60 Best Money Laundering Research Papers, Books and web links.

60 BEST ANTI-MONEY LAUNDERING AND COUNTER TERRORISM FINANCING RESOURCES GLOBALLY

Research into money laundering goes deeper than reading ACAMS or Linkedin. Here we have provided links to the 60 Best Money Laundering Research Papers, books and web articles.

In the coming weeks we will be blogging about these articles and what they mean to the industry. Stay tuned and register with the site (bottom of the page) if you want to get our posts via your inbox (sent once a month only – no spam!)

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Title & LinkAuthor & Link to BibliographyDescription
(scroll to left to read)
Money launderingM Levi, P Reuter – Crime and Justice, 2006 – journals.uchicago.eduTechniques for hiding proceeds of crime include transporting cash out of the country, purchasing businesses through which funds can be channeled, buying easily transportable valuables, transfer pricing, and using “underground banks.” Since the mid-1980s …
 Dirty money: The evolution of money laundering counter-measuresWC Gilmore – 1999 – ncjrs.govThe first chapter provides an overview of the problem, as it notes that estimates of money from criminal activities range from 300 to 500 billion US dollars annually, money that is available for laundering. Such quantities of money, often linked with organized crime …
How big is global money laundering?J Walker – Journal of Money Laundering Control, 1999 – emerald.comKnown incidents of money laundering involving large amounts of money generated from crime are of tremendous public interest and are consequently given wide publicity. A wide range of national and international agencies have attempted to quantify organised crime …
 Macroeconomic implications of money launderingPJ Quirk – Washington, Fondo Monetario Internacional, WP, 1996 – elibrary.imf.orgThis paper reviews the main analytical, empirical, and policy issues related to the macroeconomic implications of money laundering. The paper discusses, first, how money laundering can be measured, given that it is unobservable, and reports cross-section …
 Chasing dirty money: The fight against money launderingP Reuter – 2005 – books.google.comOriginally developed to reduce drug trafficking, efforts to combat money foundering have broadened over the years to address other crimes and, most recently, terrorism. In this study,[the authors] look at the scale and characteristics of money laundering, describe and …
 Money laundering: a new international law enforcement modelG Stessens – 2000 – books.google.comThis book gives a broad analysis of the legal issues raised by the international fight against money laundering. It offers an extensive comparative research of the criminal and preventive law aspects from an international perspective. Stessens portrays money laundering as a …
Money laundering: muddying the macroeconomyPJ Quirk – Finance and Development, 1997 – search.proquest.comIMF staff went to a small island country to assess economic developments. As they walked around the capital, they noticed a surprisingly large number of small banks (more than 100 in a country of less than 100,000 people). A year later, it was revealed that many of these …
Money laundering and its regulationM Levi – The Annals of the American Academy of Political …, 2002 – journals.sagepub.comThis article examines definitions of” money laundering” and the conceptual and actual role its regulation plays in dealing with drug markets. If laundering is prevented, incentives to become major criminals are diminished. It identifies and critiques three aspects of harm …
Money laundering: the economics of regulationD Masciandaro – European Journal of Law and Economics, 1999 – SpringerEconomic research has not yet systematically undertaken the analysis of the existing interactions between criminal economy and financial markets. The present work belongs to a research field increasingly interested in such issues and focuses on the economic analysis of money laundering …
Money laundering: some factsF Schneider, U Windischbauer – European Journal of Law and Economics, 2008 – SpringerThis paper tackles the quite difficult topic of money laundering. After defining money laundering, and after explaining the three stages (steps), placement, layering and integration, the paper tries a quantification and estimation of the volume and development of …
Money laundering and the international financial systemV Tanzi – 1996 – ideas.repec.orgThe IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues …
Measuring Global Money Laundering:” The Walker Gravity Model”J Walker, B Unger – Review of Law & Economics, 2009 – degruyter.comMeasuring global money laundering, the proceeds of transnational crime that are pumped through the financial system worldwide, is still in its infancy. Methods such as case studies, proxy variables, or models for measuring the shadow economy all tend to under-or …
Money laundering—a global obstacleB Buchanan – Research in International Business and Finance, 2004 – ElsevierOne of the biggest obstacles to maintaining an effective operating international financial system is money laundering. A global phenomenon and international challenge, money laundering is a financial crime that often involves a complex series of transactions and …
An inquiry into money laundering tools in the Bitcoin ecosystemM Möser, R Böhme, D Breuker – 2013 APWG eCrime …, 2013 – ieeexplore.ieee.orgWe provide a first systematic account of opportunities and limitations of anti-money laundering (AML) in Bitcoin, a decentralized cryptographic currency proliferating on the Internet. Our starting point is the observation that Bitcoin attracts criminal activity as many …
