AML-CFT

Publication: Money Laundering: Concept, Significance and its Impact

2012-02-02T03:28:00.000-08:00

Money laundering is the process by which large amount of illegally obtained money, from drug trafficking, Terrorist activity or other serious crimes, is given the appearance of having originated from the legitimate source. Money laundering has an adverse impact on economy and political stability of country and hence such an activity must be curbed with an iron hand. Therefore, nations of the world must join hands and adopt measures to dismantle syndicates engaged in money laundering by resorting to aggressive enforcement of law. An attempt has been made in this article to explain the Concept, Significance and its impact.

European Journal of Business and Management

by Vandana Ajay Kumar, Department of Laws, Panjab University, Chandigarh

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HSBC faces money laundering inquiry

2012-01-26T03:44:00.000-08:00

HSBC executives face the prospect of being called to appear before a US congressional hearing this year as part of a Senate investigation into allegations the bank was involved in money-laundering.

The Senate Permanent Subcommittee on Investigations is looking into HSBC's involvement in the movement of money linked to illegal groups as part of a long-running inquiry into global banks and money-laundering.

No time frame has been given for the Committee's work, but a full report and a hearing could come later this year, according to reports.

A spokesman for HSBC said: "We support US efforts to strengthen anti-money laundering defences and protect the integrity of the financial system through our rigorous new internal processes and close working partnership with regulators."

HSBC has already disclosed it is in discussions with the US authorities and has said it is "co-operating" with all the inquiries. This month, the bank hired Stuart Levey, a former US Treasury Department official, as its chief legal officer.

Source: The Telegraph

Article: Promoting financial inclusion for effective AML/CFT

2012-01-18T02:50:00.000-08:00

Abstract: “Financial inclusion” is the delivery of financial services at affordable costs, especially to the disadvantaged and low income populations. Financial inclusion has gained some importance in the last few decades as a result of findings on the impact of “financial exclusion” on development and especially its correlation to poverty.This paper arguesthat access to financial services contributes to human and economic development; and that financial inclusion and effective AML/CFT are complementary to ensure the safety, integrity and soundness of the financial system and the protection of depositors. It calls for the recognition of country specific characteristics of the derived segments of the society, the risks and national priorities in the application of AML/CFT measures, as well as how financial inclusion has been applied with flexible AML/CFT principles. It concludes that inclusive finance does not necessarily mean that everyone who is eligible uses each of the services, but they should be able to choose to use such services if they wish.

by Abdullahi Y. Shehu

Dr. Shehu is Director General of the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA). GIABA is a Specialized Institution of the Economic Community of West African States (ECOWAS), as well as a Financial Action Task Force (FATF) Style Regional Body (FSRB) with its Headquarters in Dakar, Senegal.

Click HERE for the Full Article publised at The Journal of Crime, Law and Social Change

US diplomats to hold talks in Seoul on Iran sanctions

2012-01-16T00:47:00.000-08:00

A delegation of senior U.S. diplomats is scheduled to arrive in Seoul on Monday for consultations on anti-Iran sanctions expected to focus on how much Korea should cut its crude oil imports from the Middle Eastern nation.

The three-day visit by the U.S. delegation, led by Robert Einhorn, the State Department's special adviser for nonproliferation and arms control, comes amid mounting global tensions over Iran's nuclear ambitions.

Late last month, U.S. President Barack Obama signed into law a bill that imposes tough sanctions against financial institutions dealing with the central bank of Iran accused of seeking a nuclear weapons program.

The new U.S. sanctions, however, have placed South Korea in a difficult position, as Seoul imports some 10 percent of its crude oil needs from Tehran.

Einhorn, who last visited South Korea early last month, will be accompanied by Daniel Glaser, the U.S. Treasury's deputy assistant secretary for terrorist financing and financial crimes, Seoul's foreign ministry said.

South Korean officials said that Seoul has not yet made a decision on how much to cut its crude oil imports from Iran.

In a statement, the foreign ministry said South Korea will "actively request that the U.S. help minimize potential adverse effects that the new U.S. sanctions could exert on South Korean companies in the course of their implementation."

During his visit to Seoul last month, Einhorn denied that he specifically asked Korea to stop purchases of crude oil from Iran, but said the U.S. would welcome such a decision by Seoul.

Iranian crude oil accounted for 8.3 percent of total imports by South Korea in 2010, but the ratio rose to 9.6 percent in the first 11 months of last year.

Currently, Korea is dealing with Iran's central bank to make payments for its crude oil imports.

In an apparent move to minimize fallout from the U.S. sanctions against Iran, Korean Prime Minister Kim Hwang-sik is currently on a tour of two Middle East nations, Oman and the United Arab Emirates. (Yonhap)

Source: The Korea Times

ARTICLE: Need for a Globally Agreed Upon Definition of Terrorism

2012-01-12T00:00:00.000-08:00

Abstract: Globally, terrorism is known to involve the use of violence and threats to intimidate or coerce, especially for political purposes; it is a criminal act that influences an audience beyond the immediate victim. It is out of place that despite the destructiveness of this cruel and evil crime, there is yet to be a globally agreed upon definition for it and this poses problem for the entire international community. This paper states different definitions of terrorism as given by international organisations, states and individuals. It goes further to analyse the different features common to the various definitions of terrorism. Further to this, the paper highlights the obstacles to having a globally agreed upon definition of terrorism and finally states the benefits of having such an agreed upon definition of terrorism.

Click HERE for the FULL ARTICLE

Source: Ozean Journal of Social Sciences 4(3), 2011, 139

by PONNLE SOLOMON LAWSON

Department of General Studies, Federal Polytechnic, Ede, Nigeria

Indonesia AML Agency Reports 1,800 Officials to Corruption Authorities

2012-01-11T02:34:00.000-08:00

Indonesia's anti-money laundering agency on Tuesday called on government institutions, including the House of Representatives and law enforcers, to be transparent about what they do with reports of suspicious bank accounts held by their staff.

Muhammad Yusuf, chairman of the Financial Transaction Reports and Analysis Center (PPATK), said the list of more than 1,800 people who since 2003 had been detected as having suspiciously large bank accounts did not only include young civil servants and police officers, as had previously been said.

The names of the account holders also included some members of the House and officials working in law enforcement institutions, Yusuf said.

He declined to identify people on the list by name, but said the data had been submitted to their respective employers as well as to the police, prosecutors and the Corruption Eradication Commission (KPK) for further action.

“Regarding the details and the development of the legal processes — which cases are legally processed and which are not — you will have to ask them,” Yusuf said of the institutions.

And since it was now up to the institutions to investigate and sanction those unable to explain the source of their wealth, he called for transparency, including for cases that end up being dropped.

“If it turns out true that A has an account containing, let us say, Rp 20 billion to Rp 30 billion [$2.2 million to $3.3 million], but investigations fail to find enough evidence, it is OK, there is no problem with that, as long as the public is told,” Yusuf said.

He said the PPATK was planning to regularly query the relevant government institutions about the progress of the cases reported among their ranks.

“We will do it once every two or three months,” Yusuf said, adding that every time they would synchronize the information they had with those of the institutions concerned.

He added that if the ministries responded that they had to drop an investigation for lack of evidence, his institution would demand data to authenticate the claim rather than accept it on face value. “We want to be more comprehensive, not like in the past,” he said.

The state administrative reform deputy minister, Eko Prasodjo, said last month that his ministry would soon begin investigating the “fat accounts” of young civil servants after PPATK announced that 10 civil servants aged 28 to 38 held bank accounts worth hundreds of billion rupiah.

The National Police last year said it had investigated reports of 17 suspiciously large bank accounts held by senior police officers.

Only three of those accounts were found to have irregularities, but those three belonged to officers already convicted of or on trial for other crimes.

On Monday, the private Indonesian Survey Institute (LSI) announced the results of a survey it conducted last month that found that only 44 percent of respondents were satisfied with President Susilo Bambang Yudhoyono’s corruption eradication efforts, the lowest in five years.

The survey blamed long-unresolved cases and the KPK’s declining reputation for the erosion of public trust.

The government on the weekend flagged a plan to force civil servants to disclose their wealth.

Source: Jakarta Globe

US Agents Helped Launder Millions in Mission to Break Up Drug Rings

2012-01-10T11:41:00.000-08:00

In an effort to infiltrate and wreak havoc on drug rings, Mexico's government allowed a group of undercover U.S. anti-drug agents and their Colombian informant to launder millions in cash, they eventually lost track of, for a powerful Mexican drug trafficker and his Colombian cocaine supplier.

The Mexican magazine Emeequis published portions of documents, Monday, that describe how Drug Enforcement Administration agents, a Colombian trafficker-turned-informant and Mexican federal police officers in 2007 infiltrated the Beltran Leyva drug cartel and a cell of money launderers for Colombia's Valle del Norte cartel in Mexico.

The group of officials conducted at least 15 wire transfers to banks in the United States, Canada and China and smuggled and laundered about $2.5 million in the United States. They lost track of much of that money.

In his testimony, the DEA agent in charge of the operation says DEA agents posing as pilots flew at least one shipment of cocaine from Ecuador to Madrid through a Dallas airport.

The documents are part of an extradition order against Harold Mauricio Poveda-Ortega, a Colombian arrested in Mexico in 2010 on charges of supplying cocaine to Arturo Beltran Leyva. A year earlier, Beltran Leyva was killed in a shootout with Mexican marines in the city of Cuernavaca, south of Mexico City.

The documents show Mexico approved Poveda-Ortega's extradition to the United States in May, but neither Mexican nor U.S. authorities would confirm whether he has been extradited. Mexican authorities listed his first name as "Haroldo."

In a statement issued late Monday, Mexico's Attorney General's Office said it cooperates with the United States in combatting money laundering and said the Poveda-Ortega case, like others of its kind, "are carried out strictly within the legal framework."

While the statement said that "coordinated money laundering investigations are carried out exclusively by Mexican authorities," it also noted that "sometimes, these investigations require specialized techniques to detect money laundering, which each agency carries out within its own jurisdiction."

U.S. officials did not respond to requests for comment.

The documents offer rare glimpses into the way U.S. anti-drug agents are operating in Mexico, an often sensitive subject in a country touchy about national sovereignty.

On one occasion, the informant who began working for the DEA in 2003 after a drug arrest met with the girlfriend of a Colombian drug trafficker in Dallas and offered to move cocaine for their group around the world for $1,000 per kilo. In a follow-up meeting, the informant introduced the woman to a DEA agent posing as a pilot. The woman is identified as the girlfriend of Horley Rengifo Pareja, who was detained in 2007 accused of laundering money and drug trafficking.

Another scene described the informant negotiating a deal to move a cocaine shipment from Ecuador to Spain and minutes later being taken to a house where he met with Arturo Beltran Leyva.

Beltran Leyva was once a top lieutenant for the Sinaloa drug cartel, led by Joaquin "El Chapo" Guzman. But he split from the cartel shortly after his brother was arrested in 2008, setting off a bloody battle between the former allies.

Fractured cartels have led to an increase of drug violence in Mexico. According to several counts more than 45,000 people have been killed since late 2006, though the government stopped giving figures on drug war dead when the toll hit nearly 35,000 a year ago.

On Monday, police in western Mexico found the bodies of 13 men at a gas station in the state of Michoacan.

The bodies were dumped near a convenience store on the gas station lot in the town of Zitacuaro, said Michoacan state prosecutors spokesman Jonathan Arredondo.

Arredondo said threatening messages were found with the bodies, but he wouldn't comment on their content or give any other details.

However, the federal Interior Department later said a total of 15 bodies had been found in Zitacuaro. The statement did not specify whether all were found at the gas station.

Also Monday, the Michoacan state prosecutors office reported three high school students were shot to death by assailants who opened fire from a passing vehicle while the youths were relaxing in a park in the town of Yurecuaro, near the border with the neighboring state of Jalisco.

There was no evident motive in the attack.

The western state of Michoacan is home base to The Knights Templar cartel, which like its predecessor, La Familia, is a pseudo-religious gang specializing in methamphetamine production, drug smuggling, extortion and other crimes.

Based on reporting by the Associated Press.

Source: Fox News

PUBLICATION: Terrorist Financing, Money Laundering, and Tax Evasion: Examining the Performance of FIUs

2012-01-09T01:39:00.000-08:00

Summary: Tracking funding is a critical part of the fight against terrorism and as the threat has escalated, so has the development of financial intelligence units (FIUs) designed to investigate suspicious transactions. Terrorist Financing, Money Laundering, and Tax Evasion: Examining the Performance of Financial Intelligence Units provides a thorough analysis of the financing phenomenon from the raising of funds to government agencies’ efforts to interdict them to measuring and monitoring the outcomes of these efforts.

This volume begins by presenting deep-rooted conflicts in the Middle East, the United States, the Indian subcontinent, Northern Ireland, and South America that have led to modern terrorism. It describes recent developments in counterterrorism and discusses the next steps in intelligence reform. Next, the author discusses how financial crime is committed, examining the source of funds from money laundering and tax evasion among others, and the transfer of these funds. He then covers performance and risk management, and the process of measuring performance using the balanced scorecard method. The book presents an overview of anti-money laundering and counterterrorist financing initiatives in several regions around the globe: the European Union, Asia Pacific, North America, Latin America and the Caribbean, the Middle East, and Africa. It concludes with a survey of experts’ opinions on the efficacy of current programs and recommendations for improving government performance in countering terrorist financing and related money laundering and tax evasion.

Knowing what to target and how to measure results are essential for performance enhancement in preventing and interdicting financial criminal activity. Establishing the need for accurate assessment of the success and failure of FIUs, the book demonstrates how monitoring and measuring progress is a crucial part of financial interdiction efforts in the fight against terrorism.

About the Aouthor: Jayesh D’Souza is a doctoral graduate from Florida International University’s Public Administration Program. Mr. D’Souza is a specialist in public policy, finance, and economics and has a number of publications and presentations in governmental financial performance, counterterrorism, economic development, energy and the environment, education, and health care. His past employers include the Government of Ontario and T. D. Waterhouse

Click HERE for more

EU to Support Anti Money Laundering Efforts in Peru

2012-01-09T01:23:00.000-08:00

The European Union is to provide support to Peru to combat money laundering from the illicit drug trade, the head of the EU’s delegation in Peru, Hans Allden, said.

“It is a clear priority of the European Union to reinforce the ambitions of Peru and other countries (in Latin America) regarding money laundering, in a wider context of the battles against international crime,” state news agency Andina reported Allden as saying.

Allden added that the EU would support Peru’s implementation of its 2012 to 2016 national plan against drug trafficking, and hoped that the plan would have measureable results. He said Peru’s plan to combat drug traffic from several fronts at the same time was ambitious, implementing efforts to combat money laundering at the same time as coca leaf eradication efforts and controls on chemical supplies in the coca-growing areas.

This week Ricardo Soberon, head of Peru’s drug strategy agency, Devida, made a presentation to 14 EU ambassadors regarding the plan and Peru’s search to gain active cooperation from a series of partners —including the EU and Brazil as well as the U.S.— to stem the illegal drug trade.

Peru is the world’s biggest producer of cocaine, according to the U.S. Drug Enforcement Administration.

The global cocaine business has an estimated worth of about $85 billion. It is forecast that about 15 percent of those funds stay in the producer countries, which also include Bolivia and Colombia. The United Nations estimates that the drug trade in Peru accounts for about 6 percent of the country’s GDP.About 80 percent of the funds that are laundered in Peru come from the drug trade, while 5 percent come from tax fraud.

Source: Peruvian Times

Bangladesh cabinet nod for death penalty for financing terrorism

2012-01-09T01:21:00.000-08:00

The Bangladesh cabinet on Monday approved a proposed amendment to current anti-terrorism legislation, which, if passed by parliament, will make the financing of terrorism punishable by death.

Under the existing law, financing terrorism carries a maximum sentence of 20 years in prison.

'The government has decided to amend the previous legislation to strengthen the country's legal framework to stop terrorism,' Abul Kalam Azad, the prime minister's spokesman, told a press conference after the cabinet meeting.

Parliament will discuss the proposed amendment in January, which will give greater power to Bangladesh Bank, the banking regulator, to freeze any accounts over suspicious transactions.

Under the current Anti-Terrorism Act of 2009, killing, possessing illegal arms and ammunition, abduction, creating panic and using Bangladesh to carry out terrorist activities in or outside the country, are punishable by death.

The government believes sources of terrorism funding need to stop through stringent provisions in the law, a Home Ministry official said.

Source: M & G

Feds seize three cars from former bank president

2012-01-09T01:18:00.000-08:00

Federal agents seized a Brockton former bank president’s three pricey cars — a Rolls Royce, a Lexus and BMW — this afternoon after he failed to repay more than $250,000 in restitution to the FDIC, part of the punishment for a 1997 fraud conviction that symbolized the excesses of the late 1980s and early 1990s, according to the U.S attorney’s office.

Edward Buchanan, 75, the former president of the Massachusetts Bank & Trust Co., was convicted of defrauding the bank in 1997 and sentenced to 30 months in prison and more than $250,000 in restitution, fines and interest, the U.S. attorney’s office said.

Agents today seized a 1987 Rolls Royce Corniche, a 2010 Lexus RX350 and a 2008 BMW 328xi, worth a combined $98,179.

Buchanan, the former owner, president and chief executive of Massachusetts Bank & Trust, was found guilty of misusing $450,000 in bank funds. The Brockton-based institution was closed by regulators in July 1992.

The jury found that Buchanan improperly paid salaries and benefits to his two daughters at times they didn’t actually work for the bank, and that he used bank funds to buy and run three cars, including a Mercedes-Benz and a $153,000 Rolls-Royce.

Bank funds also helped pay crew members’ salaries on a 67-foot yacht Buchanan used for personal pleasure, according to the verdict.

The jury also found Buchanan guilty of laundering $50,000 the bank had won in a lawsuit. He had the money paid to himself in six checks, each for less than $10,000, to evade currency reporting requirements, prosecutors said at the time.-— brendan.lynch@bostonherald.com

Source: Biz Smart

US delegation to meet Pak on terror financing

2012-01-09T01:14:00.000-08:00

A US Treasury delegation will meet senior Pakistani economic managers next week to exchange views on money-laundering and financing of terrorists, according to a media report on Saturday.

Officials of Pakistan's Finance Ministry and State Bank told the Dawn newspaper that the US delegation comprising four to five officials will hold talks with Finance Minister Abdul Hafeez Shaikh, State Bank of Pakistan Governor Yaseen Anwar and other officials.

The delegation may also meet Prime Minister Yousuf Raza Gilani. Pakistan drew a lot of attention on the issue of money laundering and financing of terrorists since 9/11.

Transactions in and outside Pakistan have been under strict scrutiny since then.

The checks on remittances from abroad put an end to all illegal channels and banks took charge of these transactions.

Under the Anti-Money Laundering Ordinance promulgated in 2007, money laundering is a punishable with prison terms ranging between one and 10 years, a fine of up to Rs 1 million and forfeiture of property.

On Friday, the State Bank of Pakistan directed all exchange companies to meticulously follow anti-money laundering laws and to counter the financing of terrorists by submitting suspicious transactions manually or electronically to the Financial Monitoring Unit.

Source: Zee News

FinCEN Sees Uptick In Reporting, Annual Report Says

2012-01-09T01:11:00.000-08:00

The Financial Crimes Enforcement Network saw a nearly across-the-board uptick in reporting by financial institutions in 2011, according to FinCEN’s annual report released Thursday.

FinCen, the Treasury Department’s repository for data on money laundering, terrorist financing and other financial crimes, said that it received a total of 17,124,020 reports in 2011, up from 16,197,658 in 2010.

The filings, which are required under the Bank Secrecy Act, are used to create a financial trail that law enforcement and intelligence agencies can use to track criminals and terrorist networks, their activities, and their assets.

Most of the filings come through two types of reports: Currency Transaction Reports and Suspicious Activity Reports.

CTRs are filed in connection with cash deposits, withdrawals or other payments through, or to a financial institution involving a transaction exceeding $10,000. According to the annual report, preliminary data showed that about 14.8 million CTRs were filed in 2011, compared with about 14 million in 2010.

SARs are filed in connection with transactions that financial institutions know or suspect may be related to illicit activity. About 1.4 million SARs were filed in 2011, compared with1.3 million filed in 2010, the report said.

Other reports increased over the last year as well. Reports of Foreign Bank and Financial Accounts jumped from 594,488 to 618,134, Registrations of Money Services Business went from 20,302 to 20,315, and Reports of Cash Payments Over $10,000 Received in a Trade or Business went from 174,023 to 194,366.

FinCEN attributed the increase in reporting, in part, to the body’s efforts to enhance financial institutions’ understanding of and compliance with the reporting requirements.

The annual report also said that electronic filing of reports increased in 2011, as about 87 % of reports were filed electronically, up from 83% during the last two months of 2010. FinCEN began modernizing its information technology systems in 2010 and is preparing to assume the system of record for reports filed pursuant to the Bank Secrecy Act, a responsibility currently shouldered by the Internal Revenue Service.

