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anti money laundering

COVID-19 has caused a rise in the number of cybercrimes. The 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. The free webinar conducted by Blue Ocean Academy on ‘Anti Money Laundering’ threw light on the concept of money laundering and the ways to tackle it.

Around 70 professionals attended the insightful and informative webinar. We received great feedback from the participants for the insightful and informative webinar. Following are the important points discussed in the webinar:

What is money laundering?

Money laundering is a criminal offense in which the origins of money obtained from illegal activity is concealed by passing it through commercial transactions. As a result of the transaction, the criminals can use the cash without any legal consequences.   

Three stages in money laundering

Money laundering has three major stages. They are:

  1. Placement- Moving the illegal money into financial institutions by misrepresenting the source.
  2. Layering- This is the complex stage that may involve multiple transactions to conceal the source.
  3. Integration- In this stage, the illegal money appears to be normal business earnings and can be used by the criminals.

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. It is a global-level effort to cooperate to fight 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 and 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, 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. These recommendations can be summarized as given below:

  • The identification of risks and development of appropriate policies
  • The criminal justice system and law enforcement
  • The financial systems and its regulation
  • The transparency of legal persons and arrangements
  • Monitor progress, review AML technologies, countermeasures and promote adoption of FATF recommendations

International blacklists

The countries that don’t cooperate with the global effort against money laundering and terrorist financing are including in the international blacklists.

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 blacklists and greylists

FATF blacklists and greylists include the countries that don’t have regulatory measures to control money laundering and terrorist financing. While blacklist consists of high-risk jurisdictions that require strict and immediate action, greylists comprise countries that are under increased monitoring.