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Aml - Issues And Strategies

The Concept of Money Laundering
Money laundering generally involves a series of multiple transactions used to disguise the source of financial assets so that those assets may be used without compromising the criminals who are seeking to use the funds. Through money laundering, the criminal tries to transform the monetary proceeds derived from illicit activities into funds with an apparently legal source. Worldwide value of laundered funds in a year ranges between $ 500 billion- 1 trillion (Ref: UN Office of Drug and Crime). Weak financial regulatory systems, lax enforcement, and corruption are key factors that make certain jurisdictions particularly attractive for laundering illicit proceeds.

Process of Money Laundering
There are three elements to the complete laundering of funds, beginning with the placement of currency into a financial services institution ("placement"), continuing with the movement of funds from institution to institution to hide the source and ownership of the funds ("layering"), and concluding with the reinvestment of those funds in an ostensibly legitimate business ("integration").
While countermeasures to all three components of money laundering are important, laundered money is most vulnerable to detection at the placement stage. As a consequence, international regulatory and law enforcement efforts have concentrated especially on developing methods to make it difficult to place illicit funds without detection by developing measures such as Suspicious Activity Reporting (SAR) requirements, cross-border monetary declaration requirements, and "Know Your Customer"(KYC).
Finally, integration of illicit proceeds can be fought through the strengthening of Asset forfeiture laws, by which governments can seize the proceeds of criminal activity even when those proceeds have been reinvested in ostensibly legitimate enterprises.

Money Laundering Trends
The two most recent Financial Action Task Force (FATF) exercises infer that the global...