The document is the first issue of a monthly compliance newsletter. It discusses money laundering and the role of compliance officers (called the "army") in preventing it. It describes the three stages of money laundering (placement, layering, integration) and the importance of customer due diligence. The newsletter also provides brief summaries of new anti-money laundering policies in British Columbia casinos, an investigation into possible money laundering at a Dutch subsidiary of a Russian bank, the impact of a new value-added tax in the United Arab Emirates, and the detention of a Huawei executive in China for corruption.

1. BE-COMPLIANT
ISSUE | 1
MONEY LAUNDERING
AND THE ARMY
AGAINST IT
About Money Laundering &
Customer Due Diligence
JAN 2018
Latest happenings in the
world of compliance
AROUND THE WORLD

2. JANAURY 2018 | ISSUE 1
IN
THIS
ISSUE
Welcome to the free and first edition of BE-COMPLIANT, the new
monthly supplement is designed especially for people in the
compliance roles or interested to learn how compliance works. This
is for readers who want to know more about due diligence,
transaction monitoring, financial crime & fraud. The aim is to cut
through the confusion and give you clear, sensible and reliable
information that you can trust.
I want it to be entertaining and informative, but above all useful.
I hope you enjoy this first issue and do let us know if there are any
topics you’d like to see covered in the future.
Suresh Chavali
Editor
EDITOR'S NOTE
03 Money Laundering and
the army against it
08 Around the World
Latest happenings in the
world of compliance
About Money Laundering &
Customer Due Diligence
PAGE | 2

3. MONEY LAUNDERING AND
THE ARMY AGAINST IT
Money laundering refers to the process by which criminals
disguise the proceeds of criminal conduct such as
extortion, insider trading and drug trafficking so as to
make it seem to be derived from a legitimate source.
By Suresh Chavali
JAN 2018| ISSUE 1
PAGE | 3
There are a number of ways to perform money laundering
and if I start listing it I would run out of energy and
resources.However, there are few famous techniques such
as Hawala wherein illegal money is moved between a huge
network of money brokers and Bulk Cash which is the
physical transportation of cash in loads across borders.
This proves that money laundering can be accomplished
without the assistance of a formal financial system, but
the reality is millions of dollars are laundered every year
using the financial system across the globe.
The objective of money launderers is to make profit from
the proceeds of crime, any organization or individual who
assists money launderers to achieve this objective would
be subjected to an offence.

4. As stated above there are multiple ways of performing
laundering money, but traditionally it is done in three
stages:
PAGE| 4
1) Placement- The stage at which criminally derived funds
are introduced in the financial system.The placement of
the proceeds of crime can be done in a number of ways
such as :
Loan Repayment-Repayment of loans or credit cards with
illegal proceeds
Currency Exchanges-Purchasing foreign money with
illegal funds through foreign currency exchanges
2) Layering- The stage at which complex financial
transactions are carried out to camouflage the illegal
source of the money.The primary purpose of this stage is
to separate the illicit money from its source.
3) Integration- The final stage of the money laundering
process is termed the integration stage. It is at the
integration stage where the money is returned to the
criminal from what seem to be legitimate sources. For
example, the purchases of property, jewellery, or high-end
automobiles are common ways for the launderers to enjoy
their illegal money without drawing attention.
JAN 2018| ISSUE 1

5. JAN 2018| ISSUE 1
PAGE | 5
This three-stage process of money laundering is highly
simplistic, but the reality is that they generally tend to
become very complicated and often overlap.
Money laundering is indeed a global phenomenon which
undermines the economic and political stabilities of
countries and brings major financial and reputational
damage to financial institutions (FI).
So how should this be detected and prevented? This is
where Anti Money Laundering regulations (AML) were
formed to fight against money laundering and Customer
due diligence (CDD) measures became a key part of the
AML requirements.
CDD refers to the process of identifying the verifying the
customers before establishing any sort of financial
relationship and it's even done on an on-going basis
throughout the relationship of the customer with the
FI.Further, CDD should always be done where there is a
change in beneficial ownership, or where FI suspects
money laundering or terrorist financing, and where FI has
doubts concerning the veracity of previous identification
information. It helps to ensure that clients who might be
considered too risky or whose business is not adequately
understood are not accepted.

