Compliance with Anti Money Laundering

What is money laundering?

Money laundering is the process of making dirty money look clean. In other words, it's the act of hiding the source of illegally-obtained money so that it can be used without arousing suspicion.Why is it a problem?

Money laundering enables criminals to profit from their crimes and to finance further criminal activity. It also erodes public trust in financial institutions and the government.How does it work?

There are three basic steps to money laundering:

• Placement: This is when the criminal first introduces illegal funds into the financial system.

• Layering: This is when the criminal tries to disguise the source of the funds by moving them around through various accounts or investments.

• Integration: This is when the criminal finally introduces the funds back into the legal economy, often in the form of a legitimate business or investment.

What are some common methods of money laundering?

Some common methods of money laundering include:

• Smurfing: This involves making multiple small deposits into different accounts over time in order to avoid arousing suspicion.

• Structuring: This involves making deposits or withdrawals in amounts just below the limit at which financial institutions are required to report suspicious activity.

• Trade-based laundering: This involves using businesses, such as import/export companies, to move dirty money around by under- or over-invoicing goods and services.

What are some red flags that may indicate money laundering?

Some common red flags that may indicate money laundering include:

• Large or frequent cash deposits or withdrawals

• Sudden changes in account activity

• Wires to or from high-risk jurisdictions

• Multiple wire transfers to different accounts within a short period of time

• Deposits or withdrawals made outside of normal banking hours

• Unusual or unexplained wire transfer activity

What are some of the consequences of money laundering?

Consequences of money laundering can include:

Fines: Financial institutions can be fined for failing to comply with anti-money laundering regulations.

Reputational damage: Money laundering can damage the reputation of a financial institution, leading to loss of business and customers.

Criminal charges: Individuals who engage in money laundering can be charged with a crime and may face imprisonment.

AML & Financial Institutions:

All financial institutions are required to comply with anti-money laundering (AML) regulations. These regulations require financial institutions to take steps to prevent and detect money laundering, such as:

• Identifying and verifying the identity of customers

• Monitoring account activity for suspicious activity

• Reporting suspicious activity to the proper authorities

• Maintaining records of customer transactions

Failure to comply with AML regulations can result in financial institutions being fined or facing other penalties.

Individuals who engage in money laundering can also be charged with a crime and may face imprisonment.

What is suspicious activity?

Suspicious activity can take many forms, but it generally includes any activity that is out of the ordinary and seems to be intended to conceal or disguise the source of illegally-obtained funds.

Some common examples of suspicious activity include:

• Large or frequent cash deposits or withdrawals

• Sudden changes in account activity

• Wires to or from high-risk jurisdictions

• Multiple wire transfers to different accounts within a short period of time

• Deposits or withdrawals made outside of normal banking hours

• Unusual or unexplained wire transfer activity

If you see any of these red flags, you should report it to the financial institution and/or the proper authorities.

Anti Money Laundering Efforts:

The best way to protect your financial institution from being used for money laundering or terrorist financing is to have a strong anti-money laundering (AML) compliance program in place. Your AML compliance program should include policies, procedures, and controls designed to prevent and detect money laundering. It should also include a customer identification program to verify the identity of your customers. In addition, you should train your employees on how to identify and report suspicious activity.

If you suspect that a customer is engaged in money laundering or terrorist financing, you should report it to FinCEN. You can do this by filing a Suspicious Activity Report (SAR). FinCEN will then investigate the matter and take appropriate enforcement action if necessary.

In addition to having a strong AML compliance program, you should also be aware of the risk factors associated with money laundering and terrorist financing. Some of these risk factors include:

- Customers who are Politically Exposed Persons (PEPs).

- Customers who are beneficial owners of legal entities.

- Customers who are involved in shell companies.

- Transactions that involve high amounts of cash.

- Transactions that seem to have no legitimate purpose.

If you are aware of these risk factors, you will be better equipped to identify and report suspicious activity. By doing so, you can help protect your financial institution from being used for money laundering or terrorist financing.

Compliance with Anti Money Laundering:

Financial institutions are required to take steps to prevent and detect money laundering, such as:Identifying and verifying the identity of customersMonitoring account activity for suspicious activityReporting suspicious activity to the proper authoritiesMaintaining records of customer transactionsFailure to comply with AML regulations can result in financial institutions being fined or facing other penalties.