 Black finance: the economics of money launderingD Masciandaro, E Takats, B Unger – 2007 – books.google.com” The recent dramatic wave of terrorist attacks has further focussed worldwide attention on the money laundering phenomena. The objective of this book is to offer the first systematic analysis of the economics of money laundering and its connection with terrorism finance …
 Critical reflections on transnational organized crime, money laundering and corruptionME Beare – 2003 – books.google.comTransnational crime, organized crime, money laundering and corruption are four concepts that have gained and continue to gain an international and domestic profile. Is the information given to the public concerning these concepts distorted by the vested interests of …
 The amounts and the effects of money launderingB Unger, M Siegel, J Ferwerda, W de Kruijf… – Report for the Ministry of …, 2006 – ftm.nl0.4. The amount of money laundered is sizeable 0.5. Where is the criminal money being laundered and placed? 0.6. The Netherlands are a transit country of crime and criminal money 0.7. What are the effects of money laundering? 0.8. The long term dangers of money  …
The consequences of money laundering and financial crimeJ McDowell, G Novis – Economic Perspectives, 2001 – ncjrs.govMoney laundering is seen as critical to the effective operation of transnational and organized crime. However, money laundering effects a country’s economy, government, and social well-being. This article briefly reviewed both the economic and social costs of money laundering …
 Money laundering: A guide for criminal investigatorsJ Madinger – 2011 – books.google.comMany changes have occurred in the twenty-five years that have passed since the enactment of the Money Laundering Control Act of 1986. The law has been amended, new underlying crimes have been added, and court decisions have modified its scope. The Act remains an …
 The hawala alternative remittance system and its role in money launderingPM Jost, HS Sandhu – 2000 – peacepalacelibrary.nlThe components of hawala that distinguish it from other remittance systems are trust and the extensive use of connections such as family relationships or regional affiliations. Unlike traditional banking or even the’chop’system, hawala makes minimal (often no) use of any …
The fight against money launderingH Geiger, O Wuensch – Journal of Money Laundering Control, 2007 – emerald.comPurpose–To provide an economic view on the costs and benefits of anti‐money laundering (AML) efforts. Design/methodology/approach–Based on a international, comparative study conducted in Switzerland, Singapore and Germany, the authors outline the impact of AML …
Bitcoin and money laundering: mining for an effective solutionD Bryans – Ind. LJ, 2014 – HeinOnlineTechnology forges ahead at a rapid pace, whether we like it or not. Criminals recognize this inevitability and use technological improvements to advance their craft,’committing crimes from half a world away in real time. Meticulous criminals also use technological …
Corruption and money laundering: a symbiotic relationshipD Chaikin, J Sharman – 2009 – Springer
 Financial havens, banking secrecy and money-launderingJA Blum, M Levi, RT Naylor, P Williams – 1998 – amnet.co.ilThe major money laundering cases coming to light in recent years share a common feature: criminal organizations are making wide use of the opportunities offered by financial havens and offshore centres to launder criminal assets, thereby creating roadblocks to criminal …
A typological study on money launderingP He – Journal of Money Laundering Control, 2010 – emerald.comPurpose–The purpose of this paper is to make objective descriptions on various money‐laundering techniques and to put forward countermeasures in order to combat money laundering more effectively and efficiently. Design/methodology/approach–This paper …
 Reference guide to anti-money laundering and combating the financing of terrorismPA Schott – 2006 – elibrary.worldbank.orgThis second edition of the Reference Guide is a comprehensive source of practical information on how countries can fight money laundering and terrorist financing. Aimed at helping countries understand the new international standards, it discusses the problems …
 Money laundering policyPC Van Duyne – Fears and Facts, 2003 – petrusvanduyne.nlIt is difficult to argue about the nature of smells. Some of them do not even have names. But one kind of smell has certainly been nominated and changed in our appreciation: the ‘moral smell’of money. Today the adage ‘money does not smell’does not apply any more. Now we …
Responding to Money LaunderingE Savona – 2005 – books.google.comResponding to Money Laundering has its origin in the International Conference on Preventing and Controlling Money Laundering and the Use of Proceeds of Crime: A Global Approach organised by ISPAC, the International Scientific and Advisory Board of the United …
 Dirty money: the evolution of international measures to counter money laundering and the financing of terrorismWC Gilmore – 2004 – books.google.comThis is the third edition of this publication which explores key issues in the fast evolving field of money laundering and terrorist financing, and which has been restructured so as to fully reflect the high international priority given to tackling the financing of terrorism since …
