UK: A Month in Money Laundering - September 2005

Last Updated: 1 November 2005
Article by John Hammersley

Most Read Contributor in UK, August 2017

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

This edition includes news on the Royal Institute of Chartered Surveyors (RICS) in the United Kingdom lobbying the UK Government to allow RICS to regulate estate agents under the new EU Directive (5 September); American proposals to reduce currency transactions reporting requirement for seasoned business customers (16 September); and the approval of regulatory standards for Hawala money transfers between 14 Arab states (28 September).

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

Michael Corrigan
Partner, Governance and Regulation
Deloitte & Touche LLP

1 September

Financial intelligence unit to be set up in Kyrgyzstan. The Kyrgyz Acting Finance Minister, Akylbek Dzhaparov, has announced the creation of a financial intelligence unit to track financial services transactions and cash flows in Kyrgyzstan in order to prevent money laundering. No deadline has yet to be set for the opening of the unit.

Arab states take joint measures against money laundering. Mohammad Baasiri, head of the Middle East and North Africa Financial Action Task Force (MENA FATF) has announced that the groups’ members have resolved to set up a system for reviewing each other's measures against money laundering and terrorist financing. The region had made significant strides over the past year, in regulating charities and money transfers, with a further meeting planned in the year to discuss controls for the informal Hawala system, charities and cash couriers.

2 September 

More money laundering rules needed in Argentina. Jorge Brito, the Chairman of the Argentine banking association, Adeba, has said that the country’s financial system does not represent a significant money laundering risk but has admitted that further regulation is needed in order to continue the fight against money laundering and terrorist financing.

5 September

China still has some way to go on anti-money laundering. Deputy Secretary-General of China's State Council, You Quan, has called for a coordinated framework against money laundering with more support from the legislature in order to bring China up to speed with the global standard. His comments were made at a People’s Bank of China (PBOC) conference on anti-money laundering in Beijing. "There is still a room to improve for China's anti-money laundering efforts compared with international standard and the requirement of building a perfect market-oriented economic system", You said. The conference was attended by financial services professionals and representatives of Government departments.

Philippines and China to share money laundering information. The Philippines Central Bank Deputy Governor, Nestor A. Espenilla Jr., has announced the signing of a memorandum of agreement with the Chinese Banking Regulatory Commission to allow the two financial services regulators to share information on suspected money laundering activity. He added that the arrangement will help in preventing financial crime at branches of Chinese owned banks in the country.

Surveyors’ Institute lobbies UK Government to police money laundering in housing profession in the UK. The Royal Institute of Chartered Surveyors (RICS) in the United Kingdom is lobbying the Government to allow it to regulate estate agents and surveyors under the new European Money Laundering Directive. The RICS wants the Government, which must implement the Directive within two years, to allow it the right to regulate its own members. RICS head of regulation policy, Gillian Charlesworth, states the Directive calls for 'competent authorities' to monitor professionals under the money laundering rules. "We are fighting very hard for the RICS to have this role, and the Government appears to be supportive so far" she said.

6 September

US anti-money laundering team visits Russia. Representatives of the United States Financial Crimes Enforcement Network (FinCEN) have visited Moscow on the invitation of the head of the Russian anti-money laundering unit, Viktor Zubkov. The FinCEN delegates will be briefed on the efforts of their Russian counterparts, Rosfinmonitoring, and will discuss developing information exchange, joint investigations and staff exchanges between the two bodies.

7 September

Nigeria firms up regulation on money laundering. The National Insurance Commission completed its seminar for the industry on compliance with money laundering regulations. The seminar made clear plans to punish insurers and brokers who fail to file the appropriate reports to the Nigerian Financial Intelligence Unit (NFIU), and also a jail term for offenders. The Director of Research at the Nigerian Commission, Mr Sunday Thomas, has said that the tighter reporting system is part of the government’s initiative to rid the financial market of drug money and other illegally acquired monies.

