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