Money Laundering
&
Terrorist Financing
Form of relationship or arrangement involving property that represents the proceeds of a serious crime
serious crime - crime which a person is liable on conviction to imprisonment for a term of one or more years
Any property derived from crime is the proceeds of crime - does not have to be held by original person
When a criminal activity generates substantial profits, the individual or group involved must find a way to control the funds without attracting attention to the underlying activity or the persons involved.
‘wash’ criminal property so that it has a different appearance from that which it once had.
The best way for a financial services business to combat money laundering is to be vigilant about the economic or commercial rationale for both relationships and transactions.
Why is Money laundering harmful
Most crimes are committed to enable criminals to benefit from the proceeds. Any obstacle which makes it more difficult or costly to handle the proceeds will act as a disincentive.
Organised crime can infiltrate financial institutions, acquire control of large sectors of the economy through investment or offer bribes to public officials/governments
The economic and political influence of criminal organisations can weaken the social fabric, ethical standards and the democratic institutions of society.
Terrorist Financing
Terrorism differs from other types of criminal activity where financial gain is usually the goal.
terrorist organisations require financial support to achieve their aims
US Treasury Office of Foreign Assets Control list.
To monitor connected individuals
terrorist groups will attempt to disguise the links between themselves and the sources of funding.
What is a suspicious transaction
· Customers are reluctant to give full details,
· There is no commercial rationale for a transaction,
· Money is moved in and out of an account within a short period of time,
· Multi layered structures or a complex web of accounts are set up,
· A customer originates from or is dealing with a high-risk country, for example, Nigeria or Iraq,
· A customer has frequent cash transaction.