UK: A Month in Money Laundering, July 2005

Last Updated: 15 August 2005
Article by Michael Corrigan

1 July

Philippines admitted to international Egmont group. The Philippines' Anti-Money Laundering Council (AMLC) has been admitted as a member of the Egmont Group, the global network of financial intelligence units. Central Bank Deputy Governor, Amando Tetangco, said the AMLC's decision to admit the Philippines highlighted the success of the Philippines' antimony laundering laws introduced in September 2001. The Philippines will now benefit from access to information in the databases of members nations in order to further combat international money laundering.

Taiwan and Paraguay sign agreement to combat money laundering. An agreement has been signed today between Taiwan and Paraguay in order to tackle money laundering and terrorist financing. The Taiwanese Government said it hopes the pact will help strengthen the two countries' capability in combating cross-border crimes. The agreement facilitates the exchange of financial crime information between the two nations.

UK Financial Services Authority leader clarifies approach to money laundering standards. Philip Robinson, financial crime sector leader at the UK Financial Services Authority (FSA) has said that firms can avoid enforcement action for poor money laundering control by demonstrating they have attempted to put stringent anti-money laundering compliance controls in place. In a speech to industry professionals, Mr Robinson said the key to avoiding enforcement was the ability to show the firm had properly considered the risks and could demonstrate why it had decided on its particular anti-money laundering controls.

Important changes to UK money laundering legislation come into force. Changes to the Proceeds of Crime Act 2002 came into effect today in relation to money laundering. Key changes mean a deposit taking body will no longer commit money laundering offences if, without consent, it carries out transactions involving laundered funds below £250, while firms will now only be required to report money laundering suspicions to the National Criminal Intelligence Service where they either do not know the identity of the suspected money launderer or the whereabouts of laundered property or do not have information which may assist in identifying the suspect or the whereabouts of laundered property .

2 July

Greek Lawyers slam draft national money laundering laws. The Greek Bar Association gathered today to examine the draft law on money laundering which is intended to bring Greek legislation in line with the European Union Directive. The Association has voiced its opposition to both the Directive and the draft law claiming both infringe the fundamental rights of citizens.

Canadian Government issues consultation on changes to money laundering rules. Canadian Finance Minister, Ralph Goodale, has proposed enhancements to Canada's antimony laundering regime that would impose additional requirements on banks and other financial institutions. The proposals, outlined in a consultation paper, are intended to form the basis for review by a Parliamentary Committee of the Proceeds of Crime (Money Laundering) and Terrorist Finance Act. "The proposals contained in the paper are designed to ensure that Canada is at the forefront in the global fight against these crimes", said Mr Goodale.

3 July

Indonesia and Poland agree to cooperate on international crime. Indonesia and Poland have signed a memorandum of understanding against transnational crime including terrorism and money laundering. The agreement includes conditions for the exchange of information on transnational crime. Indonesian President, Susilo Bambang Yudhoyono, said that the two countries hoped the agreement would boost bilateral trade

4 July

Peru welcomed into the Egmont Group on money laundering. Carlos Hamann, Executive Director of Peru's Financial Intelligence Unit, has said that money laundering will be come much more difficult in the country following its recent entry into the Egmont Group, partly thanks to backing from Spain and the United States. He added that at present more than US$2 billion a year may be being laundered in the country. Peru is the world's second largest producer of cocaine, and drug trafficking is the main source of illegal funds passing through the country.

Changes to the UK money laundering reporting requirements on the horizon. Sir Stephen Lander, Chairman of the Serious and Organised Crime Agency, the body which will take responsibility for money laundering from the National Criminal Intelligence Service next April, has told a conference of money laundering professionals that he intends "to make the reporting system less time-consuming and more effective and to create a closer partnership with the private sector".

5 July

Proposed new body to control financial crime in Nigeria. Nigerian President, Olusegun Obasanjo, has submitted proposals for a new financial commission for controlling money laundering to the country’s Parliament. Mr Obasanjo said the move was vital for the nation to be removed from the Financial Action Task Force (FATF) list of non cooperative countries and territories. Previous proposals for a similar financial commission have already been rejected by both chambers of Nigeria's Parliament. The new bill will give the proposed commission more specific powers than previously proposed and it is hoped the commission can be established ahead of a planned visit to Nigeria by the FATF later this year.

6 July

Australia on the back foot over delayed money laundering laws. Justice Minister, Chris Ellison is to meet the new President of the Financial Action Task Force (FATF) to defend Australia's progress towards conforming with international money laundering standards after the introduction of the country’s money laundering bill was delaying following industry concerns over the cost of regulation. Experts say Australia is likely to have failed a FATF assessment in March of its current anti-money laundering standards. The FATF is due to release its report in October. The proposed bill will introduce a risk-based model to allow banks to exclude low risk customers from the requirements.