Money laundering and globalizationP Alldridge – Journal of law and society, 2008 – Wiley Online LibraryThe article traces the various imperatives generated by the combination of the money laundering panic of the late 1990s with the advent of globalization. If there is to be an attempt legally to regulate laundering, it (laundering) must be a relatively serious offence …
Money launderingN Morris-Cotterill – Foreign Policy, 2001 – JSTORFrom Moscow to Buenos Aires, money laundering scandals sap economies and destabilize governments. Policymakers blame crime cartels, tax havens, and new techniques like cyberlaundering. But dirty money long predates such influences. Without unified rules …
The economics of crime and money laundering: does anti-money laundering policy reduce crime?J Ferwerda – Review of Law & Economics, 2009 – degruyter.comAnti-money laundering policy has become a major issue in the Western world, especially in the United States after 9-11. Basically, all countries in the world are more or less forced to cooperate in the global fight against money laundering. In this paper, the criminalization of …
 Dirty dealing: the untold truth about global money laundering, international crime and terrorismP Lilley – 2003 – books.google.comPraise and ReviewsEntertaining, well written and well presented.JOHN MULQUEEN, The Irish TimesPaints an alarming picture of the power and scale of todays crooked and corrupt financial world. Lilley has done his homework.THE IODS DIRECTOR MAGAZINESChoice of …
System and method for analyzing and dispositioning money laundering suspicious activity alertsBJ Kloostra, C Dalvi, BN Behm – US Patent App. 12/258,784, 2009 – Google PatentsA system and method for analyzing, dispositioning, recording, reviewing, and managing potentially suspicious financial transactions. In some cases, the system models the steps taken by a subject matter expert to reach a conclusion so that a novice can follow similar …
A theory of “Crying Wolf”: The economics of money laundering enforcementE Takáts – The Journal of Law, Economics, & Organization, 2011 – academic.oup.comThe article shows how excessive reporting, called “crying wolf”, can dilute the information value of reports and how more reports can mean less information. Excessive reporting is investigated by undertaking the first formal analysis of money laundering enforcement …
Power and discourse in policy diffusion: Anti-money laundering in developing statesJC Sharman – International Studies Quarterly, 2008 – academic.oup.comTwenty years ago not a single country had a policy against money laundering; currently, over 170 have very similar anti-money laundering (AML) policies in place. Why have so many countries with so little in common adopted the same policy so rapidly? This extensive …
 Global financial crime: terrorism, money laundering and offshore centresD Masciandaro – 2017 – books.google.comThe scope for financial crime has widened with the expansion and increased integration of financial markets. Money laundering, terrorism financing and tax crime have all changed in both nature and dimension. As new technologies reduce the importance of physical …
AI fights money launderingJ Kingdon – IEEE Intelligent Systems, 2004 – ieeexplore.ieee.orgThe bank had approached Searchspace, formed by re- searchers from the Intelligent Systems Lab at University College London in 1993. It applies adaptive and learning- systems approaches to a range of business and finance tasks. However, until then, we had principally developed …
 Transnational criminal organizations, cybercrime, and money laundering: a handbook for law enforcement officers, auditors, and financial investigatorsJR Richards – 1998 – books.google.comWRITTEN BY A LAW ENFORCEMENT PROFESSIONAL FOR OTHER LAW ENFORCEMENT PERSONNEL IN THE TRENCHES This book examines the workings of organized criminals and criminal groups that transcend national boundaries. Discussions …
Trade-based money laundering and terrorist financingJS Zdanowicz – Review of law & economics, 2009 – degruyter.comMoney laundering can be defined, generally, as the process of concealing the existence, illegal source, or application of income derived from a criminal activity, and the subsequent disguising of the source of that income to make it appear legitimate. Deception is the heart of …
The tenuous relationship between the fight against money laundering and the disruption of criminal financeMF Cuéllar – J. Crim. L. & Criminology, 2002 – HeinOnlineThis article examines the fight against money laundering as a case study of the separation between an enforcement system’s objectives and performance. To launder money is to hide its illegal origin. The fight against money laundering is supposed to disrupt laundering in its …
 Detecting money laundering and terrorist financing via data miningJS Zdanowicz – Communications of the ACM, 2004 – dl.acm.orgThe use of international trade to move money, undetected, from one country to another is one of the oldest techniques used to circumvent government scrutiny. Either overvaluing imports or undervaluing exports can achieve this transfer. If an imported prod- uct is overvalued, the foreign …
Money laundering regulation: the micro economicsD Masciandaro – Journal of Money Laundering Control, 1998 – emerald.comThe analysis of the interactions between the criminal economy and the financial markets has not yet been systematically studied by the economists. This study belongs to a current research interested in this area, ie the economic analysis of money laundering. The work is …
Money laundering: The crime of the’90sGR Strafer – Am. Crim. L. Rev., 1989 – HeinOnlineIn the Money Laundering Control Act of 1986,’codified at sections 1956 and 1957 of Title 18 of the United States Code, Congress for the first time attempted to define and prohibit a category of activity known colloquially as” money laundering.” During an election year frenzy …
