International Standards
Simon Goddard
31 August 2012
MOLI Serbia
International Standards

Cornerstones for common
approach to legislation
and procedures to attack
ML/FT globally

Unchecked, money laundering
can destabilise financial
institutions, financial sectors and,
in certain cases, entire
economies.
International Standards
United Nations Convention against Illicit Traffic in
Narcotic Drugs and Psychotropic Substances (Vienna
Convention, 1988)

Vienna Convention does not use the term money
laundering, but defines the concept and calls
upon countries to criminalize the activity

Under the convention the only predicate offenses
for money laundering are crimes related to drug
trafficking.

Does not address preventive aspects of money
laundering.

Serves as a basis for several FATF
Recommendations on preventing, detecting, and
prosecuting money laundering.
International Standards
The International Convention against Transnational
Organized Crime (the Palermo Convention, 2000)

Contains a broad range of provisions to fight international
organized crime. Countries that ratify the convention must
implement its provisions through passage of domestic laws.
International Standards
The International Convention against Transnational
Organized Crime (the Palermo Convention, 2000)
With regard to money laundering, it obliges each ratifying country to:
•
Criminalize money laundering and include all serious crimes
(not just drug trafficking) as predicate offences to money
laundering;
•
Establish regulatory regimes to deter and detect all forms of
money laundering;
•
Cooperate and exchange information, both domestically and
internationally, and consider the establishment of a financial
intelligence unit
International Standards
International Convention for the Suppression of the
Financing of Terrorism (the SFT Convention, 1999)

This convention requires ratifying countries to
criminalize terrorism, terrorist organizations, and
terrorist acts.
It applies to the offense of direct involvement or
complicity in the intentional and unlawful provision
or collection of funds, whether attempted or actual,
with the intention or knowledge that any part of the
funds may be used to carry out any of the offences
described
International Standards
 Council of Europe ‘Strasbourg’ Convention
on Search, Seizure, and Confiscation of
the Proceeds of Crime 1990
 Council of Europe ‘Warsaw’ Convention on
Search, Seizure, and Confiscation of the
Proceeds of Crime and of the Financing of
Terrorism 2005
International Standards
UN Security Council Resolution 1373 (2001)


Binding upon all UN member countries
Obligates all member counties to criminalize actions
relating to the financing of terrorism.
International Standards
UN Security Council Resolution 1373 (2001)
Obligates countries to:
I.
II.
Deny all forms of support for terrorist groups
Suppress the provision of safe haven or support for
terrorism, including freezing funds or assets of persons,
organizations, or entities involved in terrorist acts
III. Prohibit active or passive assistance to terrorist
IV. Cooperate with other countries in criminal investigations
and in the sharing of information about planned terrorist
acts
International Standards
UN Security Council Resolution 1267 (1999) and its
successors



This Resolution is binding upon all UN member
countries (as are its successors) formed to freeze
assets of the Taliban.
Followed by Resolution 1333, which dealt with
freezing the assets of Osama Bin Laden and AlQaeda.
Later resolutions 1363, 1390, 1452, and 1455
established monitoring arrangements, merged lists
of assets to be frozen, and took other measures to
improve implementation.
Financial Action Task Force (FATF)
Inter-governmental body which develops and promotes
policies, both at national and international levels, to combat
money laundering and terrorist financing.
Works to generate the necessary political will to bring
about national legislative and regulatory reforms
Monitors members' progress in implementing necessary
measures, reviews AML/CFT techniques and countermeasures, and promotes the adoption and implementation
of appropriate measures globally.
Collaborates with other international bodies
40 Recommendations - Key Elements
Money laundering offence linked to all serious offences
Trace, freeze and confiscate assets
All ‘cash dealers’ covered
Ban anonymous accounts
Know your customer (KYC)
Transaction Reporting
Statutory protection
Regulatory framework
Inter agency co-operation
40 Recommendations - Key Elements
• Mutual legal assistance and extradition
• Information exchange and reciprocity
• Bilateral and multi lateral treaties
• Offshore branches apply ‘home’ rules
• High risk customers
• Cross border cash and non cash flows
• Shell companies and tax havens
• Identify risks from new technologies
• Training and supervision of staff
Key elements of an AML/CFT strategy
1. Law
Appropriate laws and regulations
2. Prevention
Procedures, supervision of financial
institutions and reporting to authorities
3. Detection
Financial intelligence analysis & law
enforcement
4. International cooperation
Essential Elements
1. Laws & Regulations
Creating a legal framework which enables action
to be taken against Money Laundering
Defining Money Laundering as a Crime
Specifying penalties and procedures
Permitting freezing, seizure and forfeiture
Essential Elements
2. Prevention - Procedures & supervision
Establish obligations for financial services
KYC - client identification & record retention
Monitor accounts for unusual activity
Suspect Transaction Reporting (STR)
Comprehensive AML procedures
Training
Compliance program
Essential Elements
3. Detection - Analysis & enforcement
Effective intelligence analysis
Access to financial intelligence for investigators
(e.g. following terrorist activity)
Analysis of financial transactions leading to
targets for predicate crimes, financial crime,
money laundering or its facilitation
Support FIU analysis with specialist investigation
expertise (e.g. drug trafficking)
Essential Elements
4. International Cooperation
Should be as broad as possible and cover as a
minimum:
assistance for administrative matters i.e between
financial market supervisory authorities( Banks,
securities companies, insurance companies),
tax(fiscal) , customs, police and
money laundering matters (FIU to FIU)
From Start to Finish
Info
FIU – Assisted by Reg
SEC & Law SEC
Disseminate Suspicious
targets
Analysis & Intelligence
(eg. Police records)
Fin SEC
Evaluation Target
Selection
CTR
Collect & Collate Data
STR
Investigate
Analysis and Intelligence
Gather
Evidence
Interview
Witness
Confirm
offence
Law SEC &
Reg SEC
Prosecute/
Regulate
Criminal
Action
Civil
Action
Admin
remedies
Revoke
Licence
Law SEC &
Reg SEC