8 September 

China to extend anti-money laundering supervision. China’s central bank has said that anti-money laundering supervision will gradually be extended to securities and insurance industries from the banking sector. The country is aiming to establish an effective anti-money laundering supervision system that covers the whole financial system. This is in line with its ambitions to become a member of the Financial Action Task Force (FATF) by 2006. According to the procedures for becoming a member of the FATF, the applicant country must pass an appraisal conducted by the FATF.

9 September 

South Korea wants Financial Action Task Force membership. Following a recent 2 day meeting of the Asia Pacific Economic Cooperation (APEC) finance ministers, Seoul has made a request to the United States, Canada and other countries to support its bid to join the Financial Action Task Force (FATF). Joining the body would enhance South Korea’s international credibility, said South Korean Finance Minister, Han Duck.

11 September 

Number of money laundering cases grows in Russia. During a recent forum organised by the Association of Regional Banks, the head of the Federal Financial Monitoring Service (Viktor Zubkov) said that the number of criminal cases of money laundering and financing of terrorism has grown considerably; reaching 463 this year. Zubkov cited the need to instigate the "destruction of financial schemes that often centre around banks" as a important part of combating money laundering and financing of terrorism.

12 September 

Philippines banks asked to set up anti-money laundering system. Philippine monetary authorities want all commercial banks in the Philippines to implement electronic monitoring systems that can help detect cases of money laundering. The authorities want the electronic monitoring system to provide complete audit trails, statistical analysis and profiling of covered and suspicious transactions and "watch list monitoring" that can check transfer parties. The move comes after the country’s Anti-Money Laundering Law implementation rules were revised as the country increases it’s fight against money laundering.

13 September

South Korea increases financial transactions reporting requirement. From next year, South Korea's Finance Ministry has said that financial institutions will be required to report all cash transactions of 50 million won (US$48,700) or more by individuals to the Korea Financial Intelligence Unit (KFIU), within a day. The cap changes the current requirements which are all cash transactions over 20 million won.

African nations to meeting to discuss development of capital markets. Twenty two or more African countries will be represented in Nigeria to review insider abuse in markets, as well as legal and policy framework for capital market development on the African continent. The meeting is part of the African Capital Markets Training Programme (ACMTP). "The imperatives of sharing experiences, internationalisation of standards, promotion and development of a vibrant capital market within the global context, therefore, makes the proposed training programme apt and desirable," said Musa Al-Faki, Director-general of Nigeria's Securities and Exchange Commission (SEC).

16 September

Lawyers in Australia unease at proposed anti money laundering laws. The Law Council of Australia will lobby the government and regulators to make sure the importance of legal professional privilege is understood in legal advice. The Law Council is acting now as its members are uneasy about proposed anti-money laundering laws that will require lawyers to report suspicious transactions by their clients and its effect on legal privilege for lawyers.

Australian Government to introduce legislation on anti-money laundering I.T systems. A date has yet to be set by the federal government for when banks’ I.T systems will have to comply with anti money laundering legislation. The legislation itself will be drafted and introduced to parliament next year. Advice from the financial industry to the government suggests at least three years will be needed to transition the new anti money laundering systems.

American Government set to reduce reporting requirement. The bill still requires Congressional approval but banks in America may soon not have to file Currency Transaction Reports (CTR) for seasoned business customers (businesses who have been customers for 12 months or more). It is suggested that this could lead to a 75% drop in CTRs, reducing paper work for banks. CTR filings need to be made by banks whenever a customer withdraws or deposits more than $10,000 in cash. "This will affect practically every bank in America," said Wayne Abernathy, a former Treasury Department official who is now an executive director at the American Bankers Association. "This would be very significant relief for banks", he added.

19 September

Increase in reports of money laundering in South Korea. There has been an increase in reports of suspicious transactions in South Korea with the number nearly tripling over the last year. According to the Korean Financial Intelligence Unit, financial institutions made 7,966 reports in the January to August period compared with 2,642 cases a year earlier. The unit attributed the rise to increased awareness of the issue among financial institutions and to the possibility of sanctions on companies that fail to report properly.

