the financial institutions are the 2 main reasons why de-
risking is occurring.
• Other de-risking drivers are:
– Financial institutions have not been transparent as to their reasons and criteria for exiting
relationships.
• Some of the industry benchmarks that lead to the termination and closure of bank
relationships are:
– 1) The size of the bank,
– 2) The risk capacity of the bank given the regulatory climate, and
– 3) Account profitability.
The De-Risking Puzzle
15. • The sectors mostly affected by de-risking are:
– Money service businesses,
– Foreign embassies,
– Politically exposed persons (PEPs),
– International charities, and
– Correspondent banks.
• De-risking is controversial.
– The perception is that it leads “high – risk” clients to smaller financial institutions that
might not have an adequate AML/CFT processes in place.
– Moreover, some of these entities are being pushed to less regulated or “shadow banking”
systems with no regulatory oversight.
•
• According to The Financial Action Task Force (FATF): “De-risking can be the result of
various drivers, such as concerns about profitability, prudential requirements, anxiety after the
global financial crisis, and reputational risk. It is a misconception to characterize de-risking
exclusively as an anti-money laundering issue. This issue is of crucial importance to the FATF
for the two following overriding reasons:
• 1. De-risking can introduce risk and opacity into the global financial system, as the
termination of account relationships has the potential to force entities, and persons into less
regulated or unregulated channels. Moving funds through regulated, traceable channels
facilitates the implementation of anti-money laundering / countering the financing of terrorism
(AML/CFT) measures.
The De-Risking Puzzle
16. • 2. It is central to our mandate to ensure that the global AML/CFT standard is well understood
and accurately implemented and that countries and their financial institutions are provided with
support in designing AML/CFT measures that meet the goal of financial inclusion”.
• “De-risking” should never be an excuse for a bank to avoid implementing a risk-based
approach, in line with the FATF standards. The FATF Recommendations only require financial
institutions to terminate customer relationships, on a case-by-case basis, where the money
laundering and terrorist financing risks cannot be mitigated. This is fully in line with AML/CFT
objectives. What is not in line with the FATF standards is the wholesale cutting loose of entire
classes of customer, without taking into account, seriously and comprehensively, their level of
risk or risk mitigation measures for individual customers within a particular sector.
• The risk-based approach should be the cornerstone of an effective AML/CFT system, and is
essential to properly managing risks. The FATF expects financial institutions to identify,
assess and understand their money laundering and terrorist financing risks and take
commensurate measures in order to mitigate them. This does not imply a “zero failure”
approach.
• The FATF is committed to financial inclusion, and effective implementation of AML/CFT
measures through proper implementation of the risk-based approach”.
The De-Risking Puzzle
17. • There are a variety of challenges facing FIs that are not being supported through the agency
regulatory environment – the conundrum of safely navigating the meaning of the term of art
“risk-based approach”.
• Regulatory supervision is not uniform throughout the regulatory system.
– FIs do not know what to expect from one regulator visit to another.
– Compliance quality is in the eye of the regulator.
• Regulatory education and field supervision is not uniform throughout the regulatory system.
– Leads to inconsistent regulatory supervision.
• There are no bright lines for FI compliance departments to use as bench marks for
compliance.
• The regulatory environment does not fully encourage “end-to-end” KYC-CDD standards.
– The definition of legal entity customers only includes statutory trusts created by a filing
with the Secretary of State or similar office. Otherwise, it does not include trusts.
– This is because a trust is a contractual arrangement between the person who provides
the funds or other assets and specifies the terms (i.e., the grantor/settlor) and the person
with control over the assets (i.e., the trustee), for the benefit of those named in the trust
deed (i.e., the beneficiaries).
– Formation of a trust does not generally require any action by the state.
The De-Risking Puzzle
18. • Major money centers are shedding correspondent account and “high risk” customer account
relationships,
• Smaller FIs are expanding their correspondent relationship networks.
– Requiring the complete elimination of shell company customers unless UBOs are
disclosed
– Requiring disclosure of the UBOs of the FFI.
– Requiring establishment of a trust in the P&P of the correspondent.
• Based on an in-depth review of the day-to-day activities of the FFI
• How do day-to-day activities comport with the P&P?
• A further prerequisite is a co-participation (control of) by the FI in the treasury activities of the
offshore correspondent.
• Some jurisdiction central banks are using their U.S. Federal Reserve Accounts to process the
wire activity of local FIs without U.S. correspondent relationships.
• Consolidation of banks is occurring in some jurisdictions in order to centralize risk and
heighten profitability for U.S. FIs.
– Does this necessarily increase confidence by U.S. FIs in jurisdiction FIs?
– Does this automatically eliminate UBO questions?
What is happening today?
19. • Turning back the clock at least 50 years,
No access to credit card services outside of a de –risked jurisdiction.
No ability to engage in wire transfer activity.
Vendors and buyers unable to receive and make international payments.
Slow down/ elimination of international movement of good and services.
Transportation of large amounts of actual cash.
• Increases in unemployment.
• Local jurisdiction economic recessions.
• Public unrest.
• Deteriorating international relations.
The Economic Effects?