UK: A Month in Money Laundering - June 2005

Last Updated: 27 July 2005
Article by John Hammersley

Most Read Contributor in UK, August 2017

Welcome to the June 2005 edition of A Month in Money Laundering

This edition includes news on the first anti-money laundering regulations in Vietnam (7 June) and the meeting of the Financial Action Task Force in Singapore (8, 10 and 11 June).

Also covered this month is the increased funding offered by Russia to the Eurasian Group on Money Laundering (23 June).

These issues and others are summarised in this edition of A Month in Money Laundering

Regards
Michael Corrigan
Partner, Governance and Regulation
Deloitte & Touche LLP

1 June

American bankers continue to criticise inconsistent anti-money laundering rules. The America's Community Bankers (ACB) group has asked federal bank regulatory agencies to improve consistency in its investigations and make it easier for ACB members to interpret antimoney laundering regulations. ACB urged the regulators to work with the Financial Crimes Enforcement Network and the Justice Department to develop a common, simplified policy on suspicious activity reporting including information on the use of monitoring software and the role of the Office of Foreign Assets Control.

2 June

Russian monitoring unit reports satisfactory progress. The head of the Federal Financial Monitoring Service, Viktor Zubkov, reported that the Financial Intelligence Unit’s database now lists four million suspicious activity reports, 1,500 of which were passed to law enforcers in the last year. Mr Zubkov also reported that the unit had made significant progress in investigating cases involving creation of fraudulent contracts with dummy foreign companies for consulting and other services. In the past year the amount of cash being laundered through Russia by this method has halved from the figure of US$ 9.0 billion in 2003, he announced.

6 June

Brazil hosts international conference on corruption. Representatives from about 100 countries including governmental and non-governmental organisations have arrived in Brazil's Capital, Brasilia, to participate in the 4th Global Forum on Fighting Corruption. Money laundering will be one of the central topics of the meeting where experts and officials will assess the effectiveness of international cooperation measures. Delegates will discuss new investigative strategies and share successful experiences in the recovery of laundered money.

7 June

Vietnam issues first law against money laundering. The Vietnamese government issued its first ever decree on money laundering today. This decree marks the end of three years of preparation and will take effect from 1 August this year. The laws will be applicable to all Vietnamese and foreign individuals conducting business in Vietnam. From August 1 any transactions conducted in cash, gold or foreign currencies worth VND200 million ($12,730) or more as well as any savings account worth VND500 million ($31,850) or more will be subject to transaction monitoring procedures. The decree also outlines the measures that can be taken against suspected money launderers including freezing of accounts, asset seizure, fines and imprisonment. The law also paves the way for establishment of a financial transaction monitoring unit in the country.

8 June

Financial Action Task Force delegates meet in Singapore. Anti-money laundering experts from over 30 countries attended the plenary meeting of the Financial Action Task Force (FATF) in Singapore to outline new measures to prevent the financing of terrorism and organised crime in the region. Malaysia, Indonesia, Thailand and the Philippines were all asked to outline their policies to prevent money laundering and measures to combat terrorist funding at the meeting. Further details of the meeting are available on the FATF website at http://www.fatfgafi. org/dataoecd/41/27/34988026.pdf

9 June

Experts in Ireland criticises EU money laundering directive. A committee is comprised of ploice, the Department of Finance, the Department of Justice, and the Irish Financial Services Authority have joined together to clarify how the directive will impact on Irish businesses. The new 3rd EU Directive extends money laundering requirements beyond financial institutions to professions such as accountants and solicitors. The new laws require that all businesses dealing in single or linked transactions in excess of 15,000 Euros will have to report suspicious transactions to the authorities. The committee hopes to publish its findings soon.

10 June

FATF issues guidance on requirements for international money transfers. The Financial Action Task Force (FATF) has issued an interpretative note to its Special Recommendation 7 on electronic transfers of funds. The note explains the record keeping and originator information that must be maintained by all parties for domestic and cross-border wire transfers above a de minimus threshold (US$ 1,000). Transactions using a credit or debit card are excluded from the requirements as well as many transfers between financial institutions.

