Financial Crime World

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Guideline on Anti-Money Laundering and Combating of Terrorism Financing

Issued by: Central Bank

Introduction

This guideline outlines the key concepts, governance, and risk management requirements for financial institutions and persons supervised by the Central Bank to prevent money laundering (ML) and financing of terrorism (TF).

Money Laundering (ML)

Definition

  • Money laundering is the process used by criminals to conceal the illegal origin and ownership of funds derived from criminal activities.

Stages of Money Laundering

  • The three main stages of money laundering are:
    • Placement: Placing proceeds of crime into the financial system without arousing suspicion.
    • Layering: Moving the money through a series of financial transactions to disguise the criminal source and provide the appearance of legitimacy.
    • Integration: Attempting to legitimize wealth derived from criminal activity by investing in real estate, luxury assets, or business ventures.

Terrorism Financing (TF)

Definition

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

Key Difference between ML and TF

  • The key difference between ML and TF is that with ML, the person seeks to disguise the origins of illicit funds for a profit motive, while in contrast, a person funding terrorism may use legitimately-held funds to advance a political, religious, or ideological belief.

Key Concepts

Offenses under POCA

  • Knowingly assisting in concealing or acquiring criminal property.
  • Failing to report knowledge or suspicion of money laundering.
  • Tipping off or prejudicing an investigation.
  • Not establishing appropriate policies and procedures to detect and prevent money laundering is also a separate offense under the POCA.

Conclusion

This guideline provides essential information for financial institutions and persons supervised by the Central Bank to prevent ML and TF. It is crucial to understand the key concepts, stages of money laundering, and offenses under POCA to ensure compliance with regulations and prevent illicit activities.