COVID-19 has caused a rise in the number of cybercrimes. As a result, financial institutions are striving to prevent illegal transactions despite the challenges posed by remote working. In this scenario, Anti-Money Laundering (AML) assumes huge significance. A free webinar on “Anti Money Laundering” certainly threw light on the concept of money laundering and ways to tackle it.
Around 70 professionals attended the insightful and informative webinar. In fact, we received great feedback from the participants for the insightful and informative webinar. The following are the important points discussed in the webinar:
What is money laundering?
Money laundering is a criminal offense. It is when the origins of money obtained from illegal activity is concealed by passing it through commercial transactions. As a result of the transaction, criminals can use cash without any legal consequences.
Three stages of money laundering
Money laundering has three major stages. They are:
- Placement – Moving illegal money into financial institutions by misrepresenting the source.
- Layering – This is a complex stage that may involve multiple transactions to conceal the source.
- Integration – At this point, illegal funds are usable by criminals since they seem to be regular business earnings.
Financial Action Task Force
The Financial Action Task Force (FATF) is an inter-governmental body that sets Anti-Money Laundering (AML) standards for governments and countries. It has more than 200 member countries and jurisdictions committed to implementing them. Moreover, it is a global-level effort to cooperate in fighting money laundering. FATF ensures effective compliance with AML standards and identifies Money Laundering (ML) and Terrorist Financing (TF) threats.
The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory as well as operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
Starting with its own members, the FATF monitors countries’ progress in implementing the FATF Recommendations; reviews money laundering and terrorist financing techniques and counter-measures; and, lastly, promotes the adoption and implementation of the FATF Recommendations globally.
Summary of 40 recommendations
The Financial Action Task Force (FATF) has provided 40 recommendations to prevent money laundering. We can summarize the recommendations below:
- Identify risks and develop appropriate policies
- Criminal Justice System and Law Enforcement
- Financial Systems and its Regulations
- Transparency of legal persons and arrangements
- Monitor progress, review AML technologies, countermeasures and promote adoption of FATF recommendations
The countries that don’t cooperate with global efforts against money laundering and terrorist financing are included in the international blocklists.
Non Cooperative Countries and Territories (NCCT)
Countries that lack proper legal frameworks to stop terrorist financing are included in the Non-Cooperative Countries and Territories (NCCT) list.
FATF blocklists and greylists
FATF blocklists and greylists include countries that don’t have regulatory measures to control money laundering and terrorist financing. While the blocklist consists of high-risk jurisdictions that require strict and immediate action, greylists comprise countries that are under increased monitoring.