Source: The Wall Street Journal, By Christopher Matthews

Pakistan to toughen anti-money laundering laws

2012-01-09T01:09:00.000-08:00

Pakistan has decided to amend existing laws to combat financing of terrorism after an international anti-terrorism financing watchdog highlighted that despite ‘observing’ violations, anti-money laundering laws (AML) were not being enforced.

The decision was taken on Friday during a meeting, chaired by Finance Minister Dr Abdul Hafeez Shaikh, held to review the status of AML and to plug loopholes in the existing laws.

Informed sources told The Express Tribune that the government will soon table the AML Act 2010 and another law pertaining to the inward movement of foreign currency to address concerns raised by the US through the Financial Action Task Force (FATF).

FATF is an inter-governmental body working for the promotion of national and international policies to combat money laundering and terrorist financing.

According to an official handout, the meeting “noted that despite a number of anti-terrorist cases, the prominence required to build AML aspects required further strengthening”.

The sources said the US had expressed concern that despite the ‘observation of terrorist financing’ by the Financial Investigation Unit of the central bank, the enforcement of the laws was very weak.

The State Bank of Pakistan’s (SBP) unit is required to report such violations to the anti-terrorist courts; yet no action is being taken in most cases.

The FATF has in the past termed Pakistani laws as ‘cosmetic in nature’.

Another source said that law enforcement agencies have been applying criminal charges in such cases, letting the suspects go scot-free.

“There is a need to increase the capacity of law enforcement agencies to devote due attention to incidents of terrorism,” the official handout stated.

The FATF has long been asking Pakistan that its laws should be in line with 40 recommendations of the FATF. These recommendations provide a broader framework for drafting anti-money and anti-terrorist financing laws by the national governments. Pakistan has made significant progress but the enforcement of these laws is still very weak.

The committee noted that there has been recognition of efforts by Pakistan at various international forums; however, there is “more to be done to fill the gaps that still exist (in these laws)”.The committee asked the Financial Management Unit of the finance ministry to take urgent steps to fill some of the gaps that are found in the existing regime and seek assistance to enhance the capacity of law enforcement agencies in the implementation of the AML regime.

“The parliamentary panel has been asking the finance ministry for the last one year to bring the AML Act in parliament for introducing required amendments,” said head of Senate Standing Committee on Finance and Revenue Senator Ahmad Ali. “The committee had passed the AML Act in haste on plea of the government that a delay in approval might invoke international sanctions on Pakistan,” he added.

Source: The Express Tribune

PUBLICATION: Misuse of the Non-Profit Sector for Money Laundering and Terrorism Financing

2011-12-02T13:21:00.000-08:00

The misuse of NPO-generated funds may occur in a number of ways. First, funds may be collected in the name of a legitimate NPO but be disbursed for terrorists rather than altruistic causes. Second, an NPO may be used to launder money or provide legitimate means for the transmission of funds between multiple locations. Third, funds may be misused by the recipients themselves. In any of these scenarios, the NPO may or may not be complicit in or aware of the abuse being committed. There could also be a misuse of NPO vehicles and property to transport or house terrorist operatives, money, and weapons. From the publicly available evidence, there is little to suggest that there is substantial misuse of NPOs for ML/TF. Case studies have shown that opportunities exist and are exploited for ML/TF, but the number of published cases studied is still relatively small. This could suggest that the prevalence of ML/TF misuse is itself low. Conversely, it could indicate there are low detection rates for this kind of illegal activity. The majority of the cases detected involved either the establishment of a sham NPO, in every case a charity, or the exploitation of a legitimate entity to raise, transfer, distribute, or launder funds. The current Australian regulatory regime for the nonprofit sector does not have an overt emphasis on ML/TF issues, although the encapsulation of designated services used by the NPOs under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 does afford good protection.

Author: Samantha Bricknell

Publication Date: 09/2011

Click here to download the Publication

Accountant jailed for laundering drugs money

2011-12-02T07:36:00.000-08:00

A Manchester accountant has been jailed for laundering more than £1.2m for an international drug dealer, partly through property deals and living a luxury lifestyle in Wilmslow in Cheshire.

Malcolm Carle, (pictured left) 57, helped his boss Walter Callinan (pictured right) process money from importing and selling cannabis and bought a £1.2m hotel with the cash, according to the Manchester Evening News.

Police reportedly found evidence of a cash receipt of £973,000 in cash and details on the purchase of the Hadley Green Bowling Inn near Worcester.

Carle used the money to follow Chelsea FC around the world, drive a Jaguar and even took out a secret loan against the hotel to finance his own property purchase.

He was jailed for six years at Winchester Crown Court after admitting three offences of money laundering on 15 November.

His accomplice, Walter Callinan, 59, who lived in a mansion in Malaga, was sentenced to 11 years for two drug-dealing offences, five counts of money laundering and two passport offences.

When police raided Carle's home they found more than £10,000 in cash and uncovered a complex network of trusts and overseas companies, so well concealed the Serious Organised Crime Agency had failed to find them, according to evidence.

The clerk of Winchester Court confirmed the proceeds of crime investigation is still ongoing.

Five co-defendants were also jailed for their part in the drug scam.

Source: Mortgage Solutions by Vicky Hartley

Canada's New Currency Prompts Legal Money Laundering

2011-12-02T07:35:00.000-08:00

When Canadians take the plastic out of their wallets, they're not holding a credit or debit card — it's cash, and it will foil would-be counterfeiters because it's harder to copy. The $100 note introduced this week is made from a sheet of polymer and features two transparent windows that add extra security. At the very least, the money is a technological wonder that could turn into the new dinner party game: How many hidden icons, colors, and numbers can you find in the bill?

According to CNET, the polypropylene substrate lasts twice as long as traditional paper-cotton money, so the Canadians will save taxpayers a bundle on printing. And, the bills are wipe clean and can be laundered without falling apart.

The technology was originally developed by the Reserve Bank of Australia, which issued the currency in 1988. As of 2011, at least seven countries have converted fully to polymer bank notes: Australia, Bermuda, Brunei, New Zealand, Papua New Guinea, Romania and Vietnam. A dozen or so more are testing the notes, presumably to check how they perform in ATM machines, and other mechanized pre-existing equipment.

The United States, in contrast to this high tech advance, has been toying with the idea of issuing dollar coins in lieu of paper money. Imagine carrying the weight of a coin instead of thin plastic. The Currency, Optimization, Innovation and National Savings Act bill, pitched to our crackerjack lawmakers, claims a savings of $5.5 billion over 30 years. Of course, the coins will last longer, since no one will want to use them.

Source: The Fiscal Times, By JACQUELINE LEO

Lawyers arrested for evading limits on bank deposits

2011-11-25T06:21:00.000-08:00

Two New Jersey lawyers have been arrested and charged with circumventing bank reporting requirements by breaking down $354,000 in client funds into attorney trust account deposits of less than $10,000 each.

Goldie Sommer and Edward Engelhart of Fairfield's Sommer & Engelhart surrendered Wednesday to Internal Revenue Service agents. Magistrate Judge Joseph Dickson in Newark set each one's bail at $100,000.

The partners in the two-lawyer firm face identical charges of conspiring to violate and violating a federal law that prohibits "structuring" — slicing bank deposits into amounts of less than $10,000, the threshold for triggering a requirement that the bank file a currency transaction report with the IRS.

The prohibition is meant to prevent people involved in illegal activities such as drug trafficking, money laundering and tax evasion from evading the reporting requirement.

The criminal complaint filed on Nov. 4 alleges that during a six-week period between Aug. 13 and Sept. 22, 2010, $118,000 in U.S. currency was deposited into the firm's trust account with TD Bank.

All the deposits were allegedly for large, even-dollar amounts of less than $10,000, with multiple deposits made on some days adding up to more than $10,000.

During that same time, an unspecified amount also was put into the trust account using several cashier's checks, according to the complaint.

In addition, currency deposits similar to those that went into the trust account allegedly went into the personal accounts of Sommer, Engelhart and "other individuals associated with [them]."

Checks written on those accounts went into the trust account, bringing the total of the allegedly structured funds to $354,000.

The complaint, signed by IRS Task Force Officer Keith Cregan, describes a June 16 meeting with Sommer and Engelhart, during which they allegedly admitted that "they had agreed with each other to structure U.S. currency into the Trust Account for the purpose of evading the filing of any forms with the Internal Revenue Service."

They also allegedly admitted that the source of the money was a client and that they "inferred that the client wished that the funds would be deposited into a bank without the filing of any forms" with the IRS.

Violation of the structuring law, 31 U.S.C. 5324, can carry up to five years in prison, and as much as a $250,000 fine plus forfeiture of the structured funds. The sentence and fine can be doubled in "aggravated cases" — where the structuring is done in conjunction with another crime or as part of a pattern of an illegal activity involving more than $100,000 in a 12-month period.

Sommer, of Montville, a Seton Hall School of Law graduate admitted to practice in 1975, is represented by Jack Arseneault of Arseneault, Whipple, Farmer, Fassett & Azzarello in Chatham.

Rockaway resident Engelhart, also a Seton Hall alumnus and a lawyer since 1979, has retained Howard Brownstein of Union City as defense counsel.

The Sommer & Engelhart website says the firm concentrates on real estate matters and short sales, residential tax appeals, personal injury and worker's compensation cases, family law and municipal law.

Sommer, Engelhart, Arsenealt and Brownstein did not return calls by press time.

The prosecutor handling the case is Assistant U.S. Attorney Evan Weitz in Newark.

U.S. Attorney's Office spokesman Matthew Reilly declines to provide the names of the other people whose accounts were allegedly used for the structuring or to disclose whether it was the Office of Attorney Ethics that discovered the deposits through its audits of attorney trust accounts.

In 2002, John Richardson, then a Superior Court judge in Somerset County, was charged with a similar but lesser offense — failing to report to the IRS $160,000 in cash fees he had received from a real estate client while in private practice in 1998.

He deposited the money into his trust account without complying with an Internal Revenue Code requirement to report the receipt of more than $10,000 in cash from a trade or business.

Richardson pleaded guilty to a single misdemeanor charge on Feb. 8, 2002, and was sentenced to one year of probation and a $2,500 fine. The deal also required him to resign from the bench, which he did a week before entering the plea. The state Supreme Court reprimanded him in July 2003.

Richardson, now the municipal judge in Hillsborough and of counsel with Nee Beacham & Gantner in that town, declines comment.

Source: Daily Business Review

by Mary Pat Gallagher

Foreign students used as front to launder money

2011-11-16T14:20:00.000-08:00

A Wellington businessman was today sentenced to nine months' home detention for tax evasion, fraud and money-laundering using foreign students as a front and involving more than 350,000.

Walter Law, also known as Xu Liu, 45, had earlier pleaded guilty in Wellington District Court to five charges of tax evasion, six charges of providing false income tax returns, 21 charges of aiding a company to file false GST returns, one charge of aiding a company to file false income tax returns and five charges of aiding a company to evade tax.

Law also pleaded guilty to one charge of money laundering under the Crimes Act.

Tony Morris, Inland Revenue's assurance manager investigations, said Law conducted his activities using separate companies and unregistered entities which he owned or controlled.

"Our initial investigation into one of Mr Law's companies, Holiday KTV Entertainment Limited, revealed that significant amounts of cash were unaccounted for and the company had only reported its Eftpos transactions to Inland Revenue. Our subsequent analysis showed the company had evaded GST amounting to just over $68,000, PAYE of over $41,000 and Income Tax amounting to over $29,000," Mr Morris said in a statement.

Inland Revenue's investigation into Law's foreign exchange and travel businesses found he deposited $2.5 million into bank accounts in the name of two overseas home-stay students. The students said Law had control of these accounts and they had no knowledge that the funds were used to repay loans on properties owned or controlled by Law.

"Mr Law's foreign exchange and travel businesses made a surplus of $540,000 between 2004 and 2010," Mr Morris said.

"These entities not only failed to return around $170,000 in income tax to Inland Revenue but these funds were deposited into the students' bank accounts and recharacterised as loans from a private trust in China. This money was the undeclared income from the business transactions and this action amounted to money laundering," Mr Morris said.

Law's offending resulted in a loss to Inland Revenue of just over $350,000, which had since been recovered.

"Mr Laws deliberately tried to evade his tax obligations by not declaring his income and hiding cash in other people's bank accounts. This case is a further reminder that Inland Revenue is using increasingly sophisticated analysis to detect those trading in the hidden economy," Mr Morris said.

"Businesses and individuals doing the right thing can be confident that Inland Revenue will detect those evading their obligations and those cheating on their taxes should be aware that we will take action when we detect deliberate non-compliance."

Law was also sentenced to 200 hours' community service.

Source: NZ HERALD

Publication: The Puppet Masters- How the Corrupt Use Legal Structures to Hide Stolen Assets and What to Do About It

2011-11-01T12:26:00.000-07:00

Billions in corrupt assets, complex money trails, strings of shell companies and other spurious legal structures. These form the complex web of subterfuge in corruption cases, behind which hides the beneficial owner- the Puppet Master and beneficiary of it all.

Linking the beneficial owner to the proceeds of corruption is notoriously hard. With sizable wealth and resources on their side, they exploit transnational constructions that are hard to penetrate and stay aggressively ahead of the game.

Nearly all cases of grand corruption have one thing in common. They rely on corporate vehicles- legal structures such as companies, foundations and trusts -- to conceal ownership and control of tainted assets.

The Misuse of Corporate Vehicles takes these corporate vehicles as its angle of investigation. It builds upon cases, interviews with investigators, corporate registries and financial institutions, as well as a 'mystery shopping' exercise that provide factual evidence of a criminal practice. This approach is used to understand the nature of the problem and design policy recommendations to facilitate the investigative process by unraveling the complex world of CVs.

This lucidly written report is solidly built on step-by step arguments and designed to deliver practical, applicable and well substantiated recommendations. It is intended for use by policy makers in developing national legislation and regulation as well as international standard setters. It also provides helpful information for practitioners engaged in investigating corrupt officials and academics involved in the study of financial crime.

Download the FULL REPORT

Source: World Bank

Singapore to Strengthen Anti-Money Laundering Rules

2011-10-31T10:59:00.000-07:00

by Mary Swire, Tax-News.com, Hong Kong

During a recent speech for the Wealth Management Institute, the Managing Director of the Monetary Authority of Singapore (MAS), Ravi Menon, said that Singapore welcomed legitimate funds from Europe, or anywhere else, seeking to be managed out of Singapore, but not illicit funds seeking shelter from scrutiny.

He considered that Singapore is seen to be the ideal base for the intermediation of that growing Asian wealth due to its political and economic stability, transparency in governance, and sound and predictable regulation, together with strong capabilities in asset management, foreign exchange and derivatives trading, coupled with deep and liquid capital markets.

However, Menon stressed that the financial sector must be kept clean.

“While cross-border crimes have become increasingly sophisticated, Singapore is vulnerable to being used as a conduit for illicit funds,” he added. “We need to guard against financial flows relating to corruption, terrorism, politically exposed persons, and weapons proliferation. More recently, efforts by various governments to strengthen tax enforcement have increased the risk of undeclared monies flowing to Singapore.”

Menon confirmed that MAS is fully committed to safeguarding the integrity and reputation of Singapore as a clean financial centre, and already has a strong legal and regulatory framework on anti-money laundering (AML) and counter financing of terrorism (CFT), in line with international standards; and a rigorous regime of supervision to monitor compliance by financial institutions.

Having reviewed Singapore’s regulations and supervisory and enforcement actions, the Financial Action Task Force assessors concluded: “Singapore’s AML/CFT sanctions regime is effective, proportionate, and dissuasive.”

Nevertheless, Singapore is now considering a tougher penalty regime for violations of AML/CFT; intends to make criminal the laundering of proceeds from tax offences to send a clear message that it neither wants nor will tolerate illicit inflows; and will step up its enforcement resources to deal with suspicious transactions reported by financial institutions.

It will also strengthen cross-border co-operation to fight trans-national financial crime, and will step up vigilance against suspicious flows of funds arising from external developments.

With regard to the latter, Menon was sceptical that Singapore is benefiting from an inflow of hot monies, “especially from Europe, supposedly following the adoption of enhanced exchange of information provisions among European Union countries,” as tales of large inflows of funds from Europe into Singapore are “vastly exaggerated.”

He pointed out that, “according to the Boston Consulting Group, European wealth is estimated at just 10% of the USD900 billion offshore assets under management in Singapore and Hong Kong. … As one banker puts it, the emergence of Singapore and Hong Kong as wealth management hubs has to do with more Asian wealth being retained in Asia rather than a flight of new funds to Asia.”

Nonetheless, he concluded that Singapore “must remain vigilant against potential negative spill-overs of illicit funds triggered by external developments. Recently, when Switzerland signed bilateral treaties with the United Kingdom and Germany on tax-related matters, MAS issued a set of guidelines as a pre-emptive step to guard against any potential inflows of illicit funds.”

MAS guidelines reminded financial institutions that they have a key role to play in preserving the integrity of our financial system, and safeguarding it from being used as a haven for illegitimate funds or as a conduit to disguise the flow of such funds. “This vigilance,” he emphasized, “should be extended to all forms of suspicious flows, be they from tax evasion or corruption.”

Source: Tax News

FATF Public Statement - 28 October 2011

2011-10-31T10:44:00.000-07:00

The Financial Action Task Force (FATF) is the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT). In order to protect the international financial system from ML/FT risks and to encourage greater compliance with the AML/CFT standards, the FATF identified jurisdictions that have strategic deficiencies and works with them to address those deficiencies that pose a risk to the international financial system.

Jurisdictions subject to a FATF call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/TF) risks emanating from the jurisdictions*.

Iran

Democratic People's Republic of Korea (DPRK)

Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies**. The FATF calls on its members to consider the risks arising from the deficiencies associated with each jurisdiction, as described below.

Cuba**

Bolivia

Ethiopia

Kenya

Myanmar

Nigeria

São Tomé and Príncipe

Sri Lanka

Syria

Turkey

* The FATF has previously issued public statements calling for counter-measures on Iran and DPRK. Those statements are updated below.

**Cuba has not engaged with the FATF in the process.

Iran

The FATF, with a renewed urgency, is particularly and exceptionally concerned about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system, despite Iran’s engagement with the FATF.

The FATF reaffirms its call on members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions. In addition to enhanced scrutiny, the FATF reaffirms its 25 February 2009 call on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from Iran. FATF continues to urge jurisdictions to protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices and to take into account ML/FT risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction. Due to the continuing terrorist financing threat emanating from Iran, jurisdictions should consider the steps already taken and possible additional safeguards or strengthen existing ones.

The FATF urges Iran to immediately and meaningfully address its AML/CFT deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transactions reporting (STR) requirements. If Iran fails to take concrete steps to improve its CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen counter-measures in February 2012.

Democratic People's Republic of Korea (DPRK)

The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. The FATF urges the DPRK to immediately and meaningfully address its AML/CFT deficiencies.

The FATF reaffirms its call on its members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with the DPRK, including DPRK companies and financial institutions. In addition to enhanced scrutiny, the FATF further calls on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from the DPRK. Jurisdictions should also protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices, and take into account ML/FT risks when considering requests by DPRK financial institutions to open branches and subsidiaries in their jurisdiction.

The FATF remains prepared to engage directly in assisting the DPRK to address its AML/CFT deficiencies, including through the FATF Secretariat.

________________________

Cuba

Cuba has not committed to the AML/CFT international standards, nor has it constructively engaged with the FATF. The FATF has identified Cuba as having strategic AML/CFT deficiencies that pose a risk to the international financial system. The FATF urges Cuba to develop an AML/CFT regime in line with international standards, and is ready to work with the Cuban authorities to this end.

________________________

Bolivia

Bolivia has taken steps towards improving its AML/CFT regime, including by enacting new CFT legislation. However, despite Bolivia’s high-level political commitment to work with the FATF and GAFISUD to address its strategic AML/CFT deficiencies, Bolivia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Bolivia should work on addressing these deficiencies including by: (1) ensuring adequate criminalisation of money laundering (Recommendation 1); (2) adequately criminalising terrorist financing (Special Recommendation II); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); and (4) establishing a fully operational and effective Financial Intelligence Unit (Recommendation 26). The FATF encourages Bolivia to address its remaining deficiencies and continue the process of implementing its action plan.

Ethiopia

Despite Ethiopia’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Ethiopia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Ethiopia should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing an adequate legal framework and procedures to identify and freeze terrorist assets (Special Recommendation III); (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (4) raising awareness of AML/CFT issues within the law enforcement community (Recommendation 27); and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17). The FATF encourages Ethiopia to address its remaining deficiencies and continue the process of implementing its action plan.

Kenya

Despite Kenya’s high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies, Kenya has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Kenya should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); (4) raising awareness of AML/CFT issues within the law enforcement community (Recommendation 27); and (5) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17). The FATF encourages Kenya to address its remaining deficiencies and continue the process of implementing its action plan, including by implementing the AML legislation and setting up its FIU.