11 June

55 countries agree to step up efforts to curb money laundering. Representatives from 55 Countries reiterated their commitment to implement tighter measures to counter money laundering and terrorist financing at the plenary meeting of the Financial Action Task Force (FATF). The meeting recognised the urgency to bring "alternative remittance systems" under a regulatory framework. Asia Pacific Group on Money Laundering head of secretariat, Rick McDonnell, presented results of survey of 62 case studies in the Asia-Pacific region, indicating some US$ 8 billion flowed through alternative remittance systems in the 6 month period of the study.

14 June

Vietnamese Government holds training sessions for money laundering professionals.

The Vietnamese Ministry of Public Security, in cooperation with the French Ministry of the Interior, held a training course on anti-money laundering in Ho Chi Minh City. The session, held for local anti-money laundering professionals, was part of an ongoing anti-money laundering co-operation programme between France and Vietnam.

16 June

Ukraine and Croatia sign memorandum on money laundering. Ukrainian Prosecutor- General and Croatian Chief State Prosecutor signed a memorandum on cooperation in fighting transnational crime and money laundering. Both countries confirmed their determination to fight money laundering while the Ukrainian Prosecutor-General's Office announced it intends to sign similar agreements with other European states and that agreements with Germany and Poland are currently being prepared.

17 June

Pakistan drafts anti-money laundering law. Pakistan is striving to tighten its regulation on money laundering with a new anti-money laundering Law developed by the Finance Ministry, in consultation with the ministries of Law, Foreign Affairs, the National Accountability Bureau, Federal Investigation Agency, Securities and Exchange Commission of Pakistan and the State Bank of Pakistan. The law has been sent to the Federal Cabinet for approval.

20 June

Albanian bankers attend anti-money laundering workshop. A workshop entitled "Prevention of money laundering", organised by the Bank of Albania (BoA) and the Albanian Banks Association opened today in the country. Banking and anti-money laundering professionals from the Albanian banking sector attended. BoA Governor, Adrian Fullani, in his opening address suggested that the existing law on prevention of money laundering should be reviewed and that cash payments should be restricted for certain transactions.

International Momentary Fund money laundering team begins visit to Azerbaijan. A visit by the International Monetary Fund (IMF) has arrived in the capital Baku to look at ways of improving money laundering and counter- terrorism controls. The IMF team will hold meetings with the representatives of the Justice Ministry, Foreign Ministry, Interior Ministry and the Prosecutor General's Office. Officials from Azerbaijan have expressed hope that the visit will signal the IMF's intention to lend technical assistance to the country to combat money laundering.

22 June

Korea reveals increase in money laundering activity. Foreign exchange transactions used for money laundering grew sharply in the first five months of the year, the Korea Customs Service announced today. The agency reported 883 transactions worth some US$ 1.5 billion have been found so far this year which represents a 42 percent increase compared with the period a year earlier.

FSA sector leader highlights problems with money laundering regulation. Successful regulation of money laundering is made difficult because some financial services firms are interpreting the existing laws too narrowly, said Philip Robinson, FSA's financial crime sector leader. He added that financial services firms must prioritise detecting and deterring crime, rather than aimlessly following the regulations to avoid enforcement action. Mr Robinson’s comments were made in a speech on financial crime today.

23 June

Russia offers greater funding to combat money laundering in Europe. Russia has offered further financing of US$ 3 million to the Eurasian Group on money laundering to fund projects aimed at preventing money laundering. Head of the Federal Financial Monitoring Service, Viktor Zubkov, said "In particular, we plan to use the money to evaluate the EAG countries’ technical needs, create a training centre in Moscow and train personnel for this organisation".

24 June

Iraq to join regional money laundering task force. Iraq is to join a new regional body against terrorist financing and money laundering, Muhammad Baasiri, President of the Middle East North Africa Financial Action Task Force (MENAFATF), announced today. "Should Iraq join and become a member, our body would be in a position to provide technical assistance in the area of fighting money laundering and terrorist financing," he said. Mr Baasiri added that Mauritania, Djibouti and Libya had also expressed an interest in joining.