Applying data mining in investigating money laundering crimesZ Zhang, JJ Salerno, PS Yu – Proceedings of the ninth ACM SIGKDD …, 2003 – dl.acm.orgIn this paper, we study the problem of applying data mining to facilitate the investigation of money laundering crimes (MLCs). We have identified a new paradigm of problems—that of automatic community generation based on uni-party data, the data in which there is no direct …
Turnover of organized crime and money laundering: some preliminary empirical findingsF Schneider – Public choice, 2010 – SpringerAfter a short literature review, the paper quantifies the turnover of organized crime with the help of a MIMIC estimation procedure for the years 1995 to 2006 for 20 highly developed OECD countries. The volume of turnover from organized crime was US-270billionintheyear1995forthese20OECDc …
Money laundering: an international challengeLA Barbot – Tul. J. Int’l & Comp. L., 1995 – HeinOnlineIn the words of South American drug barons,” dirty money is best passed through clean hands.” 1 Money laundering is often defined as” the process by which one conceals the existence, illegal source or illegal application of income, and then disguises that income to …
Money laundering and its regulationA Chong, F Lopez‐De‐Silanes – Economics & Politics, 2015 – Wiley Online LibraryThe recent wave of terrorist attacks has increased the attention to money laundering activities, and the role played by the regulatory frameworks controlling feeder activities. We investigate empirically the determinants of money laundering and its regulation in close to …
 Money laundering: a concise guide for all businessD Hopton – 2009 – books.google.comWorldwide, anti-money laundering regulations and legislation have become one of the weapons of choice of governments that are fighting global terrorism and criminality. In this updated edition of Money Laundering, Doug Hopton explains how The Money Laundering  …
Virtual money laundering: the case of Bitcoin and the Linden dollarR Stokes – Information & Communications Technology Law, 2012 – Taylor & FrancisThis paper presents an analysis of the money laundering risks of two virtual currencies, the Linden dollar, the in-world currency of the interactive online environment Second Life, and Bitcoin, an experimental virtual currency that allows for the transfer of value through peer-to …
 Anti-Money Laundering: international law and practiceWH Muller, CH Kalin, JG Goldsworth – 2007 – books.google.comAnti-Money Laundering is the definitive reference on money laundering and practice. First an outline will be given of the general approach taken by supra-national organisations like the United Nations and the European Council. Next the approach taken by international …
 Crime, illicit markets, and money launderingP Williams – Managing global issues: Lessons learned, 2001 – carnegieendowment.orgPhil Williams organized crime is perhaps best understood as the continuation of commerce by illegal means, with transnational criminal organizations as the illicit counterparts of multinational corporations. During the 1990s, transnational organized crime—and the …
 Criminal finance: The political economy of money laundering in a comparative legal contextK Hinterseer – 2002 – books.google.comLike it or not, money launderers are major players in the world’s economy. Their strategies constrain national economic policies and undermine financial institutions. With the advent of secure transfer technologies, and with the help of modern financial theories of derivatives …
A comparative guide to anti-money launderingM Pieth, G Aiolfi – 2004 – academia.eduMoney laundering is the process by which criminals attempt to conceal the source and ownership of the proceeds of their illicit activities; if successful, the criminal maintains control and access to these funds when and where he chooses. The efforts to combat this …
 Money launderingFAT Force – Policy Brief July 1999, 1999 – bahamasb2b.comThe goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the act. Money laundering is the processing of these criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to …
Money Laundering: The Scope of the Problem and Attempts to Combat ItS Sultzer – Tenn. L. Rev., 1995 – HeinOnlineMoney laundering is the process of taking the proceeds of criminalactivity and making it appear legal. Money laundering has been called the” lifeblood” of crime because, without cleansing the profits of crime, the criminal enterprise cannot flourish. While drug money  …
Money laundering law: Forfeiture, confiscation, civil recovery, criminal laundering and taxation of the proceeds of crimeP Alldridge – 2003 – Bloomsbury Publishing
Money laundering and financial means of organized crime: some preliminary empirical findingsF Schneider – Paolo Baffi Centre Research Paper, 2008 – papers.ssrn.comAfter giving a short literature review, the paper tries a quantification of the volume of money laundering activities, with the help of a DYMIMIC estimation procedure for the years 1995 to 2006 for 20 highly developed OECD countries. The volume of laundered money was 273 …
Money‐Laundering: Estimates in FogPC Van Duyne – Journal of Financial Crime, 1994 – emerald.comThe paper examines certain problems in determining the extent of money‐laundering. The author first discusses the methodological problems inherent in assessing its volume. He then discusses two methods to estimate the extent of money‐laundering. One method is …

