PowerPoint Presentation

AVN 7 irr. AML CFT Training. Anti-money Laundering and Combating Financing Terrorism.

What is Money Laundering?. Why do criminals launder dirty money?.

Guidance on ML & TF. Customer Due Diligence - Individuals.

Hiding Dirty Money laundering is the act of hiding dirty money to make it look like clean.

[Audio] So, you should always remember that Money laundering is hiding dirty money to look-like clean. Once, the money become dirty, it always remain dirty and can never become clean..

[Audio] Why do people hide dirty money? As we already discussed, Money laundering is the process of hiding the source of money obtained from illegal sources and converting it to a clean source. Therefore, illegal activists presume that if the source of money is proven to be from dirty source, the funds or acquired assets will be confiscated, that is officially take aways funds or property from the criminals and legal actions will be initiated by deployed authority issuing arrest warrant against them and putting behind the bars. So, in order to avoid confiscation and arrest, most often they will hide the source of money and pretend to make it as from clean source..

[Audio] What is concealment of dirty money? Let us understand, the meaning of concealment, that is, the action of hiding something or preventing it from being known. To disguise of the true nature, source, location, disposition, movement rights with respect to, or ownership of property knowing that it is derived from a criminal offense. let us see, How do they change an asset type. Individuals or entities attempt to convert illicitly gained funds or assets into a different form to make appear legitimate. For example, Currency conversion, real estate transactions, and investing in cryptocurrency transactions. Individuals or entities attempt to engage in activities like illegal and unethical such as establishing shell companies, nominee owners, and creating offshore accounts So, hope you would have understood that, what is concealment of dirty money..

[Audio] Now let us see, how the link is created between Money laundering & Predicate crime. First we will see, what is predicate crime? It is an illegal activity, that is underlying crime generates motive with illegal proceeds. For example, Bribery, Smuggling, Illegal arms sales, human or drug trafficking So, we should understand that predicate crime is the foundation or the first crime in chain of another crime, From which the dirty money gets originated and attempt to conceal the source of origin and eventually will convert the dirty money to look like clean money. Therefore, predicate crime and money laundering are two separate and independent crimes..

[Audio] Now we will look into, different money laundering crimes. What is concealment by transfer - The purpose of concealment by transfer is to make it difficult for authorities or investigators to trace the assets back to their original source of ownership. Acquisition, possession and use - It is a critical phase in money laundering process, because it allows criminals to enjoy benefits of illegal obtained gains without attracting attention. Facilitation - It is a process or activity making task easier and more effective by assisting individuals or entities in making illegal obtained funds appear legitimate. Failure to report - It depends on the nature of incident, in some cases might result with civil or criminal penalties, including with fines, imprisonment or other legal actions. Tipping-off - It refers to the act of informing or warning a person or entity that they are the subject of a suspicious transaction report or that an investigation is underway their financial activities..

[Audio] Now let us see the how criminals hide dirty money? First stage of hiding the dirty money will start with Placement, that is inserting dirty money into the financial system. This is the riskiest phase for money launderer as they attempt to distance themselves from criminal activities. For example. Blending of funds, Foreign exchange, Breaking up amounts, Currency smuggling. Second stage is Layering that is distancing by repeated transfers. It involves converting the proceeds of crime into another form and creating complex layers of financial transactions to confuse the source and ownership of funds. For example, Using shell companies, Investing in real estates, Reselling high value goods and prepaid access. Third stage is Integration that is money returns to criminal look like legal transaction. It is exceedingly difficult for authorities to trace the funds back to illegal origins. For example, Purchasing luxury assets, capital gains, creating fictitious loans and others..

[Audio] What are the different methods of money laundering? Firstly, let us understand what is typologies. In simple, it is Various methods. However it is very essential to understand, there are various typologies of money laundering prevails which are exhibited here, now let us look into each of these in short. Firstly, what is Structuring - When someone intentionally splits large amounts of money into smaller transactions is called structuring. However there is another name also exist that is called Smurfing. Second is Wire transfer- Moving the money electronically from one bank account to another is called wire transfer either by domestic or international. Real estate- Investing by purchasing land and buildings. High value goods- For example, investing in jewellery and other luxury items . Trade based money laundering - Moving through trade transaction to legitimise their illicit origins. Professional money laundering-provide services to organised crime groups by laundering crime proceeds.