Myanmar

Despite Myanmar’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Myanmar has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Myanmar should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) further strengthening the extradition framework in relation to terrorist financing (Recommendation 35 and Special Recommendation I); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (5) enhancing financial transparency (Recommendation 4); and (6) strengthening customer due diligence measures (Recommendation 5). The FATF encourages Myanmar to address its remaining deficiencies and continue the process of implementing its action plan.

Nigeria

Nigeria has taken steps towards improving its AML/CFT regime, including by enacting AML/CFT legislation. However, despite Nigeria’s high-level political commitment to work with the FATF and GIABA to address its strategic AML/CFT deficiencies, Nigeria has not made sufficient progress in implementing its action plan, and certain strategic deficiencies remain. Nigeria should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) ensuring that relevant laws or regulations address deficiencies in customer due diligence requirements and that they apply to all financial institutions (Recommendation 5); and (4) continuing to improve the overall supervisory framework for AML/CFT (Recommendation 23). The FATF encourages Nigeria to address its remaining deficiencies and continue the process of implementing its action plan.

São Tomé and Príncipe

Despite São Tomé and Príncipe’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, São Tomé and Príncipe has not made sufficient progress in implementing its action plan, and certain strategic deficiencies remain. São Tomé and Príncipe should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (3) ensuring that financial institutions and DNFBPs are subject to adequate AML/CFT regulation and supervision, and that a competent authority or competent authorities have been designated to ensure compliance with AML/CFT requirements (Recommendations 23, 24 and 29); (4) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17); and (5) taking the necessary action to gain membership of GIABA. The FATF encourages São Tomé and Príncipe to address its remaining deficiencies and continue the process of implementing its action plan.

Sri Lanka

Sri Lanka has taken steps towards improving its AML/CFT regime, including by enacting AML/CFT amendments. However, despite Sri Lanka’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Sri Lanka has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Sri Lanka should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing and addressing the remaining deficiencies with regard to the criminalisation of money laundering (Special Recommendation II and Recommendation 1); and (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III). The FATF encourages Sri Lanka to address its remaining deficiencies and continue the process of implementing its action plan, including by continuing to work on its AML/CFT legislation.

Syria

Syria has taken significant steps towards improving its AML/CFT regime, including by improving the legal arrangements for freezing terrorist assets. However, despite Syria’s high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Syria has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Syria should work on addressing its deficiencies, including by: (1) adopting adequate measures to implement and enforce the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I); (2) implementing adequate procedures for identifying and freezing terrorist assets (Special Recommendation III); (3) ensuring that financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to ML and FT (Recommendation 13 and Special Recommendation IV); and (4) ensuring that appropriate laws and procedures are in place to provide mutual legal assistance (Recommendations 36-38, Special Recommendation V). The FATF encourages Syria to address its remaining deficiencies and continue the process of implementing its action plan.

Turkey

Turkey has taken steps towards improving its AML/CFT regime, including by submitting CFT legislation to Parliament. Despite Turkey’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Turkey has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Turkey should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); and (2) implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III). The FATF encourages Turkey to address its remaining deficiencies and continue the process of implementing its action plan.

Source: FATF

Publication: Illicit money: how much is out there?

2011-10-27T00:19:00.000-07:00

Criminals, especially drug traffickers, may have laundered around $1.6 trillion, or 2.7 per cent of global GDP, in 2009, according to a new report by UNODC. This figure is consistent with the 2 to 5 per cent range previously established by the International Monetary Fund to estimate the scale of money-laundering.

Less than 1 per cent of global illicit financial flows is currently being seized and frozen, according to the report Estimating illicit financial flows resulting from drug trafficking and other transnational organized crime. "Tracking the flows of illicit funds generated by drug trafficking and organized crime and analysing how they are laundered through the world's financial systems remain daunting tasks," acknowledged Yury Fedotov, Executive Director of UNODC.

Launching the report in Marrakech, Morocco, during the fourth session of the Conference of the States Parties to the United Nations Convention on Corruption, Mr. Fedotov said that the Conference served as an apt reminder that corruption could play a major role in facilitating the entry of illicit funds into legitimate global financial flows, adding that investments of "dirty money" could distort the economy and hamper investment and economic growth. The aim of the study is to shed light on the total amounts probably laundered across the globe and to advance research on the topic. "But as with all such reports, we will continue to refine the figures to provide the truest possible estimates," said Mr. Fedotov.

The UNODC report estimates that the total amount of criminal proceeds generated in 2009, excluding those derived from tax evasion, may have been approximately $2.1 trillion, or 3.6 per cent of GDP in that year (2.3 to 5.5 per cent). Of that total, the proceeds of transnational organized crime - such as drug trafficking, counterfeiting, human trafficking and small arms smuggling - may have amounted to 1.5 per cent of global GDP, and 70 per cent of those proceeds are likely to have been laundered through the financial system.

The illicit drug trade - accounting for half of all proceeds of transnational organized crime and a fifth of all crime proceeds - is the most profitable sector. The study paid particular attention to the market for cocaine, probably the most lucrative illicit drug trafficked across borders. Traffickers' gross profits from the cocaine trade stood at around $84 billion in 2009. While Andean coca bush farmers earned about $1 billion, the bulk of the income generated from cocaine was concentrated in North America ($35 billion), followed by West and Central Europe ($26 billion). Approximately two-thirds of that total may have been laundered in 2009. The findings suggest that most profits from the cocaine trade are laundered in North America and in Europe, whereas illicit income from other subregions is probably laundered in the Caribbean.

Once illegal money has entered the global and financial markets, it becomes much harder to trace its origins, and the laundering of ill-gotten gains may perpetuate a cycle of crime and drug trafficking. "UNODC's challenge is to work within the United Nations system and with Member States to help to build the capacity to track and prevent money-laundering, strengthen the rule of law and prevent these funds from creating further suffering," said Mr. Fedotov.

Source: UNODC

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Global Anti-Money Laundering Survey 2011 (KPMG)

2011-09-24T01:50:00.000-07:00

KPMG annouces the latest Anti-Money Laundering (AML) survey exploring where AML fits into the changing risk and regulatory landscape facing the financial sector. It reports the views of the survey participants on their areas of focus and challenge, and also contains commentary from KPMG.

The highlights of the survey include the following:

AML is still on the radar of many banks' leadership, but is being squeezed by other priorities.
AML continues to be a significant and rising expense for banks, but many under-estimate how much it costs.
PEPs and sanctions are a major focus for banks and governments alike, however both are far from straightforward to get to grips with.
Transaction monitoring policies and systems are generally seen as satisfactory, but with plenty of room for improvement.
KYC data is generally collected and updated both robustly and regularly, but there is great variation in the approach used.

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OFAC Targets Colombian Drug Traffickers Linked To Sinaloa Cartel Leader

2011-09-22T00:18:00.000-07:00

The U.S. Treasury Department said Wednesday it imposed Kingpin Act sanctions on four Colombian individuals and 12 companies tied to a Colombian national linked to the head of the Mexico-based Sinaloa drug cartel.

Announced by Treasury’s Office of Foreign Assets Control, Colombian nationals Mauricio Barcenas Rivera, Omar Mejia Zuluaga and Ana Maria Uribe Cifuentes, and dual Uruguayan/Ecuadorian national Jesus Maria Castro all had their U.S. assets frozen. The companies are spread across Colombia, Ecuador, Mexico, Panama and Uruguay.

The companies and individuals are all linked, according to the announcement (pdf), to Jorge Milton Cifuentes Villa, who was sanctioned by OFAC in February. Villa’s organization, OFAC said, is closely tied to Sinaloa Cartel leader Joaquin Guzman Loera, known as Chapo Guzman.

Both Guzman and Villa were indicted on drug-trafficking and money-laundering charges in Florida in November 2010, and Villa was separately indicted in New York in February 2011 on drug-trafficking charges, according to Treasury’s notice.

The full list of Wednesday’s designations is available here, and a chart diagramming Villa’s drug network is here (pdf).

Source: The Wall Street Journal by Samuel RUBENFELD

How India's banks are used to fund terror

2011-09-21T02:18:00.000-07:00

As India battles unabated terror acts on its soil it has discovered a worrying trend of country's banks being potentially used to funnel money by various terrorist organizations in the country.

Maharashtra leads among states in reporting of suspicious transactions with about one-third of such cases being reported from the state. A finance ministry internal report found out that banking companies reported a maximum of 11,840 suspicious transactions between 2006 and 2010. Financial institutions and intermediaries followed with 2,872 and 2,497 suspicious transactions reported respectively during 2006-10.

The report illustrates growing fear of penetration of terror outfits in the banking and financial system of the country. The finance ministry's Financial Intelligence Unit (FIU) has been entrusted with the task to tabulate all Suspicious Transaction Report (STR). FIU is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.

Under the Prevention of Money Laundering Act (PMLA), 2002, a suspicious transaction includes a transaction that gives rise to a reasonable ground of suspicion that it might be involved in financing of the activities relating to terrorism.

The law defines such transactions as those involving funds suspected to be linked or related to or to be used for terrorism, terrorist acts or by a terrorist, terrorist organization or those who finance or are attempting to finance terrorism. But government does not conclude that all suspicious transactions would relate to terror acts since it lists several other parameters broadly under money laundering activities.

As per the FIU report over 17,000 suspicious transactions were recorded in all during 2006-2010. The STRs recorded during 2006-07 stood at 817, growing to 1,916 in 2007-08, 4409 in 2008-09 and 10,067 in 2009-10 respectively.

In the banking sector that leads the list of suspicious transactions maximum 5479 STRs were reported by private banks in the country. Public sector banks, foreign banks, insurance companies and mutual funds too reported such transactions with 3878, 2403, 2063 and 1892 STRs recorded by them respectively.

The finance ministry, however, does not specify as to whether any action was taken on STRs recorded by its financial intelligence unit.Secretary, Prime Minister's Economic Advisory Council (PMEAC) K P Krishnan said without mapping the finance ministry information with security data STR report would not on its own lead to any firm conclusion. He argued, "STR report is based on the financial transactions so we cannot conclude and relate this with terrorist financing unless security data of investigative agencies gets clubbed with this."

Expressing concern over the issue, former finance secretary, E A S Sarma said, "As the reporting system has improved it is possible that the persons intending to take part in illegal transactions have chosen other routes like hawala, FII acquisition of equity in Indian companies, real estate acquisition in foreign countries, clandestine investments in mining in other countries and so on."

Former chief of Research and Analysis Wing (RAW), A S Dulat described the increase in suspicious transactions as a matter of grave concern for the government. He said, "If government's own report is pointing that illegal money is being transferred by these routes, so why aren't they stopping it? Government should take some early actions in this matter."

Among states, Maharashtra dominated with maximum 29% share in STRs reported in all sectors. Delhi and West Bengal also followed with 12.1 and 7.3% share respectively. Other significant states in terms of share in STRs were Gujarat and Uttar Pradesh at 6%, Tamil Nadu 5.7%, Punjab 5.1%, Karnataka 4.7% and Andhra Pradesh 4.4%. Bihar and Chattisgarh conceded least 1.1% of suspicious transactions between 2006 and 2010.

On the increasing suspicious transactions in states, Sarma added "Even though some states like Maharashtra, Delhi and West Bengal still occupy high ranking positions in terms of the number of STRs, there are other emerging states like UP, Punjab, Andhra Pradesh, Haryana and Kerala where the share is on the increase. One has to watch these states closely."

Krishnan at PMEAC pointed to lack of operational coordination among investigative agencies as the "biggest problem." He said, "Government should marry all the investigative agencies together so that they can share data with one another. Without any more delay government should immediately start the proposed NATGRID project to avoid terrorist activities in the country."

As per the Prevention of Money Laundering Act, 2002 every reporting entity is required to report suspicious transactions to FIU, within 7 working days on being satisfied that the transaction is suspicious.

Source: DNA INDIA by Pankaj Sharma

Western Union Hosts 6th Annual AML, Anti-Fraud Event in Denver

2011-09-19T05:25:00.000-07:00

The Western Union Company will host the sixth annual Anti-Money Laundering & Anti-Fraud & Compliance Conference -- one of the biggest events of its kind -- Sept. 19-22, 2011 in Denver.

The event, held each year for compliance and fraud professionals from across the United States and Canada, is an interactive experience teaching best practices in preventing fraud and money laundering. This year's event will include more than 200 attendees.

More than 40 experts from a variety of government organizations will speak, including the Federal Trade Commission, the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department, the Financial Transactions and Reports Analysis Centre (FINTRAC) of Canada's Ministry of Finance, the Internal Revenue Service (IRS) and law enforcement from across the U.S.

"Western Union is committed to protecting our customers and the financial system from potential abuse," said Joe Cachey, Western Union's Acting General Counsel and Chief Compliance Officer. "This event is a unique learning experience, allowing professionals from a wide variety of financial services firms to better identify and protect their organizations against fraud."

The conference was introduced in 2006 as a way to provide continuing education to Western Union Agents on anti-money laundering best practices, regulations and law-enforcement trends. It has since grown into one of North America's largest anti-money laundering/anti-fraud conferences for professionals from a variety of industries.

About Western Union

The Western Union Company is a leader in global payment services. Together with its Vigo, Orlandi Valuta, Pago Facil and Western Union Business Solutions branded payment services, Western Union provides consumers and businesses with fast, reliable and convenient ways to send and receive money around the world, to send payments and to purchase money orders. The Western Union, Vigo and Orlandi Valuta branded services are offered through a combined network of approximately 470,000 agent locations in 200 countries and territories. In 2010, The Western Union Company completed 214 million consumer-to-consumer transactions worldwide, moving $76 billion of principal between consumers, and 405 million business payments. For more information, visit http://www.westernunion.com

Source: Market Watch

Brennan: Al-Qaeda Affiliates Turning To Crime For Funding

2011-09-08T13:28:00.000-07:00

U.S. President Barack Obama's chief counterterrorism adviser says that with Al-Qaeda's core under financial strain, its affiliates are increasingly turning to crime to fund their operations.

Deputy National Security Adviser John Brennan made the remarks in Washington at a Treasury Department symposium titled "Ten Years Later: Progress and Challenges in Combating the Financing of Terrorism Since 9/11."

"Reacting to Al-Qaeda's core financial difficulties, its affiliates in East Africa and on the Arabian Peninsula have come to rely less on support from the Al-Qaeda network as they plan and mount terrorist attacks," Brennan said.

"While the Al-Qaeda core continues to provide strategic guidance, some affiliates now instead have turned to crime to generate funding -- particularly kidnapping for ransom, control of territory, extortion, and at times, drug trafficking."

Brennan said that the trend is due to pressure exerted on the terror network by sanctions and other measures that have cut off Al-Qaeda from its financiers or disrupted the funneling of money within the organization.

He also said the Arabian Peninsula "remains the most important source of financial support for Al-Qaeda and its affiliates and adherents worldwide," but praised Saudi Arabia and the United Arab Emirates for making progress.

Brennan also singled out Iran for its support of Hamas and Hizballah.

Source: RFERL

IMF warns Kuwait on money laundering risk

2011-09-06T12:41:00.000-07:00

Kuwait needs to tighten its anti-money laundering rules or risk its growing financial sector being exploited by criminals, the IMF has warned.

Smuggling to and from neighbouring Iraq, fraud and corruption are among the main money laundering crimes identified by authorities to date, the organisation, based in Washington, said in a report.

At present, there is no evidence of significant money laundering in the country, it said.

But the IMF said criminal risks increased as the financial sector expanded, fuelled by increasing oil revenue and higher government spending, and would increase further if plans to create an international financial centre were realised.

"These developments have the potential of creating a suitable environment for money launderers seeking to exploit the Kuwaiti financial sector to exercise their illegitimate activities," it said.

Kuwait trailed other GCC states in Transparency International's Corruption Perceptions Index last year, ranking 54th out of 180 countries. In 2003, it was 35th on the index.

The country has been battling against corruption in government and industry in recent years. Members of parliament last month discussed allegations that two MPs had received frequent cash payments into their bank accounts from unknown sources. Siemens uncovered evidence of corruption at its business in Kuwait, the German conglomerate said in June.

A major problem in Kuwait, the IMF noted, was insufficient anti-money laundering rules. A law introduced in 2002 did not criminalise the financing of terrorism and did not put in place a means of enforcing UN Security Council resolutions, it said.

A new draft anti-money laundering law has yet to be agreed on, despite being sent before the national assembly in 2007. In addition, preventative measures safeguarding financial firms from money laundering were not comprehensive, the IMF said.

Kuwait's finance sector, one of the pillars of the country's non-oil economy, is recovering from heavy losses linked to the global downturn. Gulf Bank required a government bailout and the investment industry underwent a hefty shake-up after several investment companies started to default on financial obligations.

tarnold@thenational.ae

Source: The National

Fiji's anti money laundering effort commended

2011-08-30T12:34:00.000-07:00

Fiji’s initiatives for combating money laundering received regional recognition last month for making “substantial progress” in addressing deficiencies identified by the World Bank in 2006.

A delegation from the Fiji Government presented a detailed progress report on Fiji’s Anti-Money Laundering framework at the Annual Plenary Meeting of the Asia Pacific Group on Money Laundering in India last month.

Financial Intelligence Unit Razim Buksh says pressure is now put on countries to ensure global compliance with Anti Money Laundering standards that protect the domestic as well as international financial systems.

Solicitor General Christopher Pryde says restraining and forfeiture provisions, including civil forfeiture provisions, have been tested in Fiji and have resulted in a number of money laundering convictions and forfeiture of criminal assets.

Fiji’s criminal justice system was further strengthened and modernised with the introduction of a new Crimes Decree and the Criminal Procedure Decree.

Progress reports will be provided annually to the APG.

Report by : Edwin Nand

Source: FBC

Dubai regulators to keep tabs on money laundering

2011-08-26T13:48:00.000-07:00

Dubai's financial services authority will remain on guard against money laundering because such safeguards are needed to attract foreign capital, its chief executive said on Wednesday, and indicated a merger between the Dubai and Abu Dhabi stock exchanges could be an "important" development in the Middle East financial system.

"We will continue with our anti-money laundering efforts, systems and controls," Paul Koster told Dow Jones Newswires yesterday on the sidelines of a banking conference. "We are serious."

His comments follow May's Dh1.1 million fine which the regulator slapped on the local branch of an online broker for breaching its anti-money laundering systems and controls.

Commenting on the likelihood of a merger between the two stock exchanges, Koster said: "That is a political issue. But I would say consolidation is very important.

Talks of a possible merger have been on for a while as exchange operators globally are seen seeking new synergies and moving toward consolidation.

Earlier this year, Germany's Deutsche Borse AG and NYSE Euronext announced a takeover pact, while London Stock Exchange Group and Toronto's TMX Group said they have reached a deal to merge operations.

Russia's top exchanges, Micex Group and RTS, had announced their plan to merge, and in October last year, Singapore Exchange announced an $8.3 billion (Dh30.48 billion) offer for all the shares of ASX, the operator of the Australian Securities Exchange.

Source: Gulf News

Ex-president's son found guilty of money laundering in retrial

2011-08-26T13:45:00.000-07:00

The Taiwan High Court on Friday upheld previous sentences meted out to the son and daughter-in-law of former President Chen Shui-bian in a money laundering case but reduced their fines.

The court found that Chen Chih-chung and Huang Jui-ching had helped Chen Shui-bian and his wife Wu Shu-jen launder, hide and transfer abroad funds obtained illicitly, but that they did not benefit financially from those transactions.

It therefore decided to cut the NT$30 million (US$1.03 million) Chen was fined in his most recent trial to NT$4.5 million and slash Huang's fine from NT$20 million to NT$4 million.

The court, however, upheld Chen's 14-month prison sentence and Huang's one-year sentence, but still allowed Huang the option of paying NT$10 million to national coffers to have the one-year sentence commuted to a four-year suspended sentence.

Both Chen and Huang can still appeal the ruling.

The two were first convicted by the Taipei District Court in September 2009 for having engaged in money laundering during Chen Shui-bian's presidency from 2000-2008.

Chen was given a 30-month jail sentence and fined NT$150 million. Huang was also fined NT$150 million and sentenced to 20 months in prison, but she was given the option to pay NT$200 million to commute the jail time to a five-year suspended sentence.

In a second trial, the Taiwan High Court ruled on June 11, 2010 to cut Chen's sentence to 14 months and reduce his fine to NT$30 million.

Huang's fine was cut to NT$20 million, and she was given a one-year sentence that could be commuted to a four-year suspended sentence with a payment of NT$10 million.

The rulings were appealed to Taiwan's Supreme Court, which sent the case back to the Taiwan High Court Nov. 11, 2010 for retrial, resulting in Friday's rulings.

The case has not been Chen Chih-chung's only legal entanglement. In a final verdict rendered by the Supreme Court on Aug. 18, the former president's son was sentenced to three months in jail without probation for committing perjury in a corruption case involving his parents.

The verdict prompted the Executive Yuan to strip him of his seat in the Kaohsiung City Council. Chen has vowed to fight the Executive Yuan's order.