Individuals who engage in money laundering can also be charged with a crime and may face imprisonment.

Glossary:

Bank secrecy act: A law that requires financial institutions to maintain the confidentiality of their customers' information.

Anti-money laundering (AML): A set of laws and regulations designed to prevent money laundering.

Financial institution: A business that provides financial services, such as banking, lending, or investing.

Money laundering: The process of concealing the source of illegally-obtained funds.

Suspicious activity: Activity that is out of the ordinary and seems to be intended to conceal or disguise the source of illegally-obtained funds.

Terrorist financing: The provision of funds or other assets to individuals or organizations that carry out terrorist activities.

Conducting ongoing customer due diligence: The process of monitoring customers for changes in risk that could indicate money laundering or terrorist financing.

Enforcement action: A penalty imposed by a regulator on a financial institution for violating laws or regulations.

FATF: The Financial Action Task Force, an international body that sets standards for anti-money laundering and countering the financing of terrorism.

Financial Crimes Enforcement Network ( FinCEN ): A US government agency that collects and analyzes information about financial transactions to detect and investigate money laundering, terrorist financing, and other financial crimes.

SAR: A Suspicious Activity Report, a form that financial institutions must file with FinCEN when they suspect that a customer is engaged in money laundering or terrorist financing.

KYC: Know Your Customer, a set of policies and procedures that financial institutions use to verify the identity of their customers.

AML compliance program: A set of policies, procedures, and controls designed to prevent and detect money laundering.

AML compliance officer: An individual responsible for ensuring that a financial institution's AML compliance program is adequate and effective.

customer identification program: A set of procedures used by financial institutions to verify the identity of their customers.

Beneficial owner: The natural person or legal entity that ultimately owns or controls a customer, even if that ownership or control is indirect.

FATF: The FATF is an inter-governmental body that develops and promotes policies to protect the global financial system from money laundering, terrorist financing, and other illicit activity. The FATF Standards are a set of international standards for anti-money laundering and countering the financing of terrorism that financial institutions must follow.

Legal entity customers: Customers that are not natural persons, such as corporations, partnerships, and trusts.

Politically exposed person (PEP): An individual who is or has been in a position of public trust, such as a head of state, senior politician, or high-ranking government official. PEPs are considered to be at a higher risk of engaging in corruption and money laundering.

Shell company: A company that has no active business operations and exists only on paper. Shell companies are often used to conceal the beneficial owner of assets or income.

Beneficial ownership: The natural person or legal entity that ultimately owns or controls a customer, even if that ownership or control is indirect.

AML compliance program: A set of policies, procedures, and controls designed to prevent and detect money laundering.

Report suspicious transactions: Financial institutions are required to report any suspicious transactions that they believe may be related to money laundering or terrorist financing.

Filing a Suspicious Activity Report (SAR): When a financial institution suspects that a customer is engaged in money laundering or terrorist financing, it must file a SAR with FinCEN.

Enforcement action: A penalty imposed by a regulator on a financial institution for violating laws or regulations.

Financial transactions: Any transfer of funds between two parties. Financial transactions can be conducted in person, by telephone, or electronically.

Online Training on Anti-Money Laundering

Course Overview:

This course will provide participants with an understanding of what money laundering is, how it is carried out and the methods used to launder money. The course will also cover the role of anti-money laundering (AML) compliance in preventing and detecting money laundering, as well as the responsibilities of financial institutions and other businesses under AML regulations.

Learning Objectives:

- Understand what money laundering is and how it is carried out

- Understand the methods used to launder money

- Understand the role of anti-money laundering (AML) compliance in preventing and detecting money laundering

- Understand the responsibilities of financial institutions and other businesses under AML regulations.

Course Outline:

- Introduction to money laundering

- The proceeds of crime

- Money laundering methods

- The role of anti-money laundering (AML) compliance

- AML regulations and financial institutions

- AML regulations and other businesses

- Penalties for money laundering

- Case studies in money laundering.

Duration: This course is delivered online, and is self paced.