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Money laundering and terrorism financing are financial crimes with economic effects, and act as a threat to economic and financial stability. These illicit activities can discourage foreign investment and alter international capital flows. Hence resulting in welfare losses, draining resources from more productive economic activities, and even have destabilizing effects on other countries. In an increasingly interconnected world, the harm done by these activities is global.
Money launderers and terrorist financiers exploit vulnerabilities in financial systems to facilitate their crimes. They work around differences between national laws and jurisdictions with weak or ineffective controls to move funds undetected.
More governments have increased the number of policies and measures to reduce money laundering and terrorism financing, backed up by international organisations such as International Monetary Fund (IMF). Strong AML/CFT regimes enhance the integrity and stability of financial sectors, which in turn helps countries become integrated into the global financial system. It aims to help in detection, reporting, and confiscation of suspicious financial flows and for sanctioning of criminals. AML/CFT controls, when effectively implemented, mitigate the adverse effects of criminal economic activity and promote integrity and stability in financial markets.
Some examples of AML/CFT measures include:
- Strengthening of the AML Framework by Greece
- Framework to Combat Terrorism Financing in Sudan
Strengthening of the AML Framework by Greece
Systemic corruption and large-scale tax evasion can heavily undermine a country’s ability to deliver sustainable and inclusive growth. The consequences include less investment in health, education, public services, and higher economic inequality. The strengthening of the AML framework—with the help of the IMF—facilitated the seizure of hundreds of millions of euros in proceeds from tax crimes.
Framework to Combat Terrorism Financing in Sudan
Today’s advancement in technology and financial technology (fintech) is a powerful tool to strengthen against terrorism financing. For example, through machine learning and other AI tools to help detect patterns of suspicious financial flows while protecting financial systems. Hence, developing a framework for the implementation of targeted financial sanctions helps against cybercrimes.
Here are some examples of the general efforts by the IMF to support the full range of AML/CFT efforts.
- Increased access to correspondent-banking services
- Develop national AML/CFT strategies with Costa Rica, Peru and Uruguay
- Improving AML/CFT supervision with Ukraine
- Strengthening the governance and capacity of its financial intelligence unit with Mongolia
IMF Blog, Stepping up the Fight Against Money Laundering and Terrorist Financing, https://blogs.imf.org/2017/07/26/stepping-up-the-fight-against-money-laundering-and-terrorist-financing/
FATF (2012-2018), International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation, FATF, Paris, France, www.fatf-gafi.org/recommendations.html
To learn more about the efforts done, the FATF have produced a report “International Standards On Combating Money Laundering And The Financing Of Terrorism & Proliferation: The FATF Recommendations”. The report aims to set out a comprehensive and consistent framework of measures which countries should implement in order to combat money laundering and terrorist financing, as well as the financing of proliferation of weapons of mass destruction. Click here: http://bit.ly/2TLoBMT
Enhanced Assessment on Money Laundering And Terrorism Financing (ML/TF) Risks is a 2-day training course held from 8 – 9 July 2019 (Kuala Lumpur). In this 2-day workshop, delegates will learn and acquire practical tips and techniques on ML and TF risk assessment. It aims at providing participants with operational knowledge for identifying and assessing ML and TF risks, acquiring information on the latest ML and TF trends, and understanding the best practices in creating strategies. Also, setting up effective risk-based compliance systems that is compliant with both FATF Recommendations and other international best practices.