Source: Focus Taiwan

Audit unveils no money laundering by Czech govt VV

2011-08-26T13:43:00.000-07:00

A recent forensic audit has proved that there was no money laundering on the part of the Czech junior ruling Public Affairs (VV), VV chairman Radek John said today, presenting the audit, to reporters.

A separate audit of VV deputy Michal Babak´s finance has proved no irregularities either, John said.

The VV had its finance audited earlier this summer.

The audit has unveiled major shortcomings in the VV´s party accounting but the auditor found no signs of an expedient distortion of the accounting data, says the BDO auditor´s report that the VV has released on its website.

The unveiled shortcomings are of a procedural nature and the VV will remedy them soon, John said.

Babak had his own finance audited separately in reaction to critics´ suspicions of money laundering on his part.

In a press release today, Babak rejected any further challenging of his personal and professional integrity.

"I provided any possible cooperation, including thorough information on my family´s financial situation, to the auditor and the police investigators. No Czech politician has done anything similar so far. I did not have and I don´t have anything to hide," said Babak, whose VV membership has been suspended over the above mentioned suspicions.

He admitted having taken some rather non-standard steps in good faith and in an effort to help the VV during its turbulent start [in his politics], but the audit has shown that all the steps were taken to the VV´s benefit and none was at variance with law.

He said he is ready to do his utmost as a member of the VV leadership to supervise the correction of the unveiled shortcomings and prevent similar situations from repeating.

The VV entered the Czech lower house for the first time in history in the mid-2010 elections. It is the smallest in parliament and in the centre-right government.

Suspicions about its allegedly problematic financial management emerged this spring when not only the whole government but also the VV itself experienced internal turbulences.

Source: ČTK

JP Morgan pays $88.5m to settle sanction violations

2011-08-26T13:37:00.001-07:00

JP Morgan Chase has agreed with the US Treasury Department to pay $88.3m (£54.2m) to avoid liability for "apparent violations" of sanctions against Cuba, Sudan, Liberia and Iran.

The Treasury said such violations, which took place between March 2005 and March 2011, were "egregious".

These included processing 1,711 transfers totalling $178.5m to Cubans in contravention of US regulations.

JP Morgan said there had been no intention to violate regulations.

"The firm screens hundreds of millions of transaction and customer records per day, and annual error rates are a tiny fraction of 1%," said Jennifer Zuccarelli, a spokeswoman for the bank.

"We are pleased to have resolved these matters and to move forward with enhancements to our [foreign assets] compliance programme."

JP Morgan reported net profits of $5.4bn for the three months to 30 June, up from $4.8bn a year earlier.

Source: BBC

ED may file money laundering case against Jagan

2011-08-24T03:35:00.000-07:00

The Enforcement Directorate (ED) may file a money laundering case against YS Jagan Mohan Reddy and some of his associates, days after the CBI searched various premises belonging to the Kadapa MP.

The Directorate is understood to have made a discreet probe trailing the funds pumped by the MP and son of former Andhra Pradesh chief minister YS Rajasekhara Reddy and his associates into the companies owned by them.

The agency, according to sources, has gone through some official documents of transactions as part of its investigation under the provisions of the Prevention of Money laundering Act (PMLA).

The CBI has already registered a case against Reddy on the instructions of Andhra Pradesh High Court under relevant sections of the IPC pertaining to cheating, criminal conspiracy, criminal breach of trust and under provisions of Prevention of Corruption Act.

The CBI said searches were conducted at Hyderabad, Bangalore, Chennai, Kolkata, Rajkot, Delhi and Mumbai in this connection.

"The CBI has registered a case...against a Member of Parliament from Andhra Pradesh, and others, on the orders of High Court of Andhra Pradesh...on the allegation that the investors invested in the companies owned and promoted by the MP at very high premiums as a quid-pro-quo for the favours doled out by the then chief minister of Andhra Pradesh," a CBI spokesperson had said.

Source: IBN

Bahrain’s anti-terror efforts lauded

2011-08-21T05:29:00.000-07:00

Bahrain has efficiently worked to combat the financing of terrorism and boosted its border patrol capabilities, contributed manpower to international anti-terror operations, said a report.

Bahrain also conducted successful court trials under its anti-terror act, added an annual report issued by the anti-terror liaison office in the US State Department.

It confirmed that Bahrain worked successfully to combat financing of terrorism and hosted the general-secretariat of the Finance Task Force. Bahrain also liaised with its banks regarding cases of money laundering and financing of terror.

The report said Bahrain, since it ratified the international anti-nuclear terrorism initiative in March 2008, has expanded its aviation and marine patrol, increased the number of checkpoints, conducted more drills for internal co-ordination and stationed more border patrol officers capable of identifying nuclear proliferation-related substances such as centrifuges and commercially-banned components.

The report praised the Justice, Islamic Affairs and Endowments Ministry for exerting persistent efforts to combat radicalism and extremism.

The ministry organised forums and workshops for imams and also expanded its scholarships programme and finalised its annual revising of religious education curricula for its schools to update the interpretation of Islamic texts, the report added.

Source: TradeArabia News Service

US maintains Cuba, Iran, Sudan, Syria on terror sponsors' list

2011-08-19T15:45:00.000-07:00

The US has retained Cuba, Iran, Sudan and Syria on the list nations which allegedly sponsor of terrorism.

The State Department retained these four countries in this list after Secretary of State Hillary Clinton determined that the government of these nations has repeatedly provided support for acts of international terrorism.

As a result, these countries would face a wide range of sanctions including a ban on arms-related exports and sales; controls over exports of dual-use items, requiring 30-day Congressional notification for goods or services that could significantly enhance the terrorist-list country's military capability or ability to support terrorism; prohibitions on economic assistance and imposition of miscellaneous financial and other restrictions.

Designated as a State Sponsor of Terrorism in 1982, the Government of Cuba maintained a public stance against terrorism and terrorist financing in 2010, but there was no evidence that it had severed ties with elements from the Revolutionary Armed Forces of Colombia and recent media reports indicate some current and former members of the Basque Fatherland and Liberty continue to reside in Cuba, the State Department said.

Iran, designated as a State Sponsor of Terrorism in 1984, remained the most active state sponsor of terrorism in 2010.

Tehran's financial, material, and logistic support for terrorist and militant groups throughout the Middle East and Central Asia had a direct impact on international efforts to promote peace, threatened economic stability in the Gulf, and undermined the growth of democracy, it said.

In 2010, Iran remained the principal supporter of groups implacably opposed to the Middle East Peace Process, it added. Sudan, which was designated as a State Sponsor of Terrorism in 1993, the State Department said remained a cooperative partner in global counter-terrorism efforts against al-Qaida in 2010.

During the past year, the Government of Sudan worked actively to counter AQ operations that posed a potential threat to US interests and personnel in Sudan.

Sudanese officials have indicated that they viewed continued cooperation to the US as important and recognized the potential benefits of American training and information-sharing.

Syria was designated as the State Sponsor of Terrorism in 1979. In 2010, it continued its political support to a variety of terrorist groups affecting the stability of the region and beyond, the report said.

The State Department said Syria provided political and weapons support to Hizballah in Lebanon and allowed Iran to resupply the terrorist organization with weapons.

The external leadership of Hamas, the Palestine Islamic Jihad, the Popular Front for the Liberation of Palestine, and the Popular Front for the Liberation of Palestine-General Command, among others, were based in Damascus and operated within Syria's borders.

Statements supporting terrorist groups like Hamas and Hizballah consistently permeated government speeches and press statements, it said.

Source: Deccan Herald

Armenia takes positive steps in fight against terrorism

2011-08-19T15:43:00.000-07:00

Armenia took a number of positive steps in the fight against international terrorism, says Country Reports on Terrorism 2010 issued by U.S. State Department on Thursday.

Among the positive steps the report mentions improvements to its border security, significant changes to export control laws, and participation by Armenian experts in internationally sponsored anti-terrorism training courses.

The report says that Armenia has achieved measured progress in improving its border security, including installation of radiation portal alarms at all ports of entry and significant legislative changes in its export control laws.

“Armenia participated in bilateral and multilateral assistance, security, and training initiatives targeted at strengthening its ability to counter terrorism, terrorist financing, and the smuggling of illicit and hazardous materials.

Armenia continued to make progress in counterterrorism cooperation with NATO. NATO and Armenia also cooperated on the establishment of a “situation center” in Yerevan, which assisted in crisis management and counterterrorism coordination.

In December, the OSCE hosted in Yerevan a national expert workshop on countering terrorist use of the Internet and comprehensively enhancing cyber-security,” the report reads.

Source: News.am

Azerbaijan actively opposed terrorist organizations - US

2011-08-19T15:41:00.000-07:00

Azerbaijan actively opposed terrorist organizations seeking to move people, money, and material through the Caucasus.

The country stepped up efforts and has had some success in reducing the presence of terrorist facilitators and hampering their activities.

It says in Country Reports on Terrorism 2010 report released by the US Department of State on 18 August, News.Az reports.

'Law enforcement bodies continued to pursue terrorist groups and facilitators operating in Azerbaijan. In October 2009, a Baku court sentenced two Lebanese nationals, Ali Muhammad Karaki and Ali Hussein Najmeddin, to prison terms of 15 years each, and sentenced four Azerbaijani accomplices to terms of two to 14 years. The court found that the group was planning attacks on the Israeli Embassy. The investigation revealed that Karaki and Hussein were linked to Hizballah and others in Iran. According to press reports, Karaki and Najmeddin were released in a prisoner exchange with Iran and deported in August 2010, along with 12 Iranian nationals'.

The report says that the Azerbaijani government continued to implement its law on anti-money laundering and counterterrorist financing (AML/CTF) and established a Financial Investigative Unit (FIU). In October, the Central Bank prepared an action plan to bring Azerbaijan's AML/FIU into conformity with the standards of the UN, the Financial Action Task Force (FATF), and other international organizations and conventions. In addition, the Azerbaijan government submitted its plan to the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), the FATF-style regional body. MONEYVAL reviewed Azerbaijan's proposals in December and agreed to withdraw its advisory on non-compliance for Azerbaijan, and removed Azerbaijan from the FATF Watch List. The United States worked with the FIU to improve the legal AML/CTF framework, establish information systems, build capacity for AML/CTF stakeholders, and develop a strategy plan for the FIU. Azerbaijan continued to identify possible terrorism-related funding by distributing lists of suspected terrorist groups and individuals to local banks.

In September, Azerbaijan and Russia signed a border demarcation agreement regarding Azerbaijan's 390-kilometer border with Russia. On November 18, Azerbaijan signed a security cooperation agreement with Caspian Sea littoral states to coordinate law enforcement efforts aimed at smuggling, narcotics trafficking, organized crime, and terrorism.

Source: News.Az

Saudi Arabia amends highly criticized anti-terrorism law

2011-08-11T13:11:00.000-07:00

Saudi Arabian officials on Saturday proposed amendments to the draft anti-terrorism law that received much criticism from human rights groups. A spokesperson for the Shura Council confirmed that the draft of the Penal Law for Terrorism Crimes and Financing of Terrorism was discussed during a session of the council in which changes to make the law less severe were proposed. The amended version of the law would criminalize taking up arms against the king or crown prince as opposed to the original version, which made questioning the king or crown prince a crime, carrying a minimum prison sentence of 10 years. The council seeks to amend the draft further before sending it to the king for approval. However, the changes may be overridden, given the council's limited powers. Amnesty International (AI) revealed the draft law and criticized it in a press release, contending that the legislation's definition of "terrorist crimes" is overly broad and would allow authorities to prosecute protestors for a wide range of conduct. AI also claimed that the draft law conflicts with international human rights treatises such as the UN Convention Against Torture (CAT).

The proposed law comes in response to recent civil unrest in Saudi Arabia and other Middle Eastern and North African nations, but this is not the first time Saudi Arabia has been criticized for rigid counterterrorism practices. Human Rights Watch (HRW) reported in 2009 that Saudi Arabia was illegally detaining thousands under the auspices of combating terrorism. The report echoed another AI report which claimed that Saudi Arabian officials were allegedly using anti-terrorism measures as an excuse to secretly detain, imprison, torture and even kill thousands of people. In February 2009, the US Department of State released its 2008 Report on Human Rights Practices for Saudi Arabia, in which it identified several significant human rights issues, including denial of public trials and lack of due process in the judicial system, detention of political prisoners, incommunicado detention and lack of government transparency. Saudi Interior Minister Prince Nayef bin Abdul-Aziz announced in October 2008 that the kingdom had indicted 991 suspected al Qaeda members. HRW sought access to the trials in an attempt to ensure compliance with international standards, but was denied.

Source: Jurist

FinCEN Guidance to Financial Institutions on Recent Events and the Commercial Bank of Syria

2011-08-10T14:47:00.000-07:00

FinCEN Advisory

FIN-2011-A013
Issued:	August 10, 2011
Subject:	Guidance to Financial Institutions on the Commercial Bank of Syria

In coordination with Wednesday's designation of the Commercial Bank of Syria for its provision of financial services to entities previously sanctioned by the United States for their proliferation activities, the Financial Crimes Enforcement Network (FinCEN) is issuing this Advisory today to alert U.S. financial institutions of information on the Commercial Bank of Syria's continued involvement in illicit financial activities.

On March 15, 2006, FinCEN issued a Final Rule under Section 311 of the USA PATRIOT Act prohibiting U.S. financial institutions from opening or maintaining a correspondent account in the United States for or on behalf of the Commercial Bank of Syria, directly or indirectly, and requiring all covered financial institutions to review their account records to ensure they do not maintain accounts directly for, or on behalf of, the Commercial Bank of Syria¹. This Final Rule followed a Notice of Proposed Rulemaking (NPRM) and Finding on May 18, 2004, which determined that the Commercial Bank of Syria was (1) used by persons associated with terrorist organizations; and (2) used as a conduit for the laundering of proceeds generated from the illicit sale of Iraqi oil.²

Since this Final Rule was issued, the Commercial Bank of Syria has engaged in transactions with multiple proliferation-related entities, including several named in U.S., EU, and UN sanctions, which led to today's designation of the Commercial Bank of Syria pursuant to U.S. counter-proliferation sanctions authorities. The Commercial Bank of Syria is believed to have been used by a provider of lethal support to Al -Qa'ida in Iraq.

Guidance

U.S. financial institutions are reminded that the Final Rule mentioned above imposed the fifth special measure under Section 311, prohibiting U.S. financial institutions from maintaining correspondent accounts for the Commercial Bank of Syria. While the Commercial Bank of Syria no longer maintains direct correspondent relationships with U.S. banks, financial institutions are reminded of their continuing obligation to exercise due diligence with respect to their correspondent accounts that is reasonably designed to guard against indirect use of those accounts by the Commercial Bank of Syria.³ Contrary to what might be expected, financial institutions are advised that the Commercial Bank of Syria continues to maintain U.S. dollar-denominated accounts at various banks throughout Europe, the Middle East, and Asia.

Financial institutions are advised that the Commercial Bank of Syria may attempt to circumvent the prohibitions in the special measure through "nested account" activity. Such activity generally involves a financial institution gaining anonymous access to a financial system by operating through a domestic correspondent account belonging to a third party foreign financial institution rather than maintaining its own correspondent account. Examples of potentially suspicious activity related to nested accounts may include, but are not limited to:

Transactions to and from jurisdictions in which the foreign financial institution has no known business activities or interests.
Transactions in which the total volume and frequency exceeds expected activity for the foreign financial institution, considering its customer base or asset size.

In addition to the requirements under the Final Rule discussed above, FinCEN reminds U.S. financial institutions of their requirement under the BSA to report suspicious transactions conducted or attempted by, at, or through the U.S. financial institution.⁴ A transaction is suspicious if it (a) involves funds derived from illegal activity, (b) is indicative of structuring, money laundering, terrorist financing, or any other violation of federal law or regulation, or (c) has no business or apparent lawful purpose, or is not the sort in which the customer is normally expected to engage, and the financial institution knows of no reasonable explanation for the transaction after examining the available facts.⁵

Questions or comments regarding the contents of this advisory should be addressed to the FinCEN Regulatory Helpline at 800-949-2732.

¹ See generally 71 FR 13260, "Financial Crimes Enforcement Network: Amendment to the Bank Secrecy Act Regulations - Imposition of Special Measure Against Commercial Bank of Syria, Including Its Subsidiary, Syrian Lebanese Commercial Bank, as a Financial Institution of Primary Money Laundering Concern," [Final Rule] (March 15, 2006).http://www.fincen.gov/statutes_regs/patriot/pdf/noticeoffinalrule03152006.pdf. ² See generally, 69 FR 28098, "Financial Crimes Enforcement Network: Amendment to the Bank Secrecy Act Regulations - Imposition of Special Measure Against Commercial Bank of Syria, Including Its Subsidiary, Syrian Lebanese Commercial Bank, as a Financial Institution of Primary Money Laundering Concern," [Notice of Proposed Rulemaking] (May 18, 2004).http://www.fincen.gov/statutes_regs/patriot/pdf/311syrianprm.pdf. ³ 31 CFR 1010.653(b)(2).⁴ A transaction is suspicious if it falls within one of the categories enumerated in our suspicious activity reporting (SAR) rules. A transaction requires reporting if the transaction satisfies the monetary threshold in our SAR rules, and the financial institution "knows, suspects, or has reason to suspect" that the transaction is suspicious. Financial institutions should note that our rules allow for the voluntary filing of SARs. See, e.g., 31 CFR 1020.320.

⁵ Id.

FinCEN Advisory

FIN-2011-A010
Issued:	July 8, 2011
Subject:	Guidance to Financial Institutions on Recent Events in Syria

The Financial Crimes Enforcement Network (FinCEN) is issuing this Advisory to U.S. financial institutions to take reasonable risk-based steps with respect to the potential increased movement of assets that may be related to the current unrest in Syria.¹ During this period of uncertainty, FinCEN is issuing this Advisory to remind U.S. financial institutions of their requirement to apply enhanced scrutiny for private banking accounts held by or on behalf of senior foreign political figures² and to monitor transactions that could potentially represent misappropriated or diverted state assets, proceeds of bribery or other illegal payments, or other public corruption proceeds.

Financial institutions should be aware of the possible impact the events in Syria may have on patterns of financial activity when assessing risks related to particular customers and transactions. For example, as a result of the unrest in Syria, information available to the U.S. Government indicates Rami Makhluf, a cousin to Syrian President Bashar Assad and prominent Syrian businessman, is taking steps to protect his money, properties and companies. Rami Makhluf was designated by the Department of the Treasury's Office of Foreign Assets Control (OFAC) on February 21, 2008 for improperly benefiting from and aiding the public corruption of Syrian regime officials.³ On May 18, 2011, OFAC also designated three companies and one individual for their links to Makhluf: Cham Holding and its Chairman Nabil Rafik al Kuzbari, Bena Properties, and Al Mashreq Investment Fund.⁴ Further, on July 10, 2008, OFAC identified Syriatel and Ramak, two companies in which Makhluf owns, directly or indirectly, a 50 percent or greater interest.⁵

The U.S. Government has reason to believe that Rami Makhluf is disassociating himself (in name only) from his businesses and looking to safely store his wealth outside of Syria. Financial institutions should be aware of risks associated with conducting transactions linked to Makhluf, as well as the requirements for enhanced scrutiny for private banking accounts held by or on behalf of senior foreign political figures under the Bank Secrecy Act.⁶

Guidance

If a financial institution knows, suspects, or has reason to suspect that a transaction relating to senior foreign political figures involves funds derived from illicit activity, if the transaction appears to have no business or lawful purpose, or if a customer has engaged in activities indicative of money laundering, terrorist financing, or any other violation of federal law or regulation, the financial institution must file a Suspicious Activity Report (SAR).⁷ Additionally, covered financial institutions are reminded of the regulations implementing Section 312 of the USA PATRIOT Act, (31 U.S.C. 5318(i)), which require a written due diligence program for private banking accounts held for non-U.S. persons designed to detect and report any known or suspected money laundering or other suspicious activity.⁸ In instances where senior foreign political figures maintain private banking accounts at a covered institution, those financial institutions are required to apply enhanced scrutiny of such accounts to detect and report transactions that may involve the proceeds of foreign corruption. ⁹

In April 2008, FinCEN issued Guidance to assist financial institutions on reporting suspicious activity regarding proceeds of foreign corruption. That Guidance also highlights potential indicators of transactions that may be related to proceeds of foreign corruption.¹⁰In May 2011, FinCEN released a SAR Activity Review - Trends Tips and Issues specifically on foreign corruption, which highlights general regulatory requirements, general due diligence procedures, and frequently asked questions related to senior foreign political figures and corruption.¹¹ Financial institutions may find the Guidance document and SAR Activity Review useful in assisting with suspicious activity monitoring and due diligence requirements related to senior foreign political figures.

Questions or comments regarding the contents of this advisory should be addressed to the FinCEN Regulatory Helpline at 800-949-2732.

