Regulating and
Prosecuting Global Money
Laundering
By: Aida Kebere
What is Money Laundering?
Money Laundering is the process of making
illegally-gained proceeds( i.e. “ dirty money “)
appear legal (i.e. “clean).
How does money laundering work?
1.
Placement: refers to the initial point of entry for the funds
derived form the criminal activities.
2.
Layering : refers to the creation of complex networks of
transactions which attempt to obscure the link between the
initial entry point and the end of the laundering cycle.
3.
Integration: refers to the return of funds to the legitimate
economy for later extraction
Crimes Associated With Money Laundering
1.
Drug trafficking
7. Foreign official corruption
2.
Terrorist financing
8. Exchange control violation
3.
Financial fraud
9. Illegal gambling
4.
Computer Crimes
10. Bribery of public officials
5.
Alien smuggling
11.
Misappropriation, theft
6.
Illegal arms sales
12
Embezzlement of public fund
Who may be Potentially Exposed?
 Banks
 Financial institutions
 International Business Operations
 Companies
 Investors
 Corporate executives
 Individuals
The Financial Action Task Force (FATF)
 FATF is an inter-governmental body established in 1989 by
the Minister of its Member jurisdictions.
 Sets international standards , promote effective
implementation of legal, regulatory and operational
measures.
 FATF currently has 34 members jurisdictions and 2 regional
organizations.
U.S. AML Laws and Regulations
 Bank Secrecy Act of 1970 (BSA)
 The Uniting and strengthening America by Providing Tools required
to intercept and Obstruct Terrorism Act of 2001 ( commonly
referred to as USA Patriot Act).
 Money Laundering Control Act of 1986 (MLCA)
 Anti-Drug Abuse Act of 1988 Act of 1992
 Money Laundering Suppression Act of 1994 (MLSA)
 Money Laundering and Financial Crimes Strategy Act of 1998
Anti Money Laundering Statutes
1.
Comprehensive oversight, monitoring, and reporting
framework designed to limit money laundering activity,
focused primarily on financial institutions.
2.
The criminalization of money laundering activities by any
individual or corporation
The Statute of the Money Laundering Act
 The statute allows for a broad jurisdictional hook
 The Statute can reach any U.S. citizen anywhere in world, if
part of the conduct takes place in the U.S.
 Transactions value exceeds $10,000
Key U.S. Regulatory Authorities
1.
Financial Crimes Enforcement Network (FinCEN)
2.
Self-Regulatory Organizations (SROs)
3.
Financial Industry Regulatory Authority (FINRA)
4.
Department of Justice (DOJ)
Anti-money laundering (“AML”) programs
- Information sharing, Risk Assessments
-Customer Acceptance and Maintenance Program
-Large Currency Monitoring and Currency Transaction Report
Filling Program
- Monitoring, investigating and Suspicious Activity Filling
Program
- Sanction Program , Information Sharing, Training ,Record
keeping and Retention Programs
HSBC’s Case
 HSBC’s U.S branch failed to monitor transactions with
branches in other countries for money- laundering violations.
 It accepted $15 billion without further inquiry
 HSBC was fined by both the U.S. and British regulators.
 HSBC to pay $1.9 BILLION U.S. fines
 HSBC has also shouldered significant remediation costs
Policy Proposal
 Strengthen and refine the Anti-Money Laundering regulatory
regimes for all financial institutions
 Improve the effectiveness of the AML controls through
greater guidance, communication and information sharing
 Re-evaluate some of the existing procedures
 Improving compliances systems
Impact of proposal
 Pros
Cons
-
Will comply with regulation
-
Mitigate risks
-
Won’t have to pay fines
- you can’t deal with certain
-
Build strong brand in the industry
parameters
-
- Costly to continuously
revamp the procedures
- have to alienate certain
industries due to sanctions