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The word money laundering refers to the use of the financial system to hide the source of funds gained from illegal activity such as drug trafficking, bribery, extortion, embezzlement, theft or other criminal activity, as the criminals try to make their ill gotten gains appear genuine.
Anti Money Laundering is the term used by banks and other financial institutions to describe the variety of measures they have to combat this illegal activity and to prevent criminals from using individual banks and the financial system in general as the conduit for their Proceeds of Crime. In all major jurisdictions around the world, criminal legislation and regulation make it mandatory for banks and financial institutions to have arrangements to combat Money Laundering, with harsh criminal penalties for non-compliance.
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The vast majority of criminal dealings are done in cash. Criminals need ways to dispose of the cash and have it reappear as part of their wealth with as little chance as possible of it being tracked back to the cash element.
Criminals have to use the financial system and banks in particular to do this.
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Money laundering is traditionally done in three stages, called Placement, Layering and Integration. Placement is the physical depositing of the cash. Layering describes the process of transactions, some very simple, some more complicated and often involving transactions within and between banks and across borders, which seek to confuse the trail back to the original cash. Integration is the process by which the money is brought back into use by the criminal in the normal economy, often by the pruchase of assets (houses, cars, works of art) but which make it appear legitimate.
Anti Money Laundering processes and controls helps banks and financial institutions protect themselves and their reputation from the criminals. Key elements of a sound Anti Money Laundering programme, many of them required by law, include :
- Minimum Standards and Policies, approved by Senior Management, which clearly set out your philosophy on crime prevention and business requirements.
- Strong "Know Your Customer" checks at customer take-on to identify and exclude known criminals but also to be sure you know the real identity of the customers you do take on.
- Robust training programmes for all staff.
- Processes (very often automated) to monitor the activities on customer accounts to identify suspicious activity and to check incoming and outgoing payments for unauthorised transactions and to enable reports to be made to relevant authorities.
antimoneylaundering.org gives you access to a wide range of advice, systems and materials which ensure that you can develop a robust Anti Money Laundering framework in your business and a culture of crime prevention across the organisation. In particular, AntiMoneyLaundering.org gives you access to comprehensive lists to enable you to screen potential customers in order to exclude known criminals and identify any high profile individuals (such as Politically Exposed Persons) among the customers you do take on. You will then be able to comply with stringent legal and regulatory requirements, keep the criminals away from your doors and protect your reputation.
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