¹ For information from the United States Department of State regarding developments in Syria, please see http://www.travel.state.gov/travel/cis_pa_tw/cis/cis_1035.html. ² "Senior foreign political figure" means a current or former senior official of a foreign government or of a major foreign political party; a senior executive of a foreign government-owned commercial enterprise; a corporation, business, or other entity that has been formed by, or for the benefit of, any such individual; the immediate family members of any such individual; and a person who is widely and publicly known (or is actually known by the relevant covered financial institution) to be a close associate of such individual. For the purposes of this definition, "senior official or executive" means an individual with substantial authority over policy, operations, or the use of government-owned resources and "immediate family member" means spouses, parents, siblings, children and a spouse's parents and siblings. See 31 CFR 1010.620(c) and 31 CFR 1010.605(p). ³ Office of Foreign Assets Control, "Changes to List of Specially Designated Nationals and Blocked Persons Since January 1, 2008." (February 21, 2008).http://www.treasury.gov/resource-center/sanctions/SDN-List/Documents/sdnew08.pdf, and see generally, HP-834, "Rami Makhluf Designated for Benefiting from Syrian Corruption" (February 21, 2008). http://www.treasury.gov/press-center/press-releases/Pages/hp834.aspx.⁴ Office of Foreign Assets Control, "Changes to List of Specially Designated Nationals and Blocked Persons Since January 1, 2011." (May 18, 2011).http://www.treasury.gov/ofac/downloads/t11sdnew.pdf, and see generally,TG-1181, "Administration Takes Additional Steps to Hold the Government of Syria Accountable for Violent Repression Against the Syrian People" (May 18, 2011).http://www.treasury.gov/press-center/press-releases/Pages/tg1181.aspx.⁵ Office of Foreign Assets Control, "Changes to List of Specially Designated Nationals and Blocked Persons Since January 1, 2008." (July 10, 2008). http://www.treasury.gov/press-center/press-releases/Pages/hp1075.aspx, and see generally, HP-1075, "Treasury Targets Rami Makhluf's Companies" (July 10, 2008). http://www.treasury.gov/press-center/press-releases/Pages/hp1075.aspx. ⁶ See 31 CFR 1010.620(c) and 31 CFR 1010.605(p). ⁷ See, e.g., 31 CFR § 1020.320. ⁸ See, generally, 31 CFR 1010.620.⁹ 31 CFR 1010.620(c).¹⁰ See "Guidance to Financial Institutions on Filing Suspicious Activity Reports Regarding the Proceeds of Foreign Corruption," FIN-2008-G005 (April 17, 2008).http://www.fincen.gov/statutes_regs/guidance/html/fin-2008-g005.html.

¹¹ The SAR Activity Review - Trends Tips & Issues, Issue 19 (May 2011) [Published under the auspices of the BSA Advisory Group],http://www.fincen.gov/news_room/rp/files/sar_tti_19.pdf.

PM: Armenia successful in combating money laundering

2011-07-14T09:29:00.000-07:00

Prime Minister of Armenia Tigran Sargsyan received a delegation of Egmont Group Financial Intelligence Units headed by Chair Boudewijn Verhelst, according to the governmental press service.

The sitting of Egmont Group is held in Yerevan from July 11-15 aimed to discuss cooperation activity between Financial Intelligence Units against money laundering and terror financing.

The sitting hosts about 290 delegates from 102 country-members of Financial Intelligence Units as well as such international structures as IMF, WB and FATF.

“Armenia’s authorities always rendered special attention to money laundering problems, and from this point of view the country’s rating has always been high,” the Prime Minister said noting that the Center of financial monitoring of the Central Bank of Armenia presently meets top international criteria.

“Exchange of experience at international and regional levels will boost efficiency of Financial Intelligence Units activity,” said Sargsyan.

For his part, Verhelst presented directions of Egmont Group activity. He touched upon issues discussed at the plenary meeting of the group, particularly, challenges, perspectives of unified international cooperation network creation for the fight against money laundering and terror financing, as well as information exchange.

Egmont Group was established in 1995, at the initiative of Financial Intelligence Units of Belgium and the United States. 120 country-members of Financial Intelligence Units are involved in the group presently. The Center of financial monitoring of the Central Bank of Armenia obtained a status of full member of Egmont Group on May 29, 2007.

The main objective of the group is to provide a forum for FIUs around the world to improve cooperation in the fight against money laundering and financing of terrorism and to foster the implementation of domestic programs in this field.

Source: PanArmenian

Commission presents options for establishing a European system for tracking terrorist financing

2011-07-14T09:28:00.000-07:00

Brussels, 13 July 2011 – Responding to the call from the European Parliament and the Council of the European Union, today the Commission adopted a Communication outlining the main options for establishing a European Terrorist Finance Tracking System (TFTS). This Communication represents an initial response to the request to prepare a legal and technical framework for establishing such a system within the European Union.

Commissioner for Home Affairs, Cecilia Malmström, said: "Following the conclusion of the EU-US TFTP Agreement the European Parliament and the Council have asked the Commission to find a European solution for extracting the requested data on European soil. Today's Communication describes the different possible options and seeks to trigger a debate about possible future proposals. Given that these future proposals would need to fully respect fundamental rights, and in particular ensure a high level of data protection, I intend to pay close attention to the necessity and proportionality of any possible measures which may be proposed".

A European TFTS should have two main objectives. First, the system must contribute to limiting the amount of personal data transferred to the US. Second, it should contribute significantly to efforts to cut off terrorists' access to funding and materials and follow their transactions.

The Communication gives clear indications about the key issues which need to be decided upon before such a system can be established. These include the need to fully respect the fundamental rights of European citizens, data protection and data security issues, the operational scope of the system, as well as costs.

Today's Communication presents the different options under consideration at this stage without indicating any preferred one. The Commission will now discuss these options in detail with the Council and the European Parliament before deciding on further steps on the basis of a thorough impact assessment.

Background

On 28 June 2010, the European Union and the United States of America signed the agreement on the processing and transfer of financial messaging data for the purpose of the Terrorist Financing Tracking Programme (EU-US TFTP Agreement). At the same time, the Council of the EU asked the European Commission to propose, by 1 August 2011, "a legal and technical framework for the extraction of data on EU territory". The Commission has since worked on the possible introduction of such a system. The Communication is a first step towards concrete proposals.

Developing an EU TFTS is part of a wider agenda to prevent terrorism and protect European citizens, as identified in the EU Internal Security Strategy presented by the Commission in November 2010 (IP/10/1535and MEMO/10/598).

For more information

Homepage of Cecilia Malmström, Commissioner for Home Affairs

http://ec.europa.eu/commission_2010-2014/malmstrom/welcome/default_en.htm

Homepage DG Home Affairs:

http://ec.europa.eu/dgs/home-affairs/index_en.htm

Contacts :

Michele Cercone (+32 2 298 09 63)

Tove Ernst (+32 2 298 67 64)

Source: EU Press Release

European terrorist finance tracking system options proposed

2011-07-14T09:24:00.000-07:00

The same day that Bulgaria approved amendments to a law requiring accountants and enforcement agents to report to the State Agency for National Security any attempts at or conduct of an operation or transaction suspicious of terrorist financing, the European Commission unveiled its proposals for a European Terrorist Finance Tracking System (TFTS).

The Commission said on July 13 2011 that it was issuing the proposals in response to a call from the European Parliament and the Council of the European Union.

The proposals, the Commission said, represented an initial response to the request to prepare a legal and technical framework for establishing such a system within the European Union.

"Today's Communication describes the different possible options and seeks to trigger a debate about possible future proposals. Given that these future proposals would need to fully respect fundamental rights, and in particular ensure a high level of data protection, I intend to pay close attention to the necessity and proportionality of any possible measures which may be proposed".

A European TFTS should have two main objectives, the Commission said.

First, the system must contribute to limiting the amount of personal data transferred to the United States. Second, it should contribute significantly to efforts to cut off terrorists' access to funding and materials and follow their transactions.

The Communication gives clear indications about the key issues which need to be decided upon before such a system can be established, the Commission said.

These include the need to fully respect the fundamental rights of European citizens, data protection and data security issues, the operational scope of the system, as well as costs.

"Today's communication presents the different options under consideration at this stage without indicating any preferred one," the Commission said.

The European Commission will now discuss these options in detail with the European Council and the European Parliament before deciding on further steps on the basis of a thorough impact assessment.

In Bulgaria, amendments to the Measures against Terrorist Financing Act, approved conclusively on July 13, require accountants and enforcement agents to report to the State Agency for National Security (SANS) any attempts at or conduct of an operation or transaction suspected of being terrorist financing.

Assets suspected of being connected to or used for terrorist acts or by terrorist organisations and terrorists must also be reported to the SANS Financial Intelligence Agency, news agency BTA said.

Source: The Sofia Echo

Cocaine trade exacerbates money laundering in West Africa – UN Chief

2011-06-30T04:11:00.000-07:00

The global cocaine trade, which is estimated at $85 million, is exacerbating money laundering in West Africa, Mr. Ban Ki Moon, United Nations Secretary-General has indicated.

Whiles every $1 billion of pure cocaine trafficked through West Africa earns more than ten times as much when sold on the streets of Europe, the trade is also fuelling political instability threatens the sub-region’s security, Mr Ban said.

In addition, the 61 billion dollars annual markets for Afghan opiates are used in funding insurgency, international terrorism and wider destabilization.

These were contained in a message read on behalf of the UN Chief at a ceremony held on Tuesday at Wa in the Upper West Region to mark this year’s international day against drug abuse and illicit trafficking.

Mr Ban said because the threat was so urgent, the UN had established a task force to develop a system-wide strategy to coordinate and strengthen the responses to illicit drugs and organized crime by building them into all UN peacekeeping, peace building, security development and disarmament activities.

In that way, the UN could integrate the fight against drug trafficking and other forms of organized crime into the global security and development agenda, he explained.

He said this year’s international day against drug abuse and illicit trafficking was an opportunity to highlight the importance of addressing the threats through the rule of law in the provision of health service.

“Drugs use at its core is a health issue while drug dependence is a disease and not a crime. The real criminals are the drug traffickers.

“But the supply is only half of the equation and unless we reduce the demand for illicit drugs we can never fully tackle cultivation, production or trafficking”, Mr Ban said.

In a speech read on his behalf, Naval Captain Rtd Asase Gyimah, Board Chairman of Narcotics Control Board said the Board was collaborating more with other agencies for drug law enforcement and advocated the reduction of the drug trade by exchanging ideas and sharing intelligence.

Alhaji Issahaque Salia, Upper West Regional Minister said the government was more determined now than ever to put drug traffickers and users out of business, while at the same time reducing drug related crimes.

Government was also committed to resourcing not only the Narcotic Control Board but also all security agencies to fight the drug menace.

Source: GNA

FATF Paper: The Review of the Standards – Preparation for the 4th Round of Mutual Evaluation

2011-06-28T03:30:00.000-07:00

The Review of the Standards – Preparation for the 4th Round of Mutual Evaluation

Second public consultation
June 2011

Foreword

The FATF has now completed its third round of evaluations, and is currently conducting a review of the 40+9 Recommendations to ensure they remain up-to-date and relevant, and to learn any lessons from implementing and evaluating the current Standards. This is a limited and focused review, seeking to address any deficiencies and emerging threats but to maintain the necessary stability in the Standards as a whole.

Work on this review has been underway for two years, and between October 2010 and January 2011, the FATF undertook a public consultation on the first phase of its review of the FATF Standards. The FATF would like to thank all those who submitted comments. The response to the consultation was very significant, both in terms of the number of submissions received and their content; and the FATF greatly values this input from the private sector and civil society.

Detailed work has continued since then on a second phase of the review of the Standards, and the results of that work are set out in this paper for consultation. The FATF is committed to maintaining a close and constructive dialogue with the private sector, civil society and other interested parties, as important partners in ensuring the integrity of the financial system. Following this consultation we will take the opportunity to have further discussions on the proposed revision of the Standards with the FATF’s Consultative Forum later this year. I look forward to seeing our dialogue lead to stronger, clearer, and more effective FATF Standards.

Luis Urrutia, FATF President

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Improving Global AML/CFT Compliance: on-going process

2011-06-28T03:27:00.000-07:00

As part of its on-going review of compliance with the AML/CFT standards, the FATF has to date identified the following jurisdictions which have strategic AML/CFT deficiencies for which they have developed an action plan with the FATF. While the situations differ among each jurisdiction, each jurisdiction has provided a written high-level political commitment to address the identified deficiencies. The FATF welcomes these commitments.

A large number of jurisdictions have not yet been reviewed by the FATF. The FATF continues to identify additional jurisdictions, on an on-going basis, that pose a risk to the international financial system. The FATF has additionally begun initial reviews of a number of other jurisdictions as part of this process and will present its findings later this year.

The FATF and the FSRBs will continue to work with the jurisdictions noted below and to report on the progress made in addressing the identified deficiencies. The FATF calls on these jurisdictions to complete the implementation of action plans expeditiously and within the proposed timeframes. The FATF will closely monitor the implementation of these action plans and encourages its members to consider the information presented below.

Angola

In February 2010, Angola made a high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies. Since then, Angola has taken steps towards improving its AML/CFT regime, including by establishing a legal framework for the FIU. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Angola should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); and (3) establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets (Special Recommendation III). The FATF encourages Angola to address its remaining deficiencies and continue the process of implementing its action plan.

Antigua and Barbuda

In February 2010, Antigua and Barbuda made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic AML/CFT deficiencies remain. Antigua and Barbuda should continue to work on implementing its action plan to address these deficiencies, including by: (1) implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); and (2) continuing to improve the overall supervisory framework (Recommendation 23). The FATF encourages Antigua and Barbuda to address its remaining deficiencies and continue the process of implementing its action plan.

Argentina

In June 2011, Argentina made a high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies. Argentina has taken steps towards improving its AML/CFT regime, including by enacting amendments to its AML legislation on 17 June. Based on the initial analysis of the recent legal amendments, the FATF expressed some specific concerns that there are still shortcomings in the criminalisation of money laundering and further clarification is required. The FATF has determined that strategic AML/CFT deficiencies remain. Argentina will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures for the confiscation of funds related to money laundering and identifying and freezing terrorist assets (Recommendation 3 and Special Recommendation III); (3) enhancing financial transparency (Recommendation 4); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit and improving suspicious transaction reporting requirements (Recommendation 13, Special Recommendation IV, and Recommendation 26); (5) implementing an adequate AML/CFT supervisory programme for all financial sectors (Recommendations 17, 23 and 29); (6) improving and broadening CDD measures (Recommendation 5); and (7) establishing appropriate channels for international cooperation and ensuring effective implementation (Recommendation 36, Recommendation 40 and Special Recommendation V). The FATF encourages Argentina to address its remaining deficiencies without delay and continue the process of implementing its action plan.

Bangladesh

In October 2010, Bangladesh made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Bangladesh should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) implementing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (5) improving suspicious transaction reporting requirements (Recommendation 13 and Special Recommendation IV); and (6) improving international cooperation (Recommendations 36 and 39 and Special Recommendation V). The FATF encourages Bangladesh to address its remaining deficiencies and continue the process of implementing its action plan.

Brunei Darussalam

In June 2011, Brunei Darussalam made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Brunei Darussalam has taken steps towards improving its AML/CFT regime. However, the FATF has determined that strategic AML/CFT deficiencies remain. Brunei Darussalam will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) establishing and implementing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); (4) improving suspicious transaction reporting requirements (Recommendation 13 and Special Recommendation IV); (5) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); and (6) enacting and implementing appropriate mutual legal assistance legislation (Recommendation 36 and Special Recommendation V). The FATF encourages Brunei Darussalam to address its remaining deficiencies and continue the process of implementing its action plan.

Cambodia

In June 2011, Cambodia made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Cambodia has taken steps towards improving its AML/CFT regime. However, the FATF has determined that strategic AML/CFT deficiencies remain. Cambodia will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) establishing and implementing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); and (5) establishing and implementing effective controls for cross-border cash transactions (Special Recommendation IX). The FATF encourages Cambodia to address its remaining deficiencies and continue the process of implementing its action plan.

Ecuador

In June 2010, Ecuador made a high-level political commitment to work with the FATF and GAFISUD to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic AML/CFT deficiencies remain. Ecuador should continue to work on implementing its action plan to address these deficiencies, including by: (1) ensuring adequate criminalisation of terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) implementing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); and (4) reinforcing and improving coordination of financial sector supervision (Recommendation 23). The FATF encourages Ecuador to address its remaining deficiencies and continue the process of implementing its action plan.

Ghana

In October 2010, Ghana made a high-level political commitment to work with the FATF and GIABA to address its strategic AML/CFT deficiencies. However, the FATF has determined that strategic AML/CFT deficiencies remain. Ghana should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate measures for the confiscation of funds related to money laundering (Recommendation 3); (3) establishing effective CDD measures (Recommendation 5); (4) establishing a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); and (5) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III). The FATF encourages Ghana to address its remaining deficiencies and continue the process of implementing its action plan.

Honduras

In October 2010, Honduras made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. The FATF has determined that strategic AML/CFT deficiencies remain. Honduras should continue to work on implementing its action plan to address these deficiencies, including by: (1) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); and (3) improving and broadening CDD measures (Recommendation 5). The FATF encourages Honduras to address its remaining deficiencies and continue the process of implementing its action plan.

Indonesia

In February 2010, Indonesia made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since February, Indonesia has taken steps towards improving its AML/CFT regime, including by issuing circulars to financial institutions in accordance with its AML law. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Indonesia should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); and (3) amending and implementing laws or other instruments to fully implement the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I). The FATF encourages Indonesia to address its remaining deficiencies and continue the process of implementing its action plan.

Mongolia

In June 2011, Mongolia made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Mongolia has taken steps towards improving its AML/CFT regime. However, the FATF has determined that strategic AML/CFT deficiencies remain. Mongolia will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) establishing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); (4) establishing suspicious transaction reporting requirements (Recommendation 13 and Special Recommendation IV); (5) establishing a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (6) demonstrating effective regulation of money service providers. The FATF encourages Mongolia to address its remaining deficiencies and continue the process of implementing its action plan.

Morocco

In February 2010, Morocco made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. Since February, Morocco has demonstrated progress in improving its AML/CFT regime, including by adopting amendments to extend the scope of the money laundering and terrorist financing offences; to broaden customer due diligence requirements and taking steps to operationalise the FIU. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Morocco should continue to work on implementing its action plan to address these deficiencies, including by adequately criminalising terrorist financing (Special Recommendation II).

Namibia

In June 2011, Namibia made a high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies. Namibia has taken steps towards improving its AML/CFT regime. However, the FATF has determined that strategic AML/CFT deficiencies remain. Namibia will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) implementing an adequate AML/CFT supervisory programme with sufficient powers (Recommendation 23 and 29); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit, in particular addressing the operational autonomy of the FIU (Recommendation 26); (5) implementing effective, proportionate and dissuasive sanctions in order to deal with non-compliance with the national AML/CFT requirements (Recommendation 17); and (6) implementing the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I). The FATF encourages Namibia to address its remaining deficiencies and continue the process of implementing its action plan.

Nepal

In February 2010, Nepal made a high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies. Since then, Nepal has taken steps towards improving its AML/CFT regime, including by passing legislation aimed at addressing deficiencies with regard to criminalisation of money laundering and terrorist financing, and confiscation and provisional measures and by ratifying the TF and Palermo Conventions. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Nepal should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) implementing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); and (4) enacting and implementing appropriate mutual legal assistance legislation (Recommendation 36). The FATF encourages Nepal to address its remaining deficiencies and continue the process of implementing its action plan.

Nicaragua

In June 2011, Nicaragua made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. Nicaragua has taken steps towards improving its AML/CFT regime. However, the FATF has determined that strategic AML/CFT deficiencies remain. Nicaragua will work on implementing its action plan to address these deficiencies, including by: (1) establishing effective CDD measures and record-keeping requirements, in particular entities not currently regulated by the supervisory authority (Recommendation 5 and Recommendation 10); (2) establishing adequate STR reporting obligations for ML and FT (Recommendation 13 and Special Recommendation IV); (3) implementing an adequate AML/CFT supervisory programme for all financial sectors (Recommendation 23); (4) establishing a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); and (5) establishing adequate procedures for identifying and freezing terrorist assets (Special Recommendation III); The FATF encourages Nicaragua to address its remaining deficiencies and continue the process of implementing its action plan.

Nigeria

In February 2010, Nigeria made a high-level political commitment to work with the FATF and GIABA to address its strategic AML/CFT deficiencies. Since then, Nigeria has taken steps towards improving its AML/CFT regime, including by enacting legislation to criminalise TF and ML. The FATF has not yet assessed this law due to its very recent nature. The FATF will assess this legislation, and, in any case, Nigeria should work on addressing its deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) ensuring that relevant laws or regulations address deficiencies in customer due diligence requirements and that they apply to all financial institutions (Recommendation 5); and (4) demonstrating that AML/CFT supervision is undertaken effectively across the financial sector (Recommendation 23). The FATF encourages Nigeria to address its remaining deficiencies and continue the process of implementing its action plan.