Latvian banks sign declaration against money laundering. Latvian commercial banks have signed a declaration to combat money laundering in further efforts to stamp out the high rate of financial crime. The banks were threatened by sanctions from the US earlier this year after the country was identified as having poor control over money laundering. The new declaration includes a commitment to identify the clients and beneficiaries of all transactions and it is hoped the measures will eventually alleviate international pressure on the Latvian banking sector.

7 July

US embassy welcomes move by bankers association to combat money laundering. The United States embassy in Riga has welcomed the declaration issued by the Latvian Association of Commercial Banks to take aggressive action against money laundering. The US Embassy is working with the Latvian Association of Commercial Banks to organise an antimony laundering seminar for leading banking representatives later this year. The seminar will be a combined public-private event with the participation of the US Embassy in Latvia, the US Department of the Treasury, the Latvian Financial and Capital Markets Commission and commercial banking representatives.

8 July

Vietnam sets up anti-money laundering agency. The State Bank of Vietnam has announced plans to establish an "Anti-Money Laundering Centre", with the official opening date scheduled for 1 August 2005. This Hanoi based centre will have the authority to order Government agencies, organisations and individuals to provide information over suspected banking transactions. Additionally, it will be in charge of supplying information to the State Bank about illegal activities. The Director and the deputy Directors will be appointed by the State Bank of Vietnam.

Indian capital market intermediaries brought under the Prevention of Money Laundering Act (PMLA). The Bombay Stock Exchange has informed its members about the provisions of the PMLA which brings all capital market intermediaries under its control. The provisions of the PMLA require that all capital market intermediaries maintain a record of all cash transactions that are valued more than US$250. The capital intermediaries will be required to provide details of any such transactions to the Director of the Financial Intelligence Unit.

11 July

Central Bank of Nigeria (CBN) calls for inter-agency committee on money laundering. CBN Governor, Professor Charles Soludo, has stated his plans for addressing money laundering. In a keynote address to an annual anti-money laundering seminar in Lagos, Mr Soludo stated that effective combating of money laundering requires inter-agency efforts between the Government and law enforcers, with the support of the judiciary. He went on to explain the various anti-money laundering procedures in Nigeria can be summarised by the acronym CATCH or Confirm, Appoint, Train, Control and Hold.

12 July

Australia and Philippines sign Memorandum of Understanding (MoU). Australian Justice and Customs Minister, Chris Ellison, has said that the two countries will sign an MoU as part of the annual general meeting of the Asia Pacific Group on Money Laundering. The announcement underlines the increasing credibility of the Philippines following removal from the Financial Action Task Force list of non cooperative countries earlier this year and the Philippines’ recent admittance to the Egmont Group. Australian has previously signed 41 such MoUs with other countries across South-East Asia, the Pacific, South America, Europe and North America.

13 July

Poland strong at tackling money laundering says Finance Minister. Polish Finance Minister, Miroslaw Gronicki, said today that Poland should be considered a country that tackles money laundering well. The Minister was speaking at a meeting of European Union finance ministers. He stated that Poland was working towards gaining membership of the Financial Action Task Force (FATF) in the near future.

UK Financial Services Authority proposes to boost effectiveness of regime by scrapping the anti money laundering sourcebook. A recent consultation paper issued by the FSA has proposed removing the ML sourcebook from the Handbook and replacing it with brief, high-level provisions in the Senior Management, Systems and Controls sourcebook. This less prescriptive approach is designed to put a clear focus on senior management responsibility for AML systems and controls rather than emphasising compliance with detailed requirements. This should create a better fit between FSA requirements and money laundering legislation and industry AML guidance, so that the overlaps are fewer. The role of the MLRO will remain the focus of anti-money laundering activity at firms and for this reason the post will continue as a "controlled function". The proposals have been issued in a pubic consultation paper 05/10.

14 July

China speeds up anti-money laundering bill. China is speeding up implementation of its first anti-money laundering law which is being drafted with the assistance of 17 separate government departments. The existing Criminal Law only extends to money laundering involving drug trafficking, organised crime, terrorism and smuggling. The new law will add crimes of embezzlement and bribery as well as further regulations against money laundering for the securities and insurance industries.

16 July

Belgians challenge legality of money laundering laws in European court. Belgian lawyers have gone to the European Court of Justice to determine whether the reporting requirement placed upon lawyers violates the right to a fair trail. The 2001 Money Laundering Directive requires lawyers in member states to notify the relevant authorities if they suspect their client is involved in money-laundering. The Belgian lawyers have argued that this requirement undermines the right to a fair trial, enshrined in Article 6 of the European Convention on human rights.