21 September

Beneficiaries of money laundering in Bulgaria to be fined up to US$600,000. The government in Bulgaria has announced that any person or company benefiting from money laundering and other crimes, will face fines of up to US$600,000 under the Administrative Violations and Sanctions Act. The government has warned that "The sanction will be imposed without prejudice to the perpetrator's criminal liability", however critics have called the law

"interesting and very difficult to apply" as well as "dangerous and unconstitutional".

UAE and Canada plan joint efforts against money laundering. Senior financial experts from the UAE and Canada met to discuss cooperation against money laundering in the future. The UAE delegation was headed by Sultan Bin Nasser Al Suwaidi, Governor of the Central Bank and Chairman of the National Anti-Money Laundering Committee, while the Canadians were represented by Central Bank and Financial Transactions and Reports Analysis Centre (Fintrack) officials.

22 September

Nigeria to revoke banks' licences for money laundering offences. The Nigerian Economic and Financial Crimes Commission (EFCC) which is responsible for money laundering in the country has warned its banks to cooperate with the commission or risk losing their licences. EFCC's Secretary, Emmanuel Akumaye, issued the warning while receiving a delegation of money laundering experts from the United States Treasury.

Government in Uruguay to create money laundering supervisory body. Uruguay's government has announced plans for a watchdog unit to investigate money laundering activity in the country according to a central bank spokesperson. The unit will be operated by the central bank and the economy ministry. The government is intending to present a bill to parliament later this year in order to approve the legislative framework.

23 September

Nigeria launders US$10bn a year says expert. The Nigerian Economic and Financial Crimes Commission (EFCC) has said that of an estimated US$1 trillion laundered worldwide, US$10 billion is handled by Nigerians. The statement was made by acting Director of the Nigerian Financial Intelligence Unit (NFIU) at a conference organised by the Chartered Institute of Bank of Nigeria (CIBN). He added that the funds were invested mainly in property and assured the conference that despite the significant sums involved, the NFIU was working hard to help banks tackle the problem.

Pakistani parliament reviews anti-money laundering bill. The Pakistani Government has put its new Anti-Money-Laundering Bill before parliament. The Bill proposes that those convicted could serve up to a four-year prison term and be fined up to US$16,500. It also outlines the procedures for the confiscation of the proceeds of crime. It is hoped a financial intelligence unit will be created within the central bank, with responsibility for investigation and co-coordinating with other agencies.

28 September

Hawala Standards Approved. Mohammad Baasiri, President of the Middle East and North African Financial Action Task Force (MENA FATF) announced that 14 Arab States have approved wide ranging standards for regulating Hawala, money transfers and other types of cash couriers.

30 September

Vietnam’s banks waiting for guidelines from central bank. Vietnamese banks are still awaiting guidance from the State Bank of Vietnam (SBV), regarding the new transaction reporting requirements. A new Anti-Money Laundering Centre is being setup and all banks will be required to report transactions over US$12,600. However, guidance on implementation of new anti-money laundering measures has yet to be issued.

Russian fight against money laundering continues. At the Russian Council of Commonwealth Independent States (CIS) police chiefs, Interior Minister Rashid Nurgaliyev announced that Russian law enforcement had identified 6,000 money laundering crimes since the beginning of the year, a 3.5% increase on the previous year.

Switzerland delays adoption of FATF’s revised anti-money laundering guidelines. Switzerland will delay take up of revised Financial Action Task Force (FATF) money laundering legislation. The delay comes as the Swiss government looks to gather more information after recent criticism and Switzerland’s own proposals for adoption of the international standards are re-evaluated. New Swiss insider trading laws which were encompassed in the money laundering guidelines remit will also have to wait before being passed into law.

Looking Forward

FATF will hold second plenary meeting in Cape Town. FATF will hold it’s second plenary meeting of the FATF XVII between 13th and 17th February 2006.

Canada to take FATF presidency. The Government of Canada will take the Presidency of the FATF from July 2006 for 12 months.

U.S.A Jewellers Vigilance Committee (JVC) and the Jewellers Board of Trade (JBT) have launched a seminar for complying with anti-money laundering measures. 1 January 2006, is the deadline for jewellers to have anti-money laundering procedures in place. 

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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