Pakistan

In June 2010, Pakistan made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic AML/CFT deficiencies remain. The FATF is particularly concerned with the lack of implementation regarding Pakistan’s terrorist financing offence and calls upon Pakistan to demonstrate specific action. Pakistan should continue to work on implementing its action plan to address these deficiencies, including by (1) demonstrating adequate criminalisation of money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) demonstrating adequate procedures to identify, freeze and confiscate terrorist assets (Special Recommendation III); (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (4) demonstrating effective regulation of money service providers, including an appropriate sanctions regime, and increasing the range of ML/FT preventive measures for these services (Special Recommendation VI); and (5) improving and implementing effective controls for cross-border cash transactions (Special Recommendation IX). The FATF encourages Pakistan to address its remaining deficiencies and continue the process of implementing its action plan.

Paraguay

In February 2010, Paraguay made a high-level political commitment to work with the FATF and GAFISUD to address its strategic AML/CFT deficiencies. Since February, Paraguay has taken steps towards improving its AML/CFT regime, including issuing regulations prohibiting anonymous accounts. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Paraguay should continue to work on implementing its action plan to address these deficiencies, including by: (1) establishing and implementing adequate procedures to identify, freeze and confiscate terrorist assets (Special Recommendation III). The FATF encourages Paraguay to address this remaining deficiency and continue the process of implementing its action plan.

Philippines

In October 2010, the Philippines made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since February, Philippines has taken steps towards improving its AML/CFT regime, including by conducting outreach with regard to the AML regulations. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. The Philippines should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) implementing adequate procedures to identify and freeze terrorist assets and confiscate funds related to money laundering (Special Recommendation III and Recommendation 3); (3) enhancing financial transparency (Recommendation 4); (4) extending coverage of reporting entities (Recommendations 12 and 16). The FATF encourages the Philippines to address its remaining deficiencies and continue the process of implementing its action plan.

Sudan

In February 2010, Sudan made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic AML/CFT deficiencies remain. Sudan should continue to work on implementing its action plan to address these deficiencies, including by: (1) implementing adequate procedures for identifying and freezing terrorist assets (Special Recommendation III); (2) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (3) ensuring financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to ML and FT (Recommendation 13 and Special Recommendation IV); and (4) implementing a supervisory programme for the regulators to ensure compliance with the provisions of the new law and regulations (Recommendation 23). The FATF encourages Sudan to address its remaining deficiencies and continue the process of implementing its action plan.

Tajikistan

In June 2011, Tajikistan made a high-level political commitment to work with the FATF and EAG to address its strategic AML/CFT deficiencies. Tajikistan has taken steps towards improving its AML/CFT regime. However, the FATF has determined that strategic AML/CFT deficiencies remain. Tajikistan will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures for the confiscation of funds related to money laundering and identifying and freezing terrorist assets (Recommendation 3 and Special Recommendation III); (3) enhancing financial transparency (Recommendation 4); (4) ensuring afully operational, and effectively functioning Financial Intelligence Unit and improving suspicious transaction reporting requirements (Recommendation 13, Special Recommendation IV, and Recommendation 26); and (5) improving and broadening CDD measures (Recommendation 5). The FATF encourages Tajikistan to address its remaining deficiencies and continue the process of implementing its action plan.

Tanzania

In October 2010, Tanzania made a high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic AML/CFT deficiencies remain. Tanzania should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets as well as implementing the UNSCR 1267 and 1373 through law, regulations or other enforceable means (Special Recommendation III); (3) establishing effective CDD measures (Recommendation 5); (4) establishing adequate record-keeping requirements (Recommendation 10); (5) establishing a fully operational and effectively functioning national Financial Intelligence Unit (Recommendation 26); and (6) designating competent authorities to ensure compliance with AML/CFT requirements (Recommendation 23). The FATF encourages Tanzania to address its remaining deficiencies and continue the process of implementing its action plan.

Thailand

In February 2010, Thailand made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since February, Thailand has taken steps towards improving its AML/CFT regime, including by issuing ministerial regulations on cash threshold transactions. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Thailand should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); and (3) further strengthening AML/CFT supervision (Recommendation 23). The FATF encourages Thailand to address its remaining deficiencies and continue the process of implementing its action plan.

Turkmenistan

In June 2010, Turkmenistan made a high-level political commitment to work with the FATF and EAG to address its strategic AML/CFT deficiencies. Since February, Turkmenistan has taken steps towards improving its AML/CFT regime, including by adequately criminalising money laundering and terrorist financing. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Turkmenistan should continue to work on implementing its action plan to address these deficiencies, including by: (1) implementing adequate procedures to identify and freeze terrorist assets without delay (Special Recommendation III); (2) ensuring a fully operational and effectively functioning FIU (Recommendation 26); (3) developing collaboration between the FIU and domestic counterparts, including supervisory authorities; and (4) strengthening international cooperation. The FATF encourages Turkmenistan to address its remaining deficiencies and continue the process of implementing its action plan.

Trinidad and Tobago

In February 2010, Trinidad and Tobago made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. Since February, Trinidad and Tobago has taken steps towards improving its AML/CFT regime, including by enacting FIU regulations and amendments to the Anti-Terrorism Act regarding freezing of terrorist assets. The FATF has not yet assessed this law due to its recent nature. However, the FATF has determined that certain strategic AML/CFT deficiencies remain. Trinidad and Tobago should continue to work on implementing its action plan to address these deficiencies, including by (1) implementing adequate procedures to identify and freeze terrorist assets without delay (Special Recommendation III); (2) implementing adequate procedures for the confiscation of funds related to money laundering (Recommendation 3); and (3) establishing a fully operational and effectively functioning FIU, including supervisory powers (Recommendation 26). The FATF encourages Trinidad and Tobago to address its remaining deficiencies and continue the process of implementing its action plan.

Ukraine

In February 2010, Ukraine made a high-level political commitment to work with the FATF and MONEYVAL to address its strategic AML/CFT deficiencies. Since that time, Ukraine has demonstrated progress in improving its AML/CFT regime, including by adopting legislation that aims to address issues relating to criminalisation of money laundering and terrorist financing and freezing of terrorist assets under UNSCR 1373. The FATF will conduct an on-site visit to confirm that the process of implementing the required reforms and actions is underway to address deficiencies previously identified by the FATF.

Venezuela

In October 2010, Venezuela made a high-level political commitment to work with the FATF and CFATF to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic deficiencies remain. Venezuela should continue to work with the FATF and CFATF on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendations I and III); (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit, in particular addressing the operational autonomy of the FIU (Recommendation 26); (4) implementing adequate CDD guidelines for all sectors (Recommendation 5); and (5) establishing adequate STR reporting obligations for ML and FT (Recommendation 13 and Special Recommendation IV). The FATF encourages Venezuela to address its remaining deficiencies and continue the process of implementing its action plan.

Vietnam

In October 2010, Vietnam made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic AML/CFT deficiencies remain. Vietnam should continue to work with the FATF and APG on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) making legal persons subject to criminal liability in line with FATF Recommendation 2 or demonstrating that there is a constitutional prohibition to prevent this (4) improving the overall supervisory framework (Recommendation 23); (5) improving and broadening customer due diligence measures and reporting requirements (Recommendation 5, 13, and Special Recommendation IV); and (6) strengthening international cooperation (Recommendations 36, 40). The FATF encourages Vietnam to address its remaining deficiencies and continue the process of implementing its action plan.

Yemen

In February 2010, Yemen made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. The FATF has determined that certain strategic deficiencies remain. Yemen should continue to work on implementing its action plan to address these deficiencies, including by: (1) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (2) issuing substantive guidance/instructions to reporting institutions with respect to their ML/FT obligations (Recommendation 25); (3) developing the monitoring and supervisory capacity of the financial sector supervisory authorities and the FIU, to ensure compliance by financial institutions with their STR obligations, especially in relation to FT (Recommendation 23); and (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26). The FATF encourages Yemen to address its remaining deficiencies and continue the process of implementing its action plan.

Zimbabwe

In June 2011, Zimbabwe made a high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies. Zimbabwe has taken steps towards improving its AML/CFT regime. However, the FATF has determined that strategic AML/CFT deficiencies remain. Zimbabwe will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation I and Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (4) ensuring financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to ML and FT (Recommendation 13 and Special Recommendation IV); (5) enacting and implementing appropriate mutual legal assistance legislation (Special Recommendation V); and (6) implementing the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I). The FATF encourages Zimbabwe to address its remaining deficiencies and continue the process of implementing its action plan.

Greece

The FATF welcomes Greece’s significant progress in improving its AML/CFT regime and notes that Greece has met its commitments in its Action Plan regarding the strategic AML/CFT deficiencies that the FATF had identified in February 2010. Greece is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. Greece will work with the FATF in further strengthening its AML/CFT regime.

Jurisdiction not making sufficient progress

The FATF is not yet satisfied that the following jurisdiction has made sufficient progress on its action plan agreed upon with the FATF. The most significant action plan items and/or the majority of the action plan items have not been addressed. If this jurisdiction does not take sufficient action to implement significant components of its action plan by October 2011, then the FATF will identify this jurisdiction as being out of compliance with its agreed action plans and will take the additional step of calling upon its members to consider the risks arising from the deficiencies associated with the jurisdiction.

São Tomé and Príncipe

Despite São Tomé and Príncipe’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, the FATF is not yet satisfied that São Tomé and Príncipe has made sufficient progress in implementing its action plan, and certain strategic deficiencies remain. São Tomé and Príncipe should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); (2) establishing a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (3) ensuring that financial institutions and DNFBPs are subject to adequate AML/CFT regulation and supervision, and that a competent authority or competent authorities have been designated to ensure compliance with AML/CFT requirements (Recommendations 23, 24 and 29); (4) implementing effective, proportionate and dissuasive sanctions in order to deal with natural or legal persons that do not comply with the national AML/CFT requirements (Recommendation 17); and (5) taking the necessary action to gain membership of GIABA. The FATF encourages São Tomé and Príncipe to address its remaining deficiencies and continue the process of implementing its action plan.

Source: FATF

FATF Public Statement

2011-06-28T03:20:00.000-07:00

Iran

Democratic People's Republic of Korea (DPRK)

Jurisdictions with strategic AML/CFT deficiencies that have not made sufficient progress in addressing the deficiencies or have not committed to an action plan developed with the FATF to address the deficiencies** The FATF calls on its members to consider the risks arising from the deficiencies associated with each jurisdiction, as described below.

Bolivia
Cuba**
Ethiopia
Kenya
Myanmar
Sri Lanka
Syria
Turkey

* The FATF has previously issued public statements calling for counter-measures on Iran and DPRK. Those statements are updated below.
**Cuba has not engaged with the FATF in the process.

Iran

The FATF remains concerned by Iran’s failure to meaningfully address the on-going and substantial deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime. The FATF remains particularly concerned about Iran’s failure to address the risk of terrorist financing and the serious threat this poses to the integrity of the international financial system. The FATF urges Iran to immediately and meaningfully address its AML/CFT deficiencies, in particular by criminalising terrorist financing and effectively implementing suspicious transaction reporting (STR) requirements.

The FATF reaffirms its call on members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions. In addition to enhanced scrutiny, the FATF reaffirms its 25 February 2009 call on its members and urges all jurisdictions to apply effective counter-measures to protect their financial sectors from money laundering and financing of terrorism (ML/FT) risks emanating from Iran. FATF continues to urge jurisdictions to protect against correspondent relationships being used to bypass or evade counter-measures and risk mitigation practices and to take into account ML/FT risks when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction. If Iran fails to take concrete steps to improve its AML/CFT regime, the FATF will consider calling on its members and urging all jurisdictions to strengthen counter-measures in October 2011.

Cuba

Bolivia

Despite Bolivia’s high-level political commitment to work with the FATF and GAFISUD to address its strategic AML/CFT deficiencies, Bolivia has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Bolivia should work on addressing these deficiencies including by: (1) ensuring adequate criminalisation of money laundering (Recommendation 1); (2) adequately criminalising terrorist financing (Special Recommendation II); (3) establishing and implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III); and (4) establishing a fully operational and effective Financial Intelligence Unit (Recommendation 26). The FATF encourages Bolivia to address its remaining deficiencies and continue the process of implementing its action plan, including by continuing to work on its AML/CFT legislation.

Ethiopia

Kenya

Myanmar

Myanmar has taken steps towards improving its AML/CFT regime, including by clarifying the scope of the ML offence. Despite Myanmar’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Myanmar has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Myanmar should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III); (3) further strengthening the extradition framework in relation to terrorist financing (Recommendation 35 and Special Recommendation I); (4) ensuring a fully operational and effectively functioning Financial Intelligence Unit (Recommendation 26); (5) enhancing financial transparency (Recommendation 4); and (6) strengthening customer due diligence measures (Recommendation 5). The FATF encourages Myanmar to address its remaining deficiencies and continue the process of implementing its action plan.

Sri Lanka

Despite Sri Lanka’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Sri Lanka has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Sri Lanka should work on addressing these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing (Recommendation 1 and Special Recommendation II); and (2) establishing and implementing adequate procedures to identify and freeze terrorist assets (Special Recommendation III). The FATF encourages Sri Lanka to address its remaining deficiencies and continue the process of implementing its action plan, including by continuing to work on its AML/CFT legislation.

Syria

Syria has taken steps towards improving its AML/CFT regime, including by improving the ML and TF offences. Despite Syria’s high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Syria has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain Syria should work on addressing its deficiencies, including by: (1) adopting adequate measures to implement and enforce the 1999 International Convention for the Suppression of Financing of Terrorism (Special Recommendation I); (2) implementing adequate procedures for identifying and freezing terrorist assets (Special Recommendation III); (3) ensuring financial institutions are aware of and comply with their obligations to file suspicious transaction reports in relation to ML and FT (Recommendation 13 and Special Recommendation IV); and (4) ensuring appropriate laws and procedures are in place to provide mutual legal assistance (Recommendations 36-38, Special Recommendation V). The FATF encourages Syria to address its remaining deficiencies and continue the process of implementing its action plan.

Turkey

Turkey has taken steps towards improving its AML/CFT regime, including by working on CFT legislation. Despite Turkey’s high-level political commitment to work with the FATF to address its strategic AML/CFT deficiencies, Turkey has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Turkey should work on addressing these deficiencies, including by: (1) adequately criminalising terrorist financing (Special Recommendation II); and (2) implementing an adequate legal framework for identifying and freezing terrorist assets (Special Recommendation III). The FATF encourages Turkey to address its remaining deficiencies and continue the process of implementing its action plan.

Source: FATF

Outcomes of the Joint Plenary meeting of the FATF and GAFISUD, Mexico City, 22-24 June 2011

2011-06-28T01:21:00.000-07:00

Under the Mexican Presidency, the first joint FATF-GAFISUD Plenary meeting was held in Mexico City on 22-24 June 2011. The meeting was co-chaired by the FATF and GAFISUD Presidents.

FATF Decisions

The FATF took important new steps to protect the international financial system from abuse by:

Producing two public documents as part of its ongoing work to identify jurisdictions that may pose a risk to the international financial system:

FATF Public Statement on jurisdictions with strategic anti-money laundering and combating the financing of terrorism (AML/CFT) deficiencies.
Improving Global AML/CFT Compliance: on-going process - Jurisdictions with strategic AML/CFT deficiencies for which they have developed an action plan with the FATF

Issuing a statement on the progress made by Argentina in addressing deficiencies identified in its mutual evaluation of October 2010.

Adopting the mutual evaluation reports of the State of Kuwait and the Sultanate of Oman.

Publishing a detailed examination of Organised Maritime Piracy and Related Kidnapping for Ransom, Trafficking in Human Beings and Smuggling of Migrants and Money Laundering and Corruption.

Publishing Guidance on Financial Inclusion.

Continuing its work on revision of the FATF Recommendations and preparation for the fourth round of mutual evaluations.

AML/CFT improvements in Greece

The FATF welcomes Greece’s significant progress in improving its AML/CFT regime and notes that Greece has met its commitments in its Action Plan regarding the strategic AML/CFT deficiencies that the FATF had identified in February 2010. Greece is therefore no longer subject to monitoring under the FATF’s ongoing global AML/CFT compliance process. Greece will continue to work with the FATF to further strengthen its AML/CFT regime.

Statement on the progress made by Argentina

The FATF heard Argentina´s report on progress made since its first follow-up report presented in February 2011 and recognised the important legislative efforts aimed at improving the criminalisation of money laundering. Based on the initial analysis of the recent legal amendments, the FATF expressed some specific concerns that there are still shortcomings in the criminalisation of money laundering, and further clarification is required. Substantial progress to improve the criminalisation of terrorist financing has not yet taken place, and there are a large number of other AML/CFT deficiencies remaining. The FATF remains seriously concerned about the risks that such deficiencies may pose, as identified in “Improving Global AML/CFT Compliance: on-going process”, and will continue to review progress, in the context of measures that the FATF has agreed to follow under its enhanced follow-up procedures for members insufficiently in compliance with the FATF Recommendations.

The FATF expects more substantial progress by Argentina by October 2011. In particular, the FATF expects Argentina to fully address the FATF´s concerns regarding the criminalisation of money laundering in accordance with international standards, present to the FATF a draft law criminalising terrorist financing in accordance with international standards, and inform about the progress in addressing the other AML/CFT deficiencies. As part of this discussion, the FATF reaffirmed the responsibility of all members to observe a high level of compliance with the FATF Recommendations in an expedited manner.

Mutual Evaluation of the State of Kuwait and the Sultanate of Oman

The FATF discussed and adopted two mutual evaluation reports assessing the compliance of two Gulf Cooperation Council members, the State of Kuwait and the Sultanate of Oman against the international standards for combating money laundering and terrorist financing – the 40+9 Recommendations.

Summaries of these mutual evaluations will soon be available on the FATF website, and the full reports will be released in the coming weeks.

There is currently no evidence of significant money laundering and no major terrorist activity has been recorded in the State of Kuwait. However, Kuwait’s financial sector is growing rapidly and thus may create a potential environment for such activities. The assessment team for this evaluation, composed of staff of the International Monetary Fund (IMF), concluded that the Kuwaiti AML/CFT framework had some deficiencies: terrorist financing is currently not criminalised, the money laundering offence does not cover all serious predicate offences, the Kuwaiti financial intelligence unit (KFIU) has not been established as an independent agency carrying out all core functions set out by the FATF standards, and there are shortcomings in the AML/CFT supervisory framework for some financial institutions and designated non-financial businesses and professions (DNFBPs).

The evaluation of the AML/CFT regime of the Sultanate of Oman was conducted jointly by the FATF and the Middle East and North Africa Financial Action Task Force (MENAFATF). The level of compliance with the FATF Recommendations for the AML/CFT regime of Oman is comparatively high for the region, and the legal framework is generally sound. However, the Omani AML/CFT Law was only recently updated, and executive regulations must still be issued. In addition, the overall effectiveness is generally lacking, parts of the terrorist financing legal framework need to be improved and the number of money laundering cases needs to be significantly raised.

With the adoption of the mutual evaluation reports of the State of Kuwait and the Sultanate of Oman, the FATF concluded its third round of mutual evaluations that started in 2005 and comprised 35 FATF jurisdictions and five members of the Gulf Cooperation Council.

Organised Maritime Piracy and Related Kidnapping for Ransom

In recent years, there has been a growing concern over organised piracy on the high seas and kidnapping for ransom. These activities present a number of a potential risks to the international financial system and challenges to the law enforcement and regulatory framework worldwide. The FATF has completed a study that provides an overview of this problem and analyses the related money flows to the extent that this is possible. In addition to informing the work of other international bodies dealing with this issue, the report, which will be published shortly, will also serve as a useful source of general information on the subject.

Human Being Trafficking and Smuggling of Migrants

Criminals are increasingly turning to the trafficking of human beings and the smuggling of migrants given the high profitability of these illegal activities. The money generated by such activities finds its way into the financial system. The FATF has carried out a study which describes the money flows related to these two distinct problems and attempts to assess their scale. The report, which will be published shortly, provides a series of red-flag indicators for the various destination / origin countries and different sectors to help financial institutions to better detect related suspicious financial activity.

Money Laundering and Corruption

Corruption continues to be a significant public policy issue throughout the world, and for that reason work related to anti-corruption was identified as an objective under the Mexican Presidency. In the larger framework of its work on corruption, the FATF has prepared a study on the links between corruption and money laundering. The report, which will be published shortly, identifies key vulnerabilities within the current AML/CFT framework and discusses some of the obstacles to the recovery of corruption. In addition to providing the basis for further examination of related issues, the report will serve as the catalyst for future FATF work in developing guidance or best practices on AML/CFT measures relevant to combating corruption. The FATF will continue to work on issues related to the use of AML/CFT tools in the fight against corruption.