How to Hide 2 Million Barrels of Sanctioned Oil

Avoiding OFAC/UN sanctions is like a game of cat and mouse played out on the world stage. The players are office-bound analysts checking transactions for sanctioned individuals/nations, shipping lines trying to disguise their routes, customs and excise on both sides of the trade and the regulators honing in on troubled states.

Currently we have Iran and North Korea trying to peddle their wares through international trade. Oil from Iran and Coal from ‘Rocketman’ Kim Jong-un.

In this post we will describe how the two nations sneak their trades past banks and regulators using nefarious and devious tactics to avoid detection, focusing on oil from Iran.

In any deceptive activity one of the core methods is the art of disguise. And no matter what crime type, all crimes present opportunities to detect through Locard’s law. That is to say, in every crime a criminal will leave behind evidence, be that trace, physical or nowadays digital.

With that last paragraph established, any good ML analyst or Compliance Officer needs to consider how Iran is disguising activity and what can be used to link North Korea and Iran to sanction offences.

Going further, who else in the chain is culpable? What other international actors are involved in the chain – the financial chain or the customs chain?

Hide 2 million barrels of oil…

I’m going to focus on the movement of 2 million barrels of oil, at today’s prices about $64 million.

The Strait of Hormuz is a busy shipping lane. 21 million barrels of oil move through the strait every day – at least when we’re not in the middle of a pandemic anyway.

You would think moving a hulking great tanker full of oil would be impossible to do stealthily. Yet not so fast. In the image you can see the shipping traversing the strait on a busy day. Those markers are satellite tracking markers, tracking every ship on its route. The first step to break the link is to switch the tracker off.

This clearly hides the ship from satellite tracking and means the ship can go literally anywhere. So long as it stays out of the way of any military assets that will be able to spot the ship through a much more human way – the eye-ball!

So the next step is to obfuscate further by re-badging the ship to a neutral country, like the British Virgin Islands. Registering it with a ‘one ship’ company that has no place in the BVI other than to hide identity. Changing the ships name to further confuse what the tanker is doing in the strait.

Then the ship can simply meet up with another tanker and transfer the load, ship to ship out at sea or even in the strait itself. The re-badged ship will be on a bogus journey between two innocent states, making it look like the oil is coming from a legitimate source. And so the oil is transferred to the ship that then transports the oil to its destination.

An analyst searching the ships name for adverse inference will now find nothing – the new ships name can even replicate another ship on international registers further confusing the picture.

The focus now is on the paperwork. A credit letter from a credible bank to confirm buyer funds for transfer to the seller – usually from affiliate branches to large western banks and you are halfway through the financial trail. Of course not providing links to any individual or entity that is sanctioned. Credible explanation of goods in transit and value raise no flags – neither does the pick up port of the re-badged ship, nor the drop off port, which of course are both false.

Weeks later and the bill of laden offers no further insight, matching details of the credit letter and the beneficiary bank see’s no reason to suspect, so again the transaction is approved while the ship is in transit.

No alerts have flagged about the ship, the cargo nor the owners on either side as to sanctioned lists. The crime is complete.

Or is it?

There are more detailed checks that could go on to uncover this activity. A review of the historical shipping data would see the tracking switched off for significant periods. It would show the ship not following a course that indicates the identified journey is being taken, more that the ship is off track or offline altogether. The fact the ship has changed name and registration data, the fact it failed to visit ports as frequently as it ought to have, the fact its draft is wrong; these are all good red flags to something being awry.

So much so, the recipient bank should have refused the transaction and reported the activity to their local FIU.

The problem we have is putting the right tools in the hands of the Compliance Officer. Imagine a tool that identified automatically the tracking history of the ship, tracking days offline, days out of port, cargo transited and more. Imagine draft data to show the ship laden or not. Imagine data to indicate registration of the ship and identifying recent changes in ownership, name or locality. Imagine data that identifies the ship in red flag zones, like the strait.

That is all possible with the right IT provision. Now imagine it embedded with other more traditional checks, so the system flags automatically when things are not quite right. Reducing the foot-work of staff to only alert when flags are alerted collectively.

This is the provision we are planning. Building a networked solution, integrating software already in place, to facilitate one solution, one check, one result. Reducing false positives and focusing with a laser to uncover the real activity.

Talk to us for more.

Financial Crime Solutions

Financial Crime Solutions

What Financial Crime Solutions are Available?

The world of finance moves so fast with speed of light transactions how on earth can anyone counter financial crime? You’ve found the right place as we point to some detail to help you to fight financial crime and find the solution that meets your needs.

Preventing Financial Crime

We have written extensive mitigation controls to help our clients reduce the opportunity for financial crime occurring in their business. Talk to us to help you.

Improving Monitoring to Reduce Financial Crime

It’s not all about banking and transaction monitoring. The focus always goes to that. And yet the criminal knows it. Sophisticated criminals will get around transaction monitoring easily. You need to be smarter. Talk to us about how we can help you solve your issues.

Maybe the Solution is Internal?

Just take a look at the darkweb and you will see there is a volume of financial professionals working to clean dirty money and assets and selling their services to the highest bidder. We can route them out of your business. Forever.

Talk to us today to make your life less stressful – we have the financial crime solution for you.

AML-Resources U to Z

AML Resources U to Z

A to EF to JK to OP to TU to Z

Bring yourself up to date with this useful list of AML resources and help documents. We design training packages for your staff, the below is just a small section of our knowledge base. It is important to consider your requirement for bespoke training aligned to your risk.

See our training page to book some training

U

  • United Nations Convention Against Corruption
  • United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances
  • United Nations Convention for the Suppression of the Financing of Terrorism
  • United Nations Convention Against Transnational Organised Crime and the Protocols.

