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Money Laundering

Money Laundering. Hide Disguise TRUE ORIGIN OF THE CRIMINAL PROCEEDS. Criminals…Law Enforcement Authorities. Law Enforcement Authorities Reducing Crime Criminals Retain Funds Recycle for Further Crimes. Predicate Offences (Unlawful Activities). Drug trafficking Counterfeiting

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Money Laundering

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  1. Money Laundering • Hide • Disguise • TRUE ORIGIN OF THE CRIMINAL PROCEEDS.

  2. Criminals…Law Enforcement Authorities • Law Enforcement Authorities • Reducing Crime • Criminals • Retain Funds • Recycle for Further Crimes

  3. Predicate Offences (Unlawful Activities) • Drug trafficking • Counterfeiting • Smuggling • Theft • Embezzlement • Racketeering • Tax evasion • Kidnapping • Illegal arms sales • Bribery • Illegal trade of cultural property

  4. Laundering Process • Placement • Layering • Integration

  5. Placement Problems • 50,000$ of 10$ bills=2 feet high • A bill weighs aprrox. One gram • There are aprrox. 454 bills per pound • 50lbs of 10$ bills = 227.000$ • 50lbs of 20$ bills = 454.000$ • 50lbs of 50$ bills =1.135.000$ • 50lbs of 100$ bills =2.270.000$ • 50lbs cocaine = 600.000$ • 50lbs marijuana = 300.000$

  6. ECONOMIC IMPACTS OFMONEY LAUNDERING • Misallocation Of Funds • Unpredictable Movements Of Funds • Reputation Risk • Undermines the Legitimate Private Sector • Economic Development issues • Loss of Tax Revenue • Loss of Control of Economic Policy • Other

  7. Estimation Of Laundered Money • %2-5 World GNP Annually • 500 Billion to 1.5 Trillion USD (FATF) • Approaches • Issues • Hidden activities • Difference in Predicate offences • Black money>Laundered money

  8. INTERNATIONAL EFFORTS • Financial Acton Task Force-1989 • The Vienna Conventinon-1988 • Basle Committee Statement of Principles-1988 • European Union Directive-1991 • IOSCO-1992 • Other

  9. FAFT • 40 Recommendations • Country Evaluations • Typology Studies • Guidelines • Mutual Evaluation • Identifying Non-Cooperative Countries and Territories

  10. Latest FATF Report About NCCOT’s • NCCOT’s • Jurisdictions Subject To The monitoring Process

  11. Off Shore Centers • Tax Evasion • Evading Strict Regulation • Money Laundering • Confidentiality • Weak Supervision • Owning a bank, company

  12. Some Figures Jurisdiction Banks Comp. Bahamas 305 47,040 Liechtenstein 17 75,000 Seychelles - 4,800 Nauru 400 - http://www.state.gov

  13. A Brief History of Combating • 1972 Bank Secrecy Act- US • 1986 Money Laundering Control Act-US • Enactment Of Otter Countries Acts • Emerge of Financial Intelligent Units

  14. Scope of The ACT’s • Criminalization of Laundering • Determining Predicate Offences • Establishing Of a FIU • AML Programs (Reporting, Identification, Recording etc of Transactions.. Etc) • Civil &Criminal Liabilities • Other (Information Exchange, Education..etc)

  15. Basic FIU Model 1-Disclouseres transmitted to FIU 2-FIU receives additional information from law enforcement 3-Possible exchange with foreign counterpart FIU 4-After analysis, FIU provide case ti prosecutor for action

  16. Egmont Group and Definition of FIU • EGMONT Group-1995 • Central national agency responsible for receiving, requesting, analyzing and disseminating to the competent authorities, disclosures of financial information, • concerning suspected proceeds of crime • in order to counter money laundering. • FIU’s of Some Countries

  17. Security Markets • Industry Rely on Commissions • Due Diligence has taken Perception • International, Large, Liquid Nature • Availability of many Instruments and Institutions

  18. Securities Market (Cont) • Layering Stage • Lack of Information • IOSCO Resolution-1992 • GAO survey of Securities Sector of USA

  19. Patriot ACT –Brokers/Delaers • Before Patriot Act • Currency Transaction Reports • Funds Transfers and Transmittals • Suspicious Activity Reporting-Red Flags • Other

  20. Patriot Act-Brokers/Dealers • SEC 312 Private Banking Account • SEC 313 Correspondent Account • SEC 314 Financial Institution Cooperation Provision • SEC 319 Domestic and Foreign Bank Records Production

  21. Patriot Act-Brokers/Dealers • SEC 352 Anti Money Laundering Programs • SEC 356 Suspicious Activity Report by the Securities and futures Industry • SEC 256 Customer Identification and Verification

  22. Typologies • Typologies from FATF and Other Sources

  23. Conclusion • Reducing Crime • Since 1990’s Significant Steps has taken • Lack of Statistical Data • Isolation of NCCOT’s from Global Financial Community • New Fighting Means Focusing on Detecting

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