Guidance on Financial Inclusion

Financial inclusion is an important policy objective for many countries, and the implementation of AML/CFT measures should not become an impediment to financial inclusion. However, an overly cautious approach to AML/CFT safeguards could have the unintended consequence of excluding legitimate business and consumers from the financial system. In collaboration with the World Bank and the Asia Pacific Group on Money Laundering (APG) and in consideration of the objectives set by the Mexican Presidency, the FATF has completed work on guidance that will help in developing AML/CFT measures that are in line with financial inclusion goals without compromising the overall purpose of combating crime. In providing this guidance, the FATF is contributing to the common objective of the G20 in this area as agreed at the Seoul Summit of November 2010. The FATF will continue to strive to ensure that the objectives of financial inclusion and AML/CFT are complementary. The report will be available on the FATF website shortly.

Revision of the FATF Recommendations and Preparation for the Fourth Round of Mutual Evaluations

The FATF continues its work to revise the FATF Recommendations to ensure that they will continue to provide a comprehensive set of means to combat money laundering and terrorist financing, and to build on the experience of the 3rd round of mutual evaluations. The FATF is committed to a constructive engagement with all stakeholders, and is issuing a second public consultation document (pdf, 438 Kb) on a range of issues where changes to the Standards are being considered. This covers important issues such as:

Clarifying beneficial ownership requirements (Recommendations 5, 33 and 34)
Ensuring no inconsistency between AML/CFT and data protection / privacy requirements
Creating an obligation for group wide compliance programmes for financial groups
Enhancing international cooperation (Recommendation 40)
Promoting a risk based approach to supervision
Strengthening measures in relation to politically exposed persons
Enhancing the transparency of wire transfers
Implementing targeted financial sanctions in the context of terrorist financing and proliferation financing
Strengthening and clarifying the requirements for financial intelligence units and law enforcement authorities

The President of the FATF, Mr. Luis Urrutia, thanked the FATF members for their decisive support to achieve the objectives set at the outset of his tenure and wished the new President, Mr. Giancarlo del Bufalo of Italy, and the new Vice-President, M. Bjorn Skogstag AAMO of Norway, Godspeed.

Luis Urrutia Corral

FATF President

Publication: Assessing the impact of terrorism on travel activity in Greece

2011-06-27T14:40:00.001-07:00

Author Info

Helen Gazopoulou (egazopoulou@bankofgreece.gr) (Bank of Greece)

Abstract

The aim of this paper is to assess the volatility of Greek travel receipts by considering the extent to which terrorist strikes can bring about serious unexpected disturbances to the proceeds from tourism.The paper shows that the impact of terrorist attacks at an international level is not expected to bring about a considerable decline of the number of arrivals to Greece. This finding seems consistent with other sources in the literature that argue in favour of the transitory impact of terrorist attacks on the flow of tourists to a specific destination

Click here to download:

Bank of Angola for co-operation in money laundering prevention

2011-06-27T12:08:00.000-07:00

The director of the financial information department of the National Reserve Bank of Angola (BNA), Francisca de Brito highlighted in Luanda the need for public and private financial institutions to co-operate with the state in the prevention of Money laundering and terrorism funding.

The director said so to Angop after the opening ceremony of the seminar on “Awareness on Combating Money Laundering and Terrorism Funding”.

Francisca de Brito said that such involvement is intended to safeguard the interest of Angola of not being considered by international entities as a safe haven of this evil that threatens economies.

In addition, Francisca de Brito said that the Angolan government is concerned about the consequences of Money Laundering and Terrorism Funding in the integrity of the financial system.

She said that BNA has regulations and warnings for banks and other financial institutions in order to strengthen measures on “know the customer and his/her business”, practices that may prevent harmful situation to the financial sector.

The event is being organised by the African Foundation Innovation, an organisation created by Angolans in Switzerland.

The seminar is discussing themes such as “The Impact on Economic Growth and Social Development”, “The risks, prudential and macroeconomic consequences”, “The Role of Supervision and the Financial Intelligence Unit, among other topics.

To end on Monday afternoon, the event is being attended by the Justice Minister, Guilhermina Prata and BNA governor, José de Lima Massano.

Source: ANGOP

Billions of dollars lost to corruption, $5b repatriated from stolen assets in developing countries – World Bank

2011-06-26T07:21:00.000-07:00

The World Bank says billions of dollars are lost through corruption in developing countries each year and almost one-third of these amounts are retrieved.

According to the World Bank, although the exact magnitude of the proceeds of corruption circulating in the global economy is impossible to ascertain, estimates demonstrate the severity and scale of the problem.

“An estimated $20 to $40 billion is lost to developing countries each year through corruption”, the Bank said in a report titled “Barriers to Asset Recovery” which was released Tuesday, June 21, 2011.

But the Bank indicated that the estimated amount “does not capture the societal costs of corruption and the devastating impact of such crimes on victim countries.”

According to the report citing the Stolen Asset Recovery Initiative (StAR) study, only $5 billion in stolen assets has been repatriated over the past 15 years.

The study cites “lack of political will” as a key impediment to the recovery of the proceeds of corruption, the Bank said adding “lack of a comprehensive, sustained, and concerted policy or strategy to identify asset recovery as a priority and to ensure alignment of objectives, tools, and resources to this end.”

The general barriers also include the lack of adherence to and enforcement of anti-money laundering (AML) measures as a means to prevent and detect the proceeds of corruption in the first place, the study indicates.

The World Bank said, theft of public assets from developing countries is an immense problem with a staggering development impact and these thefts divert valuable public resources from addressing the abject poverty and fragile infrastructure often present in these countries.

“Theft of assets by corrupt officials, often at the highest levels of government, weakens confidence in public institutions, damages the private investment climate, and divests needed funding available for core investment in such poverty alleviation measures as public health, education, and infrastructure”, the report said.

In solving this menace, StAR recommended some actions to be taken by international bodies, civil societies etc.

“Because asset recovery is about collective action, we also believe that other critical constituencies—such as the Group of 20, the UNCAC Asset Recovery Working Group, the Financial Action Task Force on Money Laundering, financial institutions, developmental agencies, and civil society—can all take actions that could assist in diminishing the barriers to assets recovery”, the StAR urges.

Also, civil society could use this study to derive a checklist for measuring states’ progress in addressing and overcoming the barriers to asset recovery, said the report.

By Ekow Quandzie

Source: GBN

Drug trafficking and the black economy

2011-06-25T03:03:00.000-07:00

by Huzaima Bukhari and Dr Ikramul Haq

June 26 is the International Day against Drug Abuse and Illicit Trafficking. It is being marked since the United Nations General Assembly decided upon it in 1987 to raise awareness global about the dangers of drug abuse, to prevent its spread and to encourage efforts to combat the menace at international level.

Successive governments in Pakistan have been providing money-laundering schemes, termed as economic measures, to bring black money into the mainstream. These schemes have proved highly beneficial to tax evaders, drug barons, extortionists and corrupt businessmen-turned-politicians. Even today, if anybody brings any amount of money (earned from drug trade, tax evasion or any other criminal activity) in a bank account through remittance, the tax authorities cannot question its source.

The criminals just go to a money exchanger, give him money in Pakistani rupees, and he arranges “remittance” (sic) by charging a small premium. All the criminal needs is a fake CNIC (Computerised National Identity Card); we have 30 million such cards, as has been admitted before Supreme Court. In this way, millions of rupees are recycled as white money.

Section 111(4) of the Income Tax Ordinance, 2001, actually facilitates money launderers to remit their ill-gotten money through banking channels and surrender the foreign currency to the State Bank and receive Pakistani rupees in return. In this way they can escape not only taxation but also any query from the FBR. This scheme presumably aimed at bringing huge foreign currency to Pakistan has succeeded immensely as foreign remittances coming close to $11 billion this year. Although this scheme has greatly increased inflow of foreign currency (which is just recycled untaxed money) but our tax-to-GDP ratio has nosedived. The criminals say that in the presence of this lucrative scheme – where one can whiten money by just paying 2 percent premium – only a “stupid” person would pay income tax. Section 111(4) of the Income Tax Ordinance has been widely abused by tax dodgers, drug syndicates and other criminals,including terrorists.

Due to such schemes having complete State patronage, the parallel economy is growing at an alarming rate of 22.93 percent per annum. It is estimated that every fifth rupee transacted in Pakistan is “black.” The volume of black money generated in 2009-10 was estimated at Rs3 trillion. A conservative estimate is that between Rs2 to 3 trillion is generated every year by the parallel economy, the share of illicit drug and arms trade in it is not less than Rs400 to Rs500 billion.

At the economic level, Pakistan, in addition, to rehabilitating drug addicts, also needs to spend more on anti-narcotic drives and monitoring. In 1998, the Drug Abuse Control Master Plan (1998-2003) was launched with the assistance of the United Nations Office on Drugs and Crime (UNODC) at an expenditure of Rs2.8 billion, out of which Rs1,920 million were for law enforcement and Rs912 million for drug demand reduction. However, out of the total estimated budget, only Rs185.837 million were actually spent. As usual, the plan was only partially implemented and the objectives too could not be fully realised. A revised Drug Abuse Control Master Plan (2007-2011) is now underway with the assistance of the UNODC. The master plan has two components: law enforcement and drug demand reduction.

In 2010, Pakistan had 4.6 million drug addicts. Drug dealers and addicts are also involved in smuggling and prostitution. Black economy has resulted in organised crime, which is different from normal criminal activities. How much drug money is channelled through and kept in Pakistani banks is a question which has yet not drawn the attention of law-enforcement agencies, especially the military-controlled Anti-Narcotics Force (ANF). Drug money has clear linkage with terrorists, but so far no effort has been made by any intelligence apparatus to unearth such connections. In the United States and many Western countries, comprehensive studies have been made to determine the quantum of laundered money and stringent laws have been enforced by governments to check this menace.

John Reed of Citigroup, said in his testimony before the Senate: “I am John Reed, chairman and co-chief executive officer of Citigroup. I appear today with Todd Thomson, who became the head of our Private Bank about ten days ago, and Mark Musi, the head of the Private Bank’s Compliance and Control Department. Unfortunately, Shaukat Aziz, who ran the Private Bank for the last two years and under whose leadership many of the improvements in our Private Bank’s anti-money laundering programmes took place, cannot participate in these hearings. Mr Aziz would really have been the most appropriate witness today, given his experience and knowledge, but as you know, he was called home to serve his country, Pakistan, as minister of finance. He left the bank on Oct 29. He asked me to submit his statement for the record, and it is attached to my own all financial institutions...whether banks, securities firms, or other types of financial intermediaries are potentially vulnerable to money-laundering.

“Private banks are just one subset of the potentially vulnerable institutions. Our Private Bank, for example, is a very small part of Citigroup, accounting for about 2.5 percent of Citigroup’s business. Private banks in general are no more and no less vulnerable to abuse by the unscrupulous and the dishonest than the much larger parts of most financial institutions.”

Most of the offshore banks are laundering billions of black money. All the big banks specialising in international fund transfer are called money centre banks, some of the biggest process up to $1 trillion in wire transfers a day. The most recent estimates (2010) are that 60 offshore jurisdictions around the world licensed about 4,000 offshore banks that control approximately $65 trillion in assets.

Money laundering and drugs-for-arms trades are ground realities. We daily hear from the official quarters in the US and elsewhere tall claims about war against drugs and terrorism. This is all eyewash. In reality all the financial institutions and state structures are subservient to these billionaires, the ruthless drug barons and arms suppliers, who know how to move money from one part of the world to another, buy government functionaries, control politicians, law-enforcement officials and get the profits they want from the drug trade – deals of death for many innocent people around the world.

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The writers specialise in studying global heroin economy and authors of Pakistan: From Hash to Heroin and Pakistan: Drug-trap to Debt-trap.

Source: The News

Nepal Ratifies UN Convention for the Suppression of Financing of Terrorism

2011-06-25T02:59:00.001-07:00

Nepal on Friday ratified the International Convention for the Suppression of the Financing of Terrorism, 1999, and the International Convention against Transnational Organized Crime, averting the risk of being blacklisted in the international financial market.

A parliament meeting held on Friday ratified the conventions tabled by Deputy Prime Minister and Finance Minister Bharat Mohan Adhikari by majority voting as the former rebel party, UCPN (Maoist), demanded that the convention be ratified only after clarifying the wordings ´organized crime´ mentioned in the convention.

The conventions were ratified with some reservations as demanded by ruling Maoists and the CPN-UML parties.

Friday marked the deadline given by the Financial Action Task Force (FATF), the global body overseeing anti-money laundering, to the government to ratify the conventions. The global body could have blacklisted the country had the parliament failed to ratify the conventions by Friday. International community would have also stopped carrying out financial transaction with Nepal in such a situation.

Nepal was required to ratify three UN conventions and four Acts related to anti-money laundering (AML) and controlling of terrorism financing by 2010 as per the commitments made in international forums. But the country repeatedly missed deadlines due to prolonged political transition.

Source: Asian Tribune

FATF to revise money laundering status for Argentina

2011-06-24T15:13:00.000-07:00

The Financial Action Task Force (FATF) announces today the results of a review of Argentina’s mechanisms to control money laundering activities in the country. The announcement will take place during the last day of the organization’s Council summit at Mexico City. No alterations of the Argentinean status are expected. Although some revision is anticipated, no sanctions are expected.

Yesterday Justice Minister Julio Alak delegation sources said that the FATF has acknowledged Argentina’s effort to fight money laundering. During its plenary session, the organization recognized that Argentina had moved forward in its prevention and fight against money laundering activities.

Alak spoke before the assembly and expressed that the new law recently passed by Congress, which includes stricter measures for those involved in money laundering activities, “effectively complies with all the organization’s recommendations.”

The Financial Action Task Force is an inter-governmental body whose purpose is the development and promotion of policies, both at national and international levels, to combat money laundering and terrorist financing. The FATF develops global standards for combating money laundering and terrorist financing.

Source: Buenos Aires Herald

From Building Minebots to Digging for Dirty Money

2011-06-23T15:52:00.000-07:00

By John Tozzi

Jamie King's attempt to build mining robots turned into software that helps banks find money launderers in a sea of financial data

In 2003, Jamie King was trying to develop machines that could replace humans in dangerous nickel and iron-ore mines. Then a robotics PhD student at Memorial University in Newfoundland, Canada, he used artificial intelligence to interpret the vast data streaming from the robots' sensors, which measured the distance of objects in every direction a thousand times a second. Although mining companies passed on the idea, King later discovered an unlikely new use for his minebot software: catching money launderers.

Banks collect huge data sets on the millions of transactions that move money in and out of their accounts. When university colleagues introduced King to a financial-software entrepreneur, he got a peek at such a pile of numbers and realized it looked "very much like a whole bunch of sensor readings." King co-founded Verafin in 2003 to sift bank data for patterns that could indicate fraud, drug trafficking, or terrorist financing.

At the time most banks used rules-based software that flags transactions if they match a pattern defined beforehand as suspicious, such as several transfers of money overseas in a short period. Verafin compares activity to an account holder's profile and past behavior and assigns each transaction a "probability score" that represents the likelihood it's legitimate. King says that evaluating probabilities lets Verafin discern suspicious patterns that slip through conventional systems. Say a drug lord in Chicago needs to get cash to Mexico. He might make wire transfers and deposits to multiple accounts, buy prepaid debit cards, and send payments to a shell company off-shore. By itself, any one of these actions might look perfectly fine. Verafin identifies the extremely low probability of such a pattern occurring innocuously, says King.

Verafin had C$9 million ($9.3 million) in revenue in 2009, the latest figures King will share. More than 700 banks and credit unions use Verafin's software, most with between $100 million and $20 billion in assets. Even relatively smaller banks, like Beach Business Bank in Manhattan Beach, Calif., with assets of $300 million, have to track "money that's moving around quickly and electronically, where you don't have as much information about where it's ending up," says Melissa Rickabaugh, the bank's anti-money-laundering compliance officer. She says Verafin will automatically flag an account when large deposits are followed quickly by wire transfers out, which the bank's previous software didn't do.

A native of Newfoundland, King describes himself as "an inventor who likes tackling hard problems," which is what first drew him to robotics navigation. Sniffing out money laundering has proven equally tough, he says: "It's always a challenge to stay ahead of the criminals."

EDUCATION

Left a robotics PhD program in 2003 to start Verafin.

TECHNOLOGY

Software combs financial transactions for suspicious patterns.

MARKET

700 institutions use it to comply with money-laundering laws.

Source: Business Week

FSA Report: Banks’ Management of High Money-Laundering Risk Situations

2011-06-23T14:55:00.000-07:00

Banks’ management of high money-laundering risk situations

How banks deal with high-risk customers (including politically exposed persons), correspondent banking relationships and wire transfers

This report describes how banks operating in the UK are managing money-laundering risk in higher risk situations. It focuses in particular on correspondent banking relationships, wire transfer payments and high-risk customers including politically exposed persons (PEPs).

Click here to download

UK watchdog probes two banks over money laundering

2011-06-22T12:21:00.000-07:00

By Kirstin Ridley

Two banks in Britain are being investigated for lax money-laundering controls and others are likely to be handling the proceeds of corruption and other financial crime, the financial regulator said on Wednesday.

The Financial Services Authority (FSA) said it had referred two banks to its enforcement division for "serious weaknesses" in how they managed "high-risk" customers, including those whose public status made them vulnerable to corruption.

"We are considering whether further regulatory action is required in relation to other banks, and further cases may be referred for enforcement," the FSA added as it published a review of how banks manage money-laundering risks.

In a damning report, the FSA said some banks appeared unwilling to turn away or exit very profitable business relationships, even when there appeared to be an unacceptable risk of handling the proceeds of crime.

"Around a third of banks, including the private banking arms of some major banking groups, appeared willing to accept very high levels of money-laundering risk if the immediate reputational and regulatory risk was acceptable," it stated.

Many of the failings identified by the regulator are the same as those it spotted 10 years ago when deposed Nigerian strongman Sani Abacha, his family members and associates used 42 UK bank accounts to turn over $1.3 billion in four years.

More than half of banks visited by the FSA this time around failed to have meaningful due diligence measures in higher-risk situations, and failed to identify or record negative information about customers.

Around one-third also dismissed serious allegations about their customers without adequate review, and more than one-third failed to identify customers as "politically exposed persons", or PEPs, who are considered the most vulnerable to corruption because of their public prominence.

The FSA said three-quarters of banks in its sample, which included the majority of large banks, did not always manage high-risk customers and PEP relationships effectively, and needed to do more to protect themselves from money laundering.

"We will, where appropriate, use our enforcement powers to reinforce key messages in this report to encourage banks and other firms to strengthen AML (anti-money laundering) systems and controls, and deter them from making decisions which do not take adequate account of money-laundering risk," the FSA said.

Lawyers noted the FSA was not mincing its words.

"The warning is clear: do your checks properly and be prepared to turn down high-risk business, or the FSA will come knocking," noted Alison McHaffie of law firm CMS Cameron McKenna

Global Witness, a non-government organisation that runs campaigns against conflict and corruption, said the review provided long overdue recognition of the need for ongoing monitoring and punishment to force banks to comply with rules.

"For too long, Britain's banks have been happy to accept money stolen from developing countries by corrupt rulers and their families," said Anthea Lawson, head of the banks campaign at Global Witness.

"Neither dictatorship nor corruption can occur without banks willing to help."

(Editing by David Hulmes)

Source: Reuters

Bangladesh Bank signs deal with 10 states to combat money laundering

2011-06-22T12:17:00.001-07:00

Prime Minister Sheikh Hasina Wednesday said the Bangladesh Bank (BB) has signed an agreement with financial intelligence units of 10 countries to share information related to money laundering in a bid to combat such crimes.

The prime minister informed it to the Jatiyo Sangsad (JS) in a tabled question, raised by lawmaker Mohammad Imazuddin Pramanik of Naogaon.

She said her government has taken steps to bring some changes in two acts - Money Laundering Prevention Act 2009 and Anti Terrorism Act 2009 - to make anti-money laundering system more effective.

Sheikh Hasina assured the JS of scrutinising the wealth statements of government officials, if it is necessary to curb corruption in the administration. "Wealth statements of the government officials have already been collected. Their accounts have been preserved under the respective authorities."

She said another measure has been taken to curb official corruption by launching e-tendering system. Initially Local Government Engineering Department, Roads and Highways Department, Water Development Board and Rural Electrification Board have been brought under the system. All offices would be brought under the system by the end of the year.

The government has also taken initiatives to strengthen the Anti-Corruption Commission (ACC) through ensuring its transparency and accountability. All necessary administrative, financial and legal assistance have been extended to the organisation to deal with the corrupt elements as her government is committed to curb corruption.

"With this objective in mind, a bill named Anti-Corruption Commission (amendment) Act 2011 has been placed in the House," she said, claiming that the commission is performing its activities independently.

However, she said the government has no plan to set up a separate ministry to curb corruption.

Source: FE

Bangladesh: Amended AML Act Incorporates Stringent Measures

2011-06-22T12:15:00.000-07:00

Nazmul Ahsan

The Anti-Money Laundering Act, 2011 has been made more stringent, by expanding the purview of the reporting agencies and widening the areas of suspected transactions and predicating offences.