V

W

  • SEC Rules on Whistle-blowing
  • Wolfsberg Private Banking Principles. – The Principles were initially formulated in 2000 (and revised in 2002) to take into account certain perceived risks associated with private banking. Such risks continue to warrant appropriate levels of attention, no less today than ten years ago. Regulators continue to expect strong anti-money laundering standards, robust controls, enhanced client due diligence and suitable AML policies and procedures. The Wolfsberg Principles detail the groups considerations. –
  • Wolfsberg Guidance on Sanction Screening

X

Y

Z

A to EF to JK to OP to TU to Z

AML-Resources K to O

AML Resources K to O

A to EF to JK to OP to TU to Z

Bring yourself up to date with this useful list of AML resources and help documents. We design training packages for your staff, the below is just a small section of our knowledge base. It is important to consider your requirement for bespoke training aligned to your risk.

See our training page to book some training

K

L

M

N

  • New Zealand – Audit of AML/CTF programs and risk assessments

O

  • OECD – Standard for Automatic Exchange of Financial Account Information in Tax Matters
  • Organised Crime – United Nations Convention Against Transnational Organised Crime and the Protocols.-

A to EF to JK to OP to TU to Z

AML-Resources F to J

AML Resources F to J

A to EF to JK to OP to TU to Z

Bring yourself up to date with this useful list of AML resources and help documents. We design training packages for your staff, the below is just a small section of our knowledge base. It is important to consider your requirement for bespoke training aligned to your risk.

See our training page to book some training

F

G

H

I

J

A to EF to JK to OP to TU to Z

AML-Resources P to T

AML Resources P to T

A to EF to JK to OP to TU to Z

Bring yourself up to date with this useful list of AML resources and help documents. We design training packages for your staff, the below is just a small section of our knowledge base. It is important to consider your requirement for bespoke training aligned to your risk.

See our training page to book some training

P

  • PEPs. FATF guidance on PEPs –
  • POLICY – An Anti-Money Laundering and Terrorist Financing Policy is the document that guides all AML activity and helps your organization guide staff. It is a critical document that should detail a lead from the top of the organization. Below we provide three institutional policies for you to peruse contrast and compare (the first is a Real Estate policy, the second/third are banking policies) . We make no comment on the quality. We provide this service for you to reassure you, your policy will meet the required regulatory rigour.
  • AML/CTF Policies and Procedures template – Seek our advice before using this. –

Q

R

  • Real Estate Policy Template. NB: Seek advice this is a guide only.
  • Risk Assesment and AML/CTF program audits – New Zealand
  • Risk Assessment – BSA/AML Example – for a bank. We do not warrant the quality of this document. –

S

  • Securities Exchange Commission Rules on Whistle-blowing
  • Guidance on Sanction Screening from Wolfsberg –

T

  • Standard for Automatic Exchange of Financial Account Information in Tax Matters OECD
  • Template for AML program for a small firm – US centric NB- We do not warrant the quality of this document. You must seek our advice.
  • Template for AML/CTF Policies and Procedures – Seek our advice before using this. –
  • Template for Real Estate AML/CTF Policy. NB: Seek our advice this is a guide only.
  • Terrorism. United Nations Convention for the Suppression of the Financing of Terrorism –
  • Transparency International Exporting Corruption Report
  • Company Trusts. FATF guidance on Company formation agents and Trusts – A risk based approach to their work and the risk they face in the climate to remove hidden Beneficial Ownership. For a summary and the full report go here, or download the full report.

A to EF to JK to OP to TU to Z

Risk Factors for Correspondent Banking

Correspondent Banking Risk

What are the risk factors for correspondent banking and what can we do to mitigate them? The following is advice taken from a range of EU institutes, including the European Banking Authority. The advice is best practice no matter the region it could be applied to.

Sectoral guidelines for correspondent banks

This post provides guidelines on correspondent banking as defined in Article 3(8)(a) of Directive (EU) 2015/849. Firms offering other correspondent relationships as defined in Article 3(8)(b) of Directive (EU) 2015/849 should apply these guidelines as appropriate.

In a correspondent banking relationship, the correspondent provides banking services to the respondent, either in a principal-to-principal capacity or on the respondent’s customers’ behalf. The correspondent does not normally have a business relationship with the respondent’s customers and will not normally know their identity or the nature or purpose of the underlying transaction, unless this information is included in the payment instruction.

Banks should consider the following risk factors and measures alongside those set out in our generic risk post.

Risk factors

Product, service and transaction risk factors

The following factors may contribute to increasing risk:

  • The account can be used by other respondent banks that have a direct relationship with the respondent but not with the correspondent (‘nesting’, or downstream clearing), which means that the correspondent is indirectly providing services to other banks that are not the respondent.
  • The account can be used by other entities within the respondent’s group that have not themselves been subject to the correspondent’s due diligence.
  • The service includes the opening of a payable-through account, which allows the respondent’s customers to carry out transactions directly on the account of the respondent.

