Preventing Money Laundering and Terrorism Financing: A Crucial Effort

Introduction

The purpose of money laundering and terrorism financing prevention is to protect society from the risks associated with illicit financial activities. This involves preventing criminals from disguising the origins of their funds and using them to finance criminal activities.

Key Goals

• Prevent the use of financial systems for illicit purposes: Stop criminals from using banks, financial institutions, and other payment systems to launder money or fund terrorist activities.
• Protect national security and public safety: Prevent the financing of terrorism, which can lead to violent attacks and harm innocent people.
• Maintain trust in the financial system: Ensure that the financial system remains stable and trustworthy, and that citizens have confidence in its integrity.

Measures for Prevention

The following measures are outlined to achieve these goals:

Identifying Beneficial Owners

• Reporting entities (e.g., banks, financial institutions) must identify and verify the beneficial owners of customers.
  • Individuals who ultimately own or control a company
  • This helps prevent shell companies and other complex structures from being used for illicit purposes.

Conducting Risk Assessments

• Reporting entities must assess the risks of money laundering and terrorism financing in their own field of activity.
  • Factors to consider:
    • Customer profile
    • Business relationship
    • Country (jurisdiction) profile
    • Goods or services offered

Implementing Due Diligence Measures

• Reporting entities must apply due diligence measures to customers, including enhanced due diligence for higher-risk customers.
  • This involves verifying the identity of customers and their beneficial owners.

Using a Risk-Based Approach

• Reporting entities must use a risk-based approach to prevention and mitigation of money laundering and terrorism financing.
  • Actions proportional to the identified risks
  • Helps ensure that resources are focused on high-risk areas.

Preventing Money Laundering and Terrorism Financing

The measures outlined above aim to prevent money laundering and terrorism financing by:

Detecting Suspicious Transactions

• Identifying and reporting unusual or suspicious transactions that may indicate money laundering or terrorist activity.
  • Helps prevent illicit funds from being laundered through the financial system.

Freezing Assets

• Temporarily freezing assets suspected of being linked to money laundering or terrorist financing, pending further investigation.
  • Helps prevent illicit funds from being used for further criminal activities.

Recovering Illicit Funds

• Recovering funds laundered through the financial system and returning them to their rightful owners.
  • Helps prevent criminals from benefiting from their illicit activities.

Disrupting Terrorist Networks

• Disrupting the financial flows that support terrorist organizations and networks.
  • Helps prevent terrorist groups from financing their activities.