With the change in the existing definition of "money laundering" under the act, the maximum term of imprisonment for the offence has been increased from seven years to 12 years and the minimum, from current six months to four years under the proposed new act.

The amendment to the Anti-Money Laundering Act (AMLA) was approved last Monday last at a cabinet meeting. Prime Minister Sheikh Hasina presided over the meeting.

The Act, with the proposed amendments, will be placed now at the parliament as a Bill, sources in the Ministry of Finance (MoF) said.

According to the approved act, 11 types of financial and social business entities have to report now to Bangladesh Bank (BB) regularly on their "suspected transactions."

The newly included reporting agencies which came within the ambit of mandatory reporting are-stock dealers and stock brokers, portfolio managers, security custodians, asset managers, non-profit organisations, non-government organisations, cooperatives, real estate companies, jewel and metal businessmen, trust companies, lawyers and accountants.

Presently, only banks, insurance companies, money changers and financial institutions are liable to report to the BB on any suspected transaction.

"Many financial institutions including brokerage houses and cooperatives are now the safe havens for black money and money earned through illegal means. This should be stopped," a MoF official said.

"A number of global watchdog organisations on anti-money laundering have long been putting pressure on us to bring such financial institutions under the mandatory reporting to the central bank," he added.

The new proposed act has brought under its operational jurisdiction politically exposed persons, special judges appointed under Criminal Law Amendment Act, 1958, terror financing, any wealth obtained or possessed through corruption and money siphoned off to foreign countries.

It has included six types of offences with the existing ones to be treated as predicated offences.

The new areas are-smuggling, laundering currency, robbery, human trafficking and dowry.

The existing predicated offences have also been included in the AMLA. These are: trafficking of women and children, corruption and bribery, faking currency, faking land document, extortion, forgery, illegal trade of arms, illegal trade of narcotics, abduction and murder.

Officials in the MoF said the move to upgrade the existing anti-money laundering act, 2009 has been taken to comply with the international standard.

He said, Financial Action Task Force (FATF), an inter-governmental body formed to develop and promote national and international policies to combat money laundering and terrorist financing, said in its report in 2010, Bangladesh is still non-compliant in at least 10 key areas for attaining international standard.

The FATF has strongly recommended to the government to make the current AMLA stringent to attain the global standard.

Accordingly, MoF formed a 12-member National Coordination Committee (NCC), headed by Finance Minister AMA Muhith, to update the existing anti-money laundering act.

"The US Justice Department has extended its technical cooperation for updating the act, which is now one of the global standard anti-money laundering acts," a top MoF official told the FE.

Source: FE

Chinese Gang Laundering Money at Laundries

2011-06-22T12:11:00.000-07:00

Spanish police say they arrested 34 Chinese citizens as they smashed a family-run crime gang suspected of importing fake goods and laundering the profits, with the help of a chain of laundries.

The raids in Madrid, Barcelona, Valencia, Cadiz, Seville and Huelva overnight broke up the largest Chinese-linked criminal gang based in Spain, operating since the 1990s, said the Civil Guard overnight.

Police detained 34 Chinese nationals and seized assets worth 11 million euros ($15 million), it said.

The gang may have earned more than 40 million euros ($54.64 million) a year, importing four-to-six containers a month through Valencia packed with fake tobacco, clothes and other goods bound for sale in Spain, Britain, France, Italy and Portugal, they said.

The Chinese family-run gang laundered the proceeds by moving the money around with couriers, making bank transfers of less than 20,000 ($27,318) and by extending high-interest loans to compatriots based in Spain, police said.

The gang recruited Chinese people it had helped to enter Spain, often taking away their passports after they arrived or opening bank accounts in their names to launder illicit gains, they said.

According to police, the organisation had a branch in China, which controlled more than 30 companies including a chain of nearly 1,000 laundries and was used to conceal the source of the profits.

Source: Herald Sun

Publication: "Barriers to Asset Recovery"

2011-06-22T11:10:00.000-07:00

Barriers to Asset Recovery: An Analysis of the Key Barriers and Recommendations for Action

by: Kevin Stephenson, Larissa Gray, Ric Power

English; Paperback; 200 pages; 7x10

Published June 20, 2011 by World Bank

ISBN: 978-0-8213-8660-6; SKU: 18660

It is estimated that the proceeds of crime, corruption and tax evasion represent between $1 trillion and $1.6 trillion per year, with half coming from developing countries. Proceeds are typically transferred abroad and hidden in foreign jurisdictions, thus requiring international cooperation. Various international conventions and agreements require international cooperation on this issue, in particular the United Nations Convention against Corruption; however, only $5 billion in stolen assets have been repatriated over the last 15 years.

This enormous gap reveals that significant barriers continue to impede asset recovery despite the commitments taken by governments, civil society and the private sector. Drawing on the experience of practitioners with hands-on experience, the Stolen Asset Recovery (StAR) Initiative launched this study to identify the barriers to stolen asset recovery internationally, provide brief analysis of the impact of these barriers, and propose recommendations for overcoming these obstacles. This volume is intended to guide policy makers in their efforts to ensure necessary resources and the development of a plan, policy or strategy aimed at eradicating the barriers to asset recovery. In addition, this study proposes actions to be taken by the G20, international organizations, financial institutions, developmental agencies and civil society.

Click here for more details.

Terror arrests in Ireland are third highest in Europe

2011-06-21T05:21:00.000-07:00

by Michael Freeman

There were more arrests over terrorism offences in Ireland than almost anywhere else in the EU last year, according to a new report.

Some 62 terror suspects were taken into custody in the Republic – more than ten per cent of the European total. They included 57 people suspected of republican paramilitary activity and five in relation to Islamic militancy, Europol’s EU Terrorism and Trend Report reveals. The five Islamic terrorism arrests came after an alleged plot to murder Swedish cartoonist Lars Vilks, who drew a controversial image of the prophet Muhammad, was uncovered in Ireland in March 2010.

Only Spain and France made more arrests in 2010, though the numbers there were far greater. France arrested 219 people and Spain 118, while in fourth place the UK figure was 45. Ireland’s figures were almost double the previous year, when only 33 suspects were taken into custody.

The main other findings of the report were:

There were a total of 249 terrorist attacks carried out across the EU, with 40 perpetrated by terrorist groups based in Northern Ireland and the Republic.
The Real IRA and Continuity IRA “continue to pose a threat” in the UK, and have grown in size and capability in recent years.
Ireland has a mostly successful record for prosecuting terrorism offences, with 83 per cent of cases resulting in conviction. However, the average jail penalty of five years is below the EU average.
The report noted that Ireland had successfully implement an EU directive on money laundering, designed to restrict financing of terrorism.
A total of 179 people were arrested in Europe on suspicion of Islamic terrorism. This was a 50 per cent increase on the previous year, and almost half the arrests were made over planned attacks on EU countries.
The report warned that continued political unrest in North Africa could shake up al-Qaeda affiliates and lead to them establishing a greater presence in Europe. It also stated that most of the suspects arrested over alleged Islamic terrorism were acting alone or autonomously – meaning there is no single network or organisation which can be targeted.

Europol is the EU’s criminal intelligence agency, which works with law enforcement organisations across all member states.

Source: The Journal

Treasury seeks brainy search engine to help follow terrorist money

2011-06-20T15:41:00.000-07:00

BY ALIYA STERNSTEIN 06/20/2011

The Treasury Department is searching for a supersmart search engine to spot signs of terrorist-financing and money laundering among monetary transactions totaling 9 terabytes of data -- the equivalent of a stack of typewritten pages nearly 460 miles high.

Treasury's intelligence arm, the Financial Crimes Enforcement Network, or FinCEN, has a database to organize the 15 million reports it receives from financial institutions annually, but needs a better way to home in on what's in there, FinCEN officials said Monday. On June 17, FinCEN issued a request for information from contractors on technology to improve analytical queries into the repository.

The software must be able to work with FinCEN's existing fraud-detection application to probe the database, according to the notice.

Ray Bjorklund, chief knowledge officer at market research firm FedSources, said the cost of such technology could range from $20,000 to $2 million, depending on the pattern-matching features FinCEN wants and can afford.

"You need to be able to quickly pull pieces from many different sources," he said. "The ability to get to all of the relevant tables that are within that database and extract what they need, when they need it and be able to correlate four or five different pieces of information -- therein lies the trick."

Deploying the tool also will be a challenge, he said. "This is not something that can easily be shared in a networked environment" such as an online cloud that provides services remotely, Bjorklund said. "It is very tough to get these systems to tune to the database that that you have."

Complicating matters, he said, is the fact that FinCEN expects to switch databases in early fiscal 2012, as noted in the RFI. The agency needs an application that can work with its current Sybase database and then adapt to an Oracle framework it plans to install.

The market survey requires vendors to include prices and delivery schedules in their responses, along with a description of their technology's specifications, by July 5. FinCEN does not plan to pay for this information or commit to awarding a contract, according to the RFI. "Dependent upon the results of this market survey, FinCEN may subsequently issue a request for quotation (RFQ) to acquire the appropriate solution," states the notice.

There is no date set for issuing an RFQ yet, FinCEN spokesman Steven Hudak said Monday. He said he could not expand on the details of the RFI because of contracting rules.

Potential bidders who are concerned about disclosing business-sensitive information in their responses can note their models contain proprietary information. But, "If Treasury intends to take some of the clever ideas that come forward in the RFI and put them in the [request for proposals,] that may compromise the prospective offerors' business," Bjorklund noted.

Hudak said the agency asked for precise information because "we're on tight timelines and tight budgets." The potential enhancement is part of a four-year agencywide technology upgrade that is half complete, he said. "We're trying to find out what the best technology is," Hudak added.

Legislation passed after the Sept. 11 attacks expanded the jurisdiction of the 20-year-old agency. To find possible terrorist backers, the agency now collects records of large-transactions from hundreds of thousands of financial institutions, including banks, stock brokers, insurers, check cashing services, currency exchanges, casinos and gem dealers.

The 1970 Bank Secrecy Act and post-Sept. 11 amendments require these entities to keep records of cash transactions exceeding $10,000 and to report abnormal dealings.

"FinCEN has a huge amount of data that it gathers in suspicious activity reports and it needs to be able to manipulate that data and provide it to law enforcement," said Ernest Patrikis, an attorney with the bank and insurance regulatory practice at law firm White & Case and a 30-year veteran of the Federal Reserve Bank of New York. "The worst thing in the world for FinCEN would be to have that data and not be able to use it. This requires up-to-date systems."

Source: NextGov

UAE central bank orders freeze of Libyan assets

2011-06-20T14:48:00.000-07:00

By EMAN EL-SHENAWI

The Central Bank of the United Arab Emirates has ordered the freeze on assets belonging to 19 Libyan individuals and institutions and expects to prepare a report on the decision within a week, an official said on Monday.

In the latest string of orders against suspicious funds belonging to individuals from ousted Middle East governments, the central bank has now instructed the country’s Gulf banks to “initiate a search” into the funds of unnamed Libyans, according to Reuters.

“We have instructed banks to initiate a search and have requested them to freeze the assets,” Abdulrahim Al Awadi, executive director at the UAE central bank’s anti-money laundering and suspicious cases unit, told reporters on the sidelines of a conference in Abu Dhabi.

“We are expecting within the next week or so to complete the report for submission to the ministry of foreign affairs,” he added.

The UAE has already frozen the assets of the Libyan leader Muammar Qaddafi and his close associates. Libya is still facing ongoing civil unrest where rebels are demanding an end to Mr. Qaddafi’s 41-year rule.

On Sunday the central bank revealed that it is to implement stricter money declaration rules in an effort to improve monitoring of suspicious cash flows.

The UAE is considered one of the region’s “safe havens,” particularly during the political unrest that swept countries in the Middle East and North Africa. Analysts said that Dubai attracted heavy investment inflows from the affected countries when the unrest peaked earlier this year.

In March, anti-corruption groups asked UAE authorities to take action over possible transfer of assets by ousted Egyptian and Tunisian rulers and their loyalists,

The UAE central bank earlier this month ordered a freeze on assets belonging to ousted Tunisian president Zine El Abidine Ben Ali whose trial on corruption charges began in Tunis on Monday.

The bank also launched a probe in April into the accounts, investments or deposits belonging to former Egyptian president Hosni Mubarak.

(Eman El-Shenawi, a writer at Al Arabiya English, can be reached at: eman.elshenawi@mbc.net.)

Source: Al Arabiya

Bangladesh Bank gets more powers to curb money laundering

2011-06-20T14:46:00.000-07:00

by Rejaul Karim Byron

The proposed anti-money laundering law empowers Bangladesh Bank to cancel licences of organisations that provide false information or conceal facts from the central bank about siphoning of funds.

The cabinet yesterday approved the Money Laundering Prevention Act. Besides banks and other financial institutions, nongovernmental organisations, stock dealers, brokerage houses, asset managers and other organisations must regularly send information about suspected transactions to the central bank, according to the draft of the law.

Under the law, a separate financial intelligence unit will be set up at Bangladesh Bank to monitor and take necessary action against money laundering activities.

If any organisation fails to provide information sought by the central bank, it can fine the agency as high as Tk 5 lakh at a rate of Tk 10,000 a day, according to the law. If any organisation is fined more than thrice in a fiscal year, the central bank can suspend registration or licence of the organisation, any of its branches, service centres, booths and agents, according to the law.

As further punitive measures, the central bank can take action against the licensing authority of the organisation, the law says. Similar punitive action will be taken against any organisation if it fails to comply with any circular issued by the central bank.

If any organisation finds information about any suspicious transaction it can suspend transaction of the account for 30 days, and the timeframe can be extended to six months, if necessary, according to the law.

Source: The Daily Star

The Economics of Money Laundering

2011-06-20T03:34:00.000-07:00

Money laundering is a massive global problem. It allows criminals to infuse billions of dollars of black money into the stream of commerce and business, corrupting financial institutions and officials. However, the precise scale of money laundering is much disputed.

In 1996, the IMF came up with the vague estimation that 2-5 % of the global economy involved laundered money. But, the Financial Action Task Force (FATF), an inter-governmental body set up to combat money laundering, said: “Overall, it is absolutely impossible to produce a reliable estimate of the amount of money laundered.”

The estimate most often bandied around in the media is $1.5 trillion a year, but Dr Dionysios Demetis, the author of the book Technology and Anti-Money Laundering, disputes the figure.

“The broader system of money laundering operations exhibits such a degree of complexity that it is impossible to determine the amount being laundered. The most commonly cited figure of $1.5 trillion is for media consumption alone,” he said.

Few academics will give estimates. But there is one distinguished expert who believes it is possible to give more accurate figures. John Walker, the CEO of Crime Trends Analysis in Australia, has produced analysis which suggests that the scale of money laundering is much larger than had been thought. Using a comparatively simple crime-economic model constructed from readily available international databases, he estimated a total of $2.85 trillion per year, heavily concentrated in Europe and North America.

Walker said: “I’ve been contracted by the UN Office on Drugs and Crime to update those 1998 figures, but sadly, the project has stalled due to the fear of upsetting member countries’ sensitivities. But I would stand by the 1998 figures if we factor in the rise in the value of the dollar. The major criticism of my 1998 figures was that my estimates were way too high. Subsequent events have shown that any criticism along those lines was laughably wrong,” he said.

The reason the figures still stand up is that recent attempts to combat money laundering have been ineffective, Walker argues.

“I do not believe that anti-money laundering has had any significant impact on rates of global crime, except to have forced changes in the way that the proceeds of crime are laundered. If I had money to launder right now, I would take advantage of the lack of oversight of international trade prices – particularly in services. The Global Financial Integrity Project led by Raymond Baker focuses on flows of finance illicitly removed from developing countries, concluding that for every dollar of aid ‘given’ to developing countries, there are $10 going the other way due to corruption, multi-national company tax evasion and straight out fraud,” he said.

In Walker’s model, the US was responsible for 46.3% of money laundered ($1.32 trillion). Two other well-known centres of organized crime came next: Italy ($0.15 trillion, 5.3%) and Russia ($0.147 trillion, 5.2%). There followed China, whose share one would expect to have grown since 1998, along with the rest of its economy ($0.13 trillion, 4.6%). The rest of the top 10 consisted mainly, though not exclusively, of Western countries: Germany, France, Romania, Canada, the UK , Hong Kong. The model’s total for money laundering of $2.85 trillion would need to be increased by 38% to allow for dollar inflation, making it $3.933 trillion. The figure for the US would be $1.82 trillion.

In Walker’s model the destinations of money laundering are sometime different from the sources. The US is top again, but with 18.9%, followed by one of the world’s major offshore financial centres, the Cayman Islands (4.9%), Russia (4.2%), Italy (3.7%), China, Romania, Canada, Vatican City, Luxembourg and France.

One necessary update to Walker’s models is that both the City of London and Wall Street now play a bigger part in global money laundering than they did in 1998.

“The capacity of these financial centres to carry out financial operations at larger scales makes them vulnerable despite the perceived strong regulatory initiatives. Also, there is a further perceived legitimacy to the laundering of funds if they go through London or New York,” said Dr Demetis.

In recent years, the banks have been implicated in a number of major money laundering scandals. One of the most shocking involved the Miami-based Wachovia Bank, which admitted responsibility in 2009 for moving $420 billion for account holders thought likely to be involved in the laundering of drug proceeds. Some of the money was traced to the purchase of aircraft used by trafficking organizations to smuggle more than 22 tons of cocaine.

“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” said Jeffrey Sloman, the federal prosecutor. Yet, the total fine of $160 million was less than 2% of the bank’s $12.3bn profit for 2009.

Read the FULL STORY: Black Money: The Business of Money Laundering

Source: Business Insider

UAE to toughen up money declaration rules from September

2011-06-19T13:10:00.000-07:00

The United Arab Emirates will require those leaving the country to declare large amounts of money from September as part of an effort to improve monitoring of suspicious cash flows, officials said on Sunday.

Dubai, a Gulf trade and finance hub, has been fighting a reputation as a haven for money laundering since the Sept. 11 attacks of 2001 drew attention to the relative ease of moving money through the city.

"The UAE... has put in place a strong legal, regulatory and institutional framework to counter money laundering and combat terrorist financing and thereby protect its institutions from any reputation risk," Central Bank Governor Sultan Nasser al-Suweidi told a conference on the new measure.

The current regulation only applies to arriving passengers.

The central bank said it is also bringing the minimum declaration amount in line with international standards, raising the requirement to declare cash and bearer instruments such as cheques to 100,000 dirhams ($27,230), or the equivalent in foreign currencies, from 40,000 dirhams. ($1=3.673 UAE Dirhams) (Reporting by Martin Dokoupil and Martina Fuchs; Editing by Nick Macfie)

Source: Reuters

France Investigating Money Laundering Linked To Ben Ali, Mubarak

2011-06-17T14:23:00.000-07:00

By Joe Palazzolo

Public prosecutors in Paris are investigating suspected organized money-laundering linked to Tunisia’s ousted president, Zine El Abidine Ben Ali, and Egypt’s Hosni Mubarak, AFP reported.

The Paris prosecutor’s office told the news agency it opened the probes on Tuesday. The move followed a request by non-governmental organizations Sherpa and Transparency International-France earlier this month for a preliminary investigation of assets linked to Ben Ali and his clan.

France has been searching for assets belonging to Ben Ali since he fled Tunisia for Saudi Arabia in mid-January amid protests. The U.S. is also looking for assets in its jurisdiction belonging to Mubarak, Ben Ali and their associates.

Source: The Wall Street Journal

Spain freezes assets of Mubarak associate

2011-06-17T13:41:00.000-07:00

Spanish police said Friday they have frozen more than 30 million euros in bank accounts and properties valued at 10 million after arresting a close associate of ousted Egyptian president Hosni Mubarak on fraud charges.

Hussein Salem, detained along with his son and a suspected frontman, was accused of money laundering, fraud, bribery and corruption, police said in a statement.

Police said they froze suspected illicit gains of 32.5 million euros ($46 million) in bank accounts, two buildings in Madrid and seven in the southern resort of Marbella, a popular destination for wealthy people, worth a total of about 10 million euros, and five luxury cars.

A court in Madrid set bail for Salem at 12 million euros, six million for his son and 18 million for his associate.

An Egyptian security official said Salem was accused of corruption in a gas deal and of giving properties to Mubarak and his family in return for huge swathes of land in Sinai.

Spanish police alleged the suspect and his family had received more than 17 million euros in funds he had obtained illegally in Egypt.

Egypt's prosecutor general's office said Friday it had sent the foreign ministry a full dossier on the investigation of Hussein Salem.

The file must now be sent to Spanish police before they can hand Salem over to Egyptian authorities.

The prosecutor general's office said Salem had "acquired Spanish citizenship despite dual nationality being illegal under Spanish law".

Magdi al-Shafei, Interpol's Egyptian bureau chief, was quoted by Egyptian state television as saying Salem's dual nationality could make it "very complicated" to try him in Egypt.

Source: AFP