The following factors may contribute to reducing risk:

  • The relationship is limited to a SWIFT RMA capability, which is designed to manage communications between financial institutions. In a SWIFT RMA relationship, the respondent, or counterparty, does not have a payment account relationship.
  • Banks are acting in a principal-to-principal capacity, rather than processing transactions on behalf of their underlying clients, for example in the case of foreign exchange services between two banks where the business is transacted on a principal- to-principal basis between the banks and where the settlement of a transaction does not involve a payment to a third party. In those cases, the transaction is for the own account of the respondent bank.
  • The transaction relates to the selling, buying or pledging of securities on regulated markets, for example when acting as or using a custodian with direct access, usually through a local participant, to an EU or non-EU securities settlement system.

Customer risk factors

The following factors may contribute to increasing risk:

  • The respondent’s AML/CFT policies and the systems and controls the respondent has in place to implement them fall short of the standards required by Directive (EU) 2015/849.
  • The respondent is not subject to adequate AML/CFT supervision.
  • The respondent, its parent or a firm belonging to the same group as the respondent has recently been the subject of regulatory enforcement for inadequate AML/CFT policies and procedures and/or breaches of AML/CFT obligations.
  • The respondent conducts significant business with sectors that are associated with higher levels of ML/TF risk; for example, the respondent conducts significant remittance business or business on behalf of certain money remitters or exchange houses, with non-residents or in a currency other than that of the country in which it is based.
  • The respondent’s management or ownership includes PEPs, in particular where a PEP can exert meaningful influence over the respondent, where the PEP’s reputation, integrity or suitability as a member of the management board or key function holder gives rise to concern or where the PEP is from a jurisdictions associated with higher ML/TF risk. Firms should pay particular attention to those jurisdictions where corruption is perceived to be systemic or widespread.
  • The history of the business relationship with the respondent gives rise to concern, for example because the amount of transactions are not in line with what the correspondent would expect based on its knowledge of the nature and size of the respondent.

The following factors may contribute to reducing risk: The correspondent is satisfied that:

  • The respondent’s AML/CFT controls are not less robust than those required by Directive (EU) 2015/849;
  • The respondent is part of the same group as the correspondent, is not based in a jurisdiction associated with higher ML/TF risk and complies effectively with group AML standards that are not less strict than those required by Directive (EU) 2015/849.

Country or geographical risk factors

The following factors may contribute to increasing risk:

  • The respondent is based in a jurisdiction associated with higher ML/TF risk. Firms should pay particular attention to those jurisdictions
    • with significant levels of corruption and/or other predicate offences to money laundering;
    • without adequate capacity of the legal and judicial system effectively to prosecute those offences; or
    • without effective AML/CFT supervision.
  • The respondent conducts significant business with customers based in a jurisdiction associated with higher ML/TF risk.
  • The respondent’s parent is headquartered or is incorporated in a jurisdiction associated with higher ML/TF risk.

The following factors may contribute to reducing risk:

  • The respondent is based in an EEA member country.
  • The respondent is based in a third country that has AML/CFT requirements not less robust than those required by Directive (EU) 2015/849 and effectively implements those requirements (although correspondents should note that this does not exempt them from applying EDD measures set out in Article 19 of Directive (EU) 2015/849).

All correspondents must carry out CDD on the respondent, who is the correspondent’s customer, on a risk-sensitive basis. This means that correspondents must:

  • Identify, and verify the identity of, the respondent and its beneficial owner. As part of this, correspondents should obtain sufficient information about the respondent’s business and reputation to establish that the money-laundering risk associated with the respondent is not increased. In particular, correspondents should:
    • obtain information about the respondent’s management and consider the relevance, for financial crime prevention purposes, of any links the respondent’s management or ownership might have to PEPs or other high-risk individuals; and
    • consider, on a risk-sensitive basis, whether obtaining information about the respondent’s major business, the types of customers it attracts, and the quality of its AML systems and controls (including publicly available information about any recent regulatory or criminal sanctions for AML failings) would be appropriate. Where the respondent is a branch, subsidiary or affiliate, correspondents should also consider the status, reputation and AML controls of the parent.
  • Establish and document the nature and purpose of the service provided, as well as the responsibilities of each institution. This may include setting out, in writing, the scope of the relationship, which products and services will be supplied, and how and by whom the correspondent banking facility can be used (e.g. if it can be used by other banks through their relationship with the respondent).
  • Monitor the business relationship, including transactions, to identify changes in the respondent’s risk profile and detect unusual or suspicious behaviour, including activities that are not consistent with the purpose of the services provided or that are contrary to commitments that have been concluded between the correspondent and the respondent. Where the correspondent bank allows the respondent’s customers direct access to accounts (e.g. payable-through accounts, or nested accounts), it should conduct enhanced ongoing monitoring of the business relationship. Due to the nature of correspondent banking, post-execution monitoring is the norm.
  • Ensure that the CDD information they hold is up to date.