25 June

India announces extended money laundering regulations for brokers and exchanges. The Reserve Bank of India, along with the Securities and Exchange Board of India and the Insurance Regulatory and Development Authority, are developing revised anti-money laundering rules for brokers and insurance companies. The new regulations will be in line with the recommendations of the Financial Action Task Force on money laundering. Broking companies and stock exchanges will be required to monitor transactions and data collated by the RBI and the IRDA will be sent to the national Financial Intelligence Unit (FIU).

28 June

Zimbabwe aiming to establish Financial Services Authority. Zimbabwean Finance Minister, Dr Herbert Murerwa, indicated his ministry was attempting to develop consolidated financial services regulation through the establishment of a Financial Services Authority. The Government has united with the reserve Bank of Zimbabwe to provide a stable and supportive legal framework for financial institutions in line with international policies and standards.

UK accountants warn of rising cost of anti-money laundering legislation. The Corporation of London in cooperation with the Institute of Chartered Accountants in England and Wales has released a report on the high costs of complying with financial services regulation in the UK. The report indicates that the high costs and heavy regulation in the country may encourage businesses to locate abroad. The report, based on interviews with antimoney laundering experts and on-line survey responses, highlights the negative response to the current framework implemented by the UK Financial Services Authority.

29 June

Egmont Group Plenary Meeting held in Washington. At the meeting, Qatar, Honduras, Bosnia Herzegovina, Serbia, San Marino, Peru and the Philippines all gained membership of the Egmont group of financial intelligence units (FIU), taking membership to 101 units. The informal organisation of FIUs aims to increase cooperation between FIUs in the areas of information exchange, training and the sharing of expertise. Yiia Shan-Mao, Director of Taiwan’s investigation Bureau and Carlos Yegros, Director General of Paraguay’s FIU announced at the meeting they have signed a pact to cooperate through information exchange.

30 June

US releases anti-money laundering examination manual. The US Federal Financial Institutions Examination Council has issued an investigator’s manual in an effort to encourage uniform standards in the investigation of US banks’ money laundering procedures. The Manual developed by the Federal Banking Agencies will help investigators understand an organisation’s compliance procedures to protect against money laundering. Banks have been encouraged to participate in the forthcoming series of briefing events including national and regional meetings.

Draft Bill on fighting terrorism and money laundering approved in Mauritius. Mauritian President, Dieng Boubou Fabra, confirmed the Senate had approved a draft bill on fighting money laundering. The new legislation follows related legislation including a Banking Bill, Bank of Mauritius Bill, Securities Bill, Long Term Insurance Bill, Short Term Insurance Bill, Extradition Bill all announced today. These Bills will incorporate international standards in matters of regulation and supervision of the financial services sector.

Financial Action Task Force (FATF) has new South African head. The Financial Action Task Force has announced a change in leadership as South African former Education Minister, Kader Asmal, was appointed President, replacing the previous French leader, Jean Louis Fort. South Africa is the only member from Africa and Professor Asmal explained his intensions to introduce FATF initiatives that were relevant to developing nations, helping governments meet their developmental objectives and counter money laundering and terrorist financing.

Looking Forward

Zambia

The Eastern and Southern Africa Anti-money Laundering Group (ESAAMLG) will hold its Plenary and Council of Ministers Meeting in Livingstone, in Zambia between 10 and 11 August 2005.

Myanmar

Myanmar and Thailand are due to sign a memorandum of understanding (MoU) on money laundering in the near future. The MoU will require the two countries to cooperate on information sharing for money laundering control.

Australia

Banks in the country have forced changes to proposed new anti-money-laundering laws. Justice and Customs Minister, Chris Ellison, announced changes are being drafted and are due for release within weeks after Australia’s major banks argued that the proposed new regime would cost them more than Aus$ 100 million over the next four years. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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