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Money Laundering

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Eman Saeed
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13 views12 pages

Money Laundering

Uploaded by

Eman Saeed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Money Laundering

Money Laundering
 Money laundering is the process by which criminals attempt to conceal
the true origin and ownership of the proceeds generated by illegal
means, allowing them to maintain control over the proceeds and,
ultimately, providing a legitimate cover for their sources of income

Money laundering involves 3 main stages:


(1) Placement – where cash obtained through criminal activity is first
placed into the financial system.

(2) Layering – where the illegal cash is disguised by passing it through


complex transactions making it difficult to trace.

(3) Integration – where the illegally obtained funds are moved back into
the legitimate economy and is now 'clean'.
Money laundering offences
 Acquiring, possession or use of criminal property.
 Concealing or disguising or transferring criminal property, or removing it from the
country.
 Entering into, or becoming involved in, an arrangement which is known or is suspected
to facilitate the acquisition, retention, use or control of criminal property by or on
behalf of another person.
 Failure to report knowledge or suspicion of money laundering.
 Tipping off

'Tipping off' means to carry out any action that may make suspected money launderers
aware that they are under investigation, or influencing the outcome of an investigation.
Anti-money laundering program: basic elements

Money Laundering Regulations impose certain obligations on financial services businesses,


which are designed to assist in detecting money laundering and preventing the financial
services organisations being used for money laundering purposes.

At a minimum, an anti-money laundering program should incorporate:


 Money laundering and terrorist financing risk assessment.
 Implementation of systems, policies, controls and procedures that effectively manage
the risk that the firm is exposed to in relation to money laundering activities and
ensure compliance with the legislation.
 Compliance with customer due diligence, enhanced due diligence and simplified due
diligence requirements. Enhanced record keeping and data protection systems, policies
and procedures
Money laundering and terrorist financing (MLTF) risk
assessment
A written risk assessment must be carried out to identify and assess the risk of money
laundering.

The risk assessment should be used to:


 Develop policies, procedures and controls to mitigate the risk of money laundering.
 Apply a risk based approach to detecting and preventing money laundering.

 The risk based approach recognises that the risks posed by MLTF activity will not be the
same in every case and so it allows the business to tailor its response in proportion to
its perceptions of risk. The risk based approach requires evidence-based decision-
making to better target risks
Anti-money laundering program: basic elements
Internal Controls
 Officer responsible for compliance
 Employees
 Independent audit function
Anti-money laundering program: basic elements
Customer due diligence
Customer due diligence involves:
 Identifying the client (i.e. knowing who the client is) and then verifying their identity
(i.e. demonstrating that they are who they claim to be) by obtaining documents or
other information from independent and reliable sources.
 Identifying beneficial owner(s) so that the ownership and control structure can be
understood and the identities of any individuals who are the owners or controllers can
be known. Reasonable measures should be taken to verify their identity on a risk
sensitive basis.
 Gathering information on the intended purpose and nature of the business relationship

It may be helpful for the auditor to explain to the client the reason for requiring evidence of
identity and this can be achieved by including this matter in the engagement letter.
Customer due diligence
Customer due diligence
Reporting procedures
It is a criminal offence not to report knowledge or suspicion of money laundering.
Money laundering regulations require that:
• A person in the organisation is nominated to receive disclosures (usually an MLRO).
• Anyone in the organisation, to whom information comes in the course of the relevant
business as a result of which he suspects that a person is engaged in money laundering,
must disclose it to the MLRO.
• Where a disclosure is made to the MLRO, they must determine whether it gives rise to
suspicion.
• Where the MLRO does so determine, the information must be disclosed to a regulatory
body authorized.

• The MLRO completes a standard form that identifies:


– Suspect’s name, address, date of birth and nationality
– Any identification or references seen
– Nature of the activities giving rise to suspicion
– Any other information that may be relevant
Potentially suspicious transactions
There is no formal definition of suspicious. A suspicious transaction will often
be inconsistent with the client’s known or usual legitimate activities.

Examples include:
• Unusually large cash deposits.
• Frequent exchanges of cash into other currencies.
• Overseas business arrangements with no clear business purpose.

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