Correspondents must also establish that the respondent does not permit its accounts to be used by a shell bank, in line with Article 24 of Directive (EU) 2015/849. This may include asking the respondent for confirmation that it does not deal with shell banks, having sight of relevant passages in the respondent’s policies and procedures, or considering publicly available information, such as legal provisions that prohibit the servicing of shell banks.

In cases of cross-border correspondent relationships with respondent institutions from third countries, Article 19 of Directive (EU) 2015/849 requires that the correspondent also apply specific EDD measures in addition to the CDD measures set out in Article 13 of Directive (EU) 2015/849.

There is no requirement in Directive (EU) 2015/849 for correspondents to apply CDD measures to the respondent’s individual customers.

Correspondents should bear in mind that CDD questionnaires provided by international organisations are not normally designed specifically to help correspondents comply with their obligations under Directive (EU) 2015/849. When considering whether to use these questionnaires, correspondents should assess whether they will be sufficient to allow them to comply with their obligations under Directive (EU) 2015/849 and should take additional steps where necessary.

Respondents based in non-EEA countries

Where the respondent is based in a third country, Article 19 of Directive (EU) 2015/849 requires correspondents to apply specific EDD measures in addition to the CDD measures set out in Article 13 of Directive (EU) 2015/849.

Correspondents must apply each of these EDD measures to respondents based in a non-
EEA country, but correspondents can adjust the extent of these measures on a risk- sensitive basis. For example, if the correspondent is satisfied, based on adequate research, that the respondent is based in a third country that has an effective AML/CFT regime, supervised effectively for compliance with these requirements, and that there are no grounds to suspect that the respondent’s AML policies and procedures are, or have recently been deemed, inadequate, then the assessment of the respondent’s AML controls may not necessarily have to be carried out in full detail.

Correspondents should always adequately document their CDD and EDD measures and decision-making processes.

Article 19 of Directive (EU) 2015/849 requires correspondents to take risk-sensitive measures to:

  • Gather sufficient information about a respondent institution to understand fully the nature of the respondent’s business, in order to establish the extent to which the respondent’s business exposes the correspondent to higher money-laundering risk. This should include taking steps to understand and risk-assess the nature of respondent’s customer base and the type of activities that the respondent will transact through the correspondent account.
  • Determine from publicly available information the reputation of the institution and the quality of supervision. This means that the correspondent should assess the extent to which the correspondent can take comfort from the fact that the respondent is adequately supervised for compliance with its AML obligations. A number of publicly available resources, for example FATF or FSAP assessments, which contain sections on effective supervision, may help correspondents establish this.
  • Assess the respondent institution’s AML/CFT controls. This implies that the correspondent should carry out a qualitative assessment of the respondent’s AML/CFT control framework, not just obtain a copy of the respondent’s AML policies and procedures. This assessment should be documented appropriately. In line with the risk-based approach, where the risk is especially high and in particular where the volume of correspondent banking transactions is substantive, the correspondent should consider on-site visits and/or sample testing to be satisfied that the respondent’s AML policies and procedures are implemented effectively.
  • Obtain approval from senior management, as defined in Article 3(12) of Directive (EU) 2015/849, before establishing new correspondent relationships. The approving senior manager should not be the officer sponsoring the relationship and the higher the risk associated with the relationship, the more senior the approving senior manager should be. Correspondents should keep senior management informed of high-risk correspondent banking relationships and the steps the correspondent takes to manage that risk effectively.
  • Document the responsibilities of each institution. This may be part of the correspondent’s standard terms and conditions but correspondents should set out, in writing, how and by whom the correspondent banking facility can be used (e.g. if it can be used by other banks through their relationship with the respondent) and what the respondent’s AML/CFT responsibilities are. Where the risk associated with the relationship is high, it may be appropriate for the correspondent to satisfy itself that the respondent complies with its responsibilities under this agreement, for example through ex post transaction monitoring.
  • With respect to payable-through accounts and nested accounts, be satisfied that the respondent credit or financial institution has verified the identity of and performed ongoing due diligence on the customer having direct access to accounts of the correspondent and that it is able to provide relevant CDD data to the correspondent institution upon request. Correspondents should seek to obtain confirmation from the respondent that the relevant data can be provided upon request.

Respondents based in EEA countries

Where the respondent is based in an EEA country, Article 19 of Directive (EU) 2015/849 does not apply. The correspondent is, however, still obliged to apply risk-sensitive CDD measures pursuant to Article 13 of Directive (EU) 2015/849.

Where the risk associated with a respondent based in an EEA Member State is increased, correspondents must apply EDD measures in line with Article 18 of Directive (EU) 2015/849. In that case, correspondents should consider applying at least some of the EDD measures described in Article 19 of Directive (EU) 2015/849, in particular Article 19(a) and (b).