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Money Laundering

MONEY LAUNDERING
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INDEX
What is money laundering?? Why money laundering Stages of money laundering Incoming money laundering circle How money laundering works How does hawala works??? The indicators of money laundering in Banks Volume of money laundering

Money Laundering

BIBLIOGRAPHY

Wikipedia
Money Laundering

Google Money Control

Business Standard
Money Management

WHAT IS MONEY LAUNDERING??


Money

laundering is a practice which engages in specific financial transactions


Money Laundering

Money

laundering is a criminal practice of filtering ill-gotten gains (dirty money)...

BASIC CONCEPTS
Money

laundering is the process, by which, large amounts of illegally obtained money is given the facade of having a legitimate source. Earlier the concept of money laundering was associated with organized crime The ambit of money laundering operations has dramatically increased.
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Money Laundering

WHY MONEY LAUNDERING??


Criminals want to: Avoid prosecution Increase profits Avoid seizure of accumulated wealth Appear legitimate Tax evasion They are trying to conceal the origin of the Cash

Money Laundering

Money Laundering

HOW AND WHERE DID IT START????


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STAGES OF MONEY LAUNDERING


Money Laundering

THE STRUCTURE OF MONEY LAUNDERING.


Conceal

ownership of funds Source of funds Movement of Funds Use of funds to enable funding criminal activities
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Money Laundering

INCOMING MONEY LAUNDERING CIRCLE

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Money Laundering

HOW MONEY LAUNDERING WORKS

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Money Laundering

INDIAN LEGISLATION
Money Laundering

The prevention of Money- Laundering Act, 2002 came into effect on 1st July 2005. Section 3 Section 4 of the act prescribes punishment for money-laundering Section 12(1) prescribes the obligations on banks, FIs and intermediaries

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HAWALA..THE ANCIENT FORM


OF

MONEY LAUNDERING
Money Laundering

Hawala

is an ancient system originating in South Asia and used around the world to conduct legitimate remittances It is an alternative or parallel remittance system which works on Trust & Honor This is what makes it difficult to detect!

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WHY DOES HAWALA WORK ?


Cost effective Price differences are as high as 20% in some markets Efficient Delivery is assured in 1 or 2 days. Reliable Rarely a remittance lost in the transit. Lack of bureaucracy No need to prove identity or status or origin of money Tax evasion Scrutiny free remittance channel and tax elusive

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Money Laundering

HOW DOES HAWALA WORKS???

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THE INDICATORS OF MONEY LAUNDERING IN BANKS


Money Laundering

High High High

Risk products & services

Risk Geographic Locations


risk customers
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ELECTRONIC BANKING AND CYBER LAUNDERER


E-banking encourages cyber-launderer Anonymity Lack of Audit trails Lack of Records Absence of Bureaucracy Border-less (Almost like Hawala!!) Encryption makes it difficult for the forensic accountant to crack the trail

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Money Laundering

FIGHTING MONEY LAUNDERING


The 1st defense against money laundering is the requirement on financial intermediaries to know their customer often termed as KYC As money laundering techniques are getting more sophisticated, so too does the technology used to fight it. Various software packages are capable of name analysis, rule based systems, statistical and profiling engines, neural networks, etc Also, there are specific KYC solutions that offer case- based account documentation acceptance & rectification.

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Money Laundering

PLANS FOR MONEY LAUNDERING


Corruption ( if you get $100,000 today through corruption, will you deposit into your bank account?) Drug production and trafficking Embezzlement, misappropriation and theft of public funds Tax exemptions and evasions Smuggling of arms, minerals and dangerous materials (It is reported that between 1995 and 2002 Tanzania lost more than Tsh300 billion (US$300 million) through the smuggling of tanzanite from the country )

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Money Laundering

SOURCES OF FUND THAT REQUIRE MONEY


LAUNDERING

Terrorism Tanzania has experienced the adverse effects of terrorist attacks. On 7 August 1998, terrorists bombed the US Embassy in Dar es Salaam It is said that the terrorist attack in 1998 was coordinated, financed and/or carried out by al-Qaeda, led by the Saudi fugitive, Osama Bin Laden.

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Money Laundering

VOLUME OF MONEY LAUNDERING


Money Laundering is one of the three largest trades in the world including the international trade in oil and the currency markets!!

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Money Laundering

REGULATORY FRAMEWORK FOR CONTROL OF


LAUNDERING Vienna conventions Palermo conventions UN resolution 1373 UN Convention for Suppression of the Financing of Terrorism Other international agreements includes The SADC Protocols (including the Protocol Against Corruption, the Protocol on Combating Illicit Drugs and the Protocol on Mutual Legal Assistance in Criminal Matters);

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Money Laundering

INSTITUTION INVOLVED IN COMBATING MONEY


LAUNDERING

the National Multi-Disciplinary Anti-Money Laundering Committee; the Ministry of Finance; the BoT and banking financial institutions; the Ministry of Justice and Constitutional Affairs; the Ministry of Home Affairs; the Police Force; the PCB; the National Drug Control Commission; and the courts.

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Money Laundering

REGULATORY FRAMEWORK FOR CONTROL OF


MONEY LAUNDERING Local legislation the Economic and Organised Crime Control Act of 1984; the Mutual Assistance in Criminal Matters Act of 1991; the Proceeds of Crime Act of 1991; the Drugs and Illicit Traffic in Drugs Act of 1995; the Extradition Act of 1965;

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Money Laundering

CONCLUSION
Bank and Financial institutions should adopt anti-money laundering policies and procedures; verify and identify customers before establishing relationship with them; develop procedures relating to retention of records of transaction of their customers; establish reporting mechanisms of suspicions transactions of their customers to the relevant authorities; and provide training and guidance to their personnel relating to procedures and control of money laundering.

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Money Laundering

Thank You

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Money Laundering

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