Basics of Anti-Money Laundering :
A Really Quick Primer
What is Money Laundering? • The act of concealing or disguising (laundering) of funds obtained through illegal activity so that they appear to have been generated through legal, legitimate sources.
Illegal money/funds
Legal money/assets
Money Laundering: A Three Stage Process
Placement • Illicit funds are physically placed in the financial institution
Layering • Multiple transactions • Wire transfers between domestic and foreign accounts
Integratio n • Real estate
investment • Luxury automobiles • Investment in securities markets
How is it Carried Out? – Shell companies, intermediaries and money transmitters usually transfer these funds around the world – Banks and other financial institutions are the chosen medium for laundering these illegal funds
AML Regulations • The Bank Secrecy Act is the most important Anti-Money Laundering (AML) regulation • The BSA requires financial institutions to: – Keep records of cash purchases of negotiable instruments – File reports of cash transactions exceeding $10,000 (daily aggregate amount) – Report suspicious activity that might signify money laundering, tax evasion, or other criminal activities – Implement a written, board-approved compliance monitoring program
• The USA Patriot Act – Expands AML requirements to all financial institutions – Augments existing BSA framework
AML Best Practices • In order to combat money laundering, banks should implement the following best practices: – Customer Identification Program (CIP) – Customer Due Diligence (CDD) Program – Bank Secrecy Act/Anti-Money Laundering Risk Assessment – Identification and Reporting of Suspicious Activity
Want to learn more about anti-money laundering process and best practices? ComplianceOnline webinars and seminars are a great training resource. Check out the following links:
• http:// www.complianceonline.com/anti-money-laundering-aml-compliance-program-seminar-t
• http:// www.complianceonline.com/bsa-aml-ofac-risk-assessments-regulatory-requirements-se
• http:// www.complianceonline.com/bsa-aml-compliance-reporting-requirements-webinar-train
• http:// www.complianceonline.com/bsa-aml-compliance-checklists-webinar-training-703178-pr
• http:// www.complianceonline.com/bsa-aml-ofac-risk-assessments-and-evaluation-compliance-
• http:// www.complianceonline.com/best-practices-for-developing-risk-models-for-aml-bsa-mon ?channel=amlppt