18 July

Singapore passes bill for stricter controls on money changers. Singapore has passed a revised bill on money laundering to crack down on Hawala, an informal system for international money transfer used in parts of Asia, Africa and the Middle East that can be used for money laundering. The bill will require all moneychangers to have a minimum paid-up capital of 100,000 Singapore dollars (US$59,200) and will give the power to the central bank to suspend moneychangers’ licenses for failing to comply with money laundering regulations. No date has yet been set for when the bill will come into effect.

20 July

Russian central bank publishes anti-money laundering guidance. The Russian Central Bank has published a guide to combating money laundering and terrorism financing. The document gives recommendations for banks’ internal control rules and for seizure of client assets as well as detailing the common features of transactions which can point to possible money laundering.

21 July

Mexico’s Treasury must make money laundering reports public. Mexico’s Treasury Department has been told to make the information related to suspicious transaction reports public including the names of the financial institutions which have reported suspicious transactions. The order was issued by the Federal Institute of Access to Information (IFAI). Only those cases where any investigations or legal proceedings have been settled will be subject to the order which has been issued under the country’s transparency Law.

22 July

Ukraine adopts new stringent money laundering regulations. The Cabinet of Ministers in the Ukraine has adopted a resolution aimed at tackling tax evasion and money laundering in off-shore territories. Under the resolution, a group comprising the anti-monopoly committee, fiscal and law enforcement agencies is to scrutinise companies whose annual gross income exceeds US$40m and who are involved in exporting spirits, tobacco, scrap metal and grain. The Deputy Prosecutor-General, Tetyana Kornyakova, will head the group which will also conduct a daily monitoring of export valued over US$200,000, VAT refund claims exceeding US$20,000 dollars and purchase of currency worth of more than US$200,000.

25 July

US regulators begin their conference tour on money laundering. The Federal banking and thrift agencies, along with the Financial Crimes Enforcement Network, has announced registration details for the upcoming outreach events where federal regulators are expected to outline their anti-money laundering priorities following concerns that there was inconsistency in the application of money laundering regulations across the industry. The events include a series of conference calls and outreach meetings in San Francisco, Dallas, Chicago, New York and Miami.

27 July

European Federal Bank announces approval of latest draft rules on identification. The European Federal Bank (FBE) has released a statement noting its approval of a proposal to standardise the sender information sent with electronic money transfers. The proposal will require all money transfers to include the name, address and bank account of the sender. The only exceptions to verifying these details will be for transactions under €1000 sent outside the EU or those under €150 sent to a charity in a member state. The proposal will require approval from the European Council of Ministers and EU Parliament before becoming part of EU legislation.

28 July

US officials stress importance of international money laundering standards. US Government officials have stressed the importance of adequate money laundering controls to prevent terrorist financing. James Roberts, acting Deputy Assistant Secretary for special operations and combating terrorism, announced the US Pacific command had been working with partner nations to help nations develop legal expertise in money laundering and encourage nations with strong expertise to provide assistance to less capable nations.

29 July

Thai Government set to broaden list of money laundering crimes. Thai Anti Money Laundering Office (AMLO) Secretary General, Peerophan Prempooti, announced a draft proposal extending the scope of the money laundering offences list. The current Anti-money Laundering bill will be amended to include crimes involving natural resources, the environment, wildlife, foreign exchange, gambling, weapons, labour fraud, bidding collusion, share manipulation and excise-tax offences. Also in the proposal is the provision that half of assets seized under the bill be returned to the state and re-invested in anti-money laundering activities.

Sri Lankan Government planning for new anti-money laundering legislation. Sri Lanka has taken positive steps to make money laundering a criminal offence. At the Sri Lankan Government Cabinet meeting a paper was distributed outlining the proposed new legislation which will be enacted in two separate bills, Prevention of Money Laundering and Financial Transactions Reporting. Constitutional Affairs Minister, Mr Gunasekera, outlined the aims of new laws for financial institutions although no date has been set for the proposed bills as yet.

30 July

US issues banking customer identification guidance. Federal regulatory agencies have issued combined guidance specifically for banks on Section 326 of the US Patriot Act (Customer Identification Program). The guidance focuses on identifying and measuring the risks of money laundering across four areas: types of accounts offered, procedures for opening accounts, bank size and location and underlying customer profiles. The guidance clarifies which subsidiaries are included in the regime, issues over third party involvement, accounts opened by minors, the definition of a "customer" and issues surrounding identification and verification practices.

Looking Forward

Qatar

The Qatar Financial Centre Authority has requested open feedback from industry and experts on its draft anti money laundering regulations.

Kyrgyzstan

In order to improve the country’s financial stability, the World Bank has agreed to help Kyrgyzstan with tackling money laundering in the country. Experts from the world bank are expected to arrive in Kyrgyzstan later this year on a familiarisation mission to assess what needs to be done and how it can be achieved.

Zambia

The Eastern and Southern Africa anti-money laundering group (ESAAMLG) will hold its Plenary and Council of Ministers Meeting in Livingstone, Zambia between 10 – 11 August.

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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