6. JAN 2018| ISSUE 1
PAGE | 6
The important components of CDD are:
1) Ascertaining and verifying the identity of the client
2) Ascertaining and verifying the identity of the beneficial
owners of a client
3) Understand the nature of business of the client
4) Ascertain the purpose of establishing relationships with
the FI.
5) Screening client and the associated parties against
politically exposed persons, sanction list, and adverse
media.
CDD Analysts or the Compliance officers as we call them is
the army and the first lines of defense in the fight against
money laundering and they can only do it if they have
proper weapons to fight back and if asked what these
weapons are? Below is the list:
Proper Training : CDD Analysts should be continuously
trained on the updates happening around the world, for
example, 4th MLD came into force last year, they should be
provided with a formal training on the changes.
Competent Resources: CDD Analysts should be deployed
in proper proportion to match the workload, this helps to
provide better quality & proper governance and control.

7. JAN 2018| ISSUE 1
PAGE | 7
Technology: CDD Analysts should be equipped with the
latest technologies to perform better due diligence. For
example, there are few RegTech players with artificial
intelligence capabilities for enhancing the results of the
screening process and others that provide data about
companies such as the ultimate beneficial owner which
are not open to the public and other such information
which is crucial for completing due diligence.
Timely Communication: The communication between the
CDD Analysts and the front office/sales team should be
seamless and timely.It happens that the process at times
only gets delayed because of the communication gap
between these two teams.
To summarize, FIs need to implement robust policies and
procedures along with competent technology and
resources to prevent and detect money laundering.

8. AROUND
THE
WORLD
JAN 2018| ISSUE 1
PAGE | 8

9. New anti-money laundering policies to be implemented in British
Columbia. casinos.
Casinos in B.C would be required to provide a" source of funds
declaration" for all cases where cash deposits or bearer bonds
exceed $10,000.
Such declarations must include the customer's identification,
the source of their funds and the financial institution and
account where the money comes from.
Casinos would be restricted from accepting money from the
customers without verifying the authenticity of the funds.
Read Full Story: http://www.cbc.ca/news/canada/british-
columbia/new-anti-money-laundering-policies-coming-to-b-c-
casinos-as-soon-as-possible-ag-says-1.4433910
JAN 2018| ISSUE 1
PAGE | 9
New AML Rules for Casino in B.C

10. The Dutch subsidiary of Russia's Alfa Bank, owned by billionaire
Mikhail Fridman, was searched mid december as part of an
investigation into possible money laundering.
Amsterdam Trade Bank is suspected of violating anti-money
laundering laws by withholding information on "Unusual
transactions" made by clients and failing to do adequate
background checks on its clients.
ATB, part of the Alfa Bank Group, serves private clients in Russia
and other parts of the former Soviet Union and had total assets
worth 1.3 billion euros at the end of last year, according to its
most recent annual report.
Read Full Story :https://www.reuters.com/article/netherlands-
russia-bank/corrected-dutch-subsidiary-of-russias-alfa-bank-
raided-in-money-laundering-investigation-idUSL8N1OC4SM
JAN 2018| ISSUE 1
PAGE| 10
Dutch Subsidiary Fined

11. From January 1, United Arab Emirates will be imposing a value-
added tax. This would make money laundering difficult in Dubai
as everything will be documented and would have a paper trail.
For decades, paper transactions between newly formed entities
in UAE were shown as genuine business deals to legitimize
undisclosed, untaxed income. Once the color of money changed
from black to white, the funds were parked with banks in Dubai
or invested in other countries or found its way back to India as
a foreign direct investment in Indian companies.
This would no longer be possible in with the introduction of the
value-added tax.
Read Full Story:
https://economictimes.indiatimes.com/news/economy/policy/for
-money-launderers-its-no-longer-dubai-duty-
free/articleshow/62075924.cms
JAN 2018| ISSUE 1
PAGE | 11
Value Added Tax- UAE

12. Huawei Technologies Co., China’s head of sales for its domestic
consumer business has been detained in a corruption
investigation.
Police have taken immediate action on Teng Hongfei on
“suspicion of taking bribes,” the Shenzhen-based company said
in a statement Wednesday. Teng ran Chinese consumer sales for
the company, which over the past year rose to No. 1 in
smartphones.
The arrest is a blow to one of China’s biggest closely-held
technology companies, the largest of a coterie of Chinese
smartphone makers that have grabbed global market share via
affordable phones with premium specifications.
Read Full Story : https://www.bloomberg.com/news/articles/2017-
12-27/huawei-s-china-consumer-sales-head-detained-in-
corruption-probe
JAN 2018| ISSUE 1
PAGE | 12
Consumer Sales Head In Corruption

13. Contact Details
Suresh Chavali +91-9176330668
suresh.chavali@hotmail.com
https://www.linkedin.com/in/suresh-chavali/
JAN 2018| ISSUE 1
PAGE | 13