Financial Crime World

Anti-Money Laundering and Combating of Terrorism Financing Guidelines

Introduction

The Central Bank has issued guidelines on anti-money laundering (AML) and combatting of terrorism financing (CFT). This document covers various aspects of AML and CFT, including definitions, key concepts, and relevant laws.

Key Definitions and Concepts

Money Laundering

  • Definition: Money laundering is a process used by criminals to conceal the illegal origin and ownership of funds derived from criminal activities.
  • Stages: It involves three stages:
    • Placement: The initial stage, where proceeds of crime are introduced into the financial system without arousing suspicion.
    • Layering: The second stage, where the money is moved through a series of transactions designed to disguise its criminal source and provide an appearance of legitimacy.
    • Integration: The final stage, where the illicit funds re-enter the legitimate economy by way of investment in real estate, luxury assets, and business ventures.

Terrorism Financing

  • Definition: Terrorism financing refers to the process by which funds are provided to an individual or group to finance terrorist acts.

Key Concepts

The following concepts are essential for understanding AML and CFT:

  • Placement: The initial stage of money laundering, where proceeds of crime are introduced into the financial system without arousing suspicion.
  • Layering: The second stage of money laundering, where the money is moved through a series of transactions designed to disguise its criminal source and provide an appearance of legitimacy.
  • Integration: The final stage of money laundering, where the illicit funds re-enter the legitimate economy by way of investment in real estate, luxury assets, and business ventures.

There are three broad groups of offences related to money laundering:

Knowingly Assisting

  • Knowingly assisting (in a number of specified ways) in concealing, or entering into arrangements for the acquisition, use, and/or possession of criminal property.

Failing to Report Suspicious Activity

  • Failing to report knowledge, suspicion, or where there are reasonable grounds for knowing or suspecting, that another person is engaged in money laundering.

Tipping Off or Prejudicing an Investigation

  • Tipping off or prejudicing an investigation into suspected money laundering activities.

Relevant Laws

The following laws are relevant to AML and CFT:

  • Prevention of Organised Crime Act (POCA): This act provides a framework for preventing and combating organised crime.
  • Financial Institutions Act (FIA): This act regulates financial institutions and provides for the reporting of suspicious transactions.
  • International Anti-Money Laundering and Combatting of Terrorism Financing Regulations (FOR): These regulations provide guidelines for international co-operation in AML/CFT.