[Audio] Additionally, with other typologies are Using Debit & Credit cards-The card is used to make a purchase with the merchant. Money is passed on by the merchant to another account or withdrawn. Hawala - Hawala can be defined as a money transfer method, which takes place outside the traditional banking system and requires a minimum of two Hawala dealers or hawaladars that take care of the transaction. Money mules- A money mule is a person who receives money from a third party in their bank account and transfers it to another one or takes it out in cash and gives it to someone else, obtaining a commission for it. Concealment of beneficial owner-Criminals employ a range of techniques and mechanisms to obscure their ownership and control of illicitly obtained assets. Shell companies- Companies which does not have any physical presence or operations in their functions is called shell companies. Currency smuggling- Smuggling involves transfer large amount of money through different agents..

[Audio] Let us see, what is terrorist financing? Terrorist financing is a critical component through by which terrorist organizations acquire and manage the funds they need to carry out their activities. For example, activities can include planning and executing acts of terrorism, recruiting members, procuring weapons and supplies, and maintaining the overall infrastructure of the organization..

[Audio] It is a crucial component of the global effort to combat financial crime and ensure the security and stability of financial systems worldwide. So, we should aware and adhere about guidance on Anti-money laundering and combatting finance terrorism following with FATF recommendations, Middle east and North Africa financial action task force guidance, UAE anti money laundering counter finance terrorism law and cabinet decision..

[Audio] There are Six pillars in AML/CFT compliance program Risk assessment: It involves a comprehensive analysis of various factors, vulnerabilities, and threats to identify and address vulnerabilities in their operations. Appointment of Compliance officer: The appointment of a compliance officer is a critical component of an organization's efforts to ensure regulatory compliance with laws, regulations, and internal policies within the organization. Policy and procedures: The Documents which establish the framework for how an organization operates, while internal controls are the mechanisms put in place to ensure that operations align with organizational objectives and comply with relevant laws and regulations. Staff training: It involves equipping employees with the knowledge, skills, and abilities they need to perform their jobs effectively and contribute to the success of the organization. Internal audit: Internal auditing is a key part of helping organisations reach their goals and handle risks well. Customer Due diligence /Enhanced due diligence: A due diligence check involves careful investigation of the economic, legal, fiscal and financial circumstances of a business or individual..

[Audio] Frontline officers, especially those working in financial institutions or businesses that handle financial transactions, have important obligations to fulfill to ensure compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. These obligations are critical for preventing financial crimes and maintaining the integrity of the financial system. Here are some of the necessary obligations of frontline officers, Understanding the clients nature, reading and comprehending anti money laundering, combatting finance terrorism policy, performing due diligence, identifying and reporting suspicious activity as well as any transactions..

[Audio] Some of other obligations of Front line officers are record keeping that is for the purpose is to provide reliable evidence of, and information about, 'who, what, when, and why' something happened. Ongoing monitoring: To ensure compliance with these obligations and demonstrates a commitment to preventing money laundering and terrorist financing. aware about the typologies, avoid tipping off practices, should undergo required training related to money laundering process, and always should remember that, strictly to adhere compliance if any suspicious activity found rather than incline on revenue..

[Audio] In order to identify the validity of customer, necessary due diligence process need to be initiated. Therefore Customer due diligence (CDD) is required for several reasons, primarily related to preventing financial crimes, ensuring the integrity of the financial system, and complying with regulatory requirements. such as customer verification, identifying beneficial owners, enquire source of wealth, reason of transaction, profile of customer, screening process, client risk assessment, ongoing monitoring to maintain the integrity of financial system..

[Audio] Who are the high-risk customers? High-risk customers are individuals, entities, or categories of customers that have an increased potential for involvement in money laundering, terrorism financing, or other illicit financial activities. However, the level of risk associated with a customer can vary depending on various factors, and it's essential for financial institutions and businesses to assess these risks carefully. For example, Banks, Money value transfer, Real estate, Dealers in precious metal stones, Political exposed persons, and high risk nationalities..

[Audio] What is enhanced due diligence? Enhanced Due Diligence (EDD) is a set of procedures and measures that financial institutions and businesses implement to obtain a deeper understanding of high-risk customers, transactions, or relationships. It requires developing a more thorough knowledge of the nature of the customer, the customer’s business and understanding of the transactions in the account than a standard or lower risk customer..

[Audio] What is beneficial ownership? Beneficial ownership, or the ultimate beneficial owner (UBO), is when any natural person ultimately owns or controls a contracted counterparty or a natural person on whose behalf a transaction or activity is being conducted. called a beneficial owner. For example, In case of companies, natural persons who are 25% more shareholders, or more voting rights. In other instance, if no one owns 25% share, then the senior most officer will be called as beneficial owner..

[Audio] What is verification of source of funds? It's important to note that the specific requirements and regulations surrounding source of funds verification can vary by country and industry. Requesting and reviewing documentation that provides evidence of the source of funds. For example, bank statements, tax records, business financial statements, and more. Asking questions to customer about the source of funds to their account and copy of withdrawal slips..