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International Standards Simon Goddard 31 August 2012 MOLI Serbia

International Standards Simon Goddard 31 August 2012 MOLI Serbia. International Standards. Cornerstones for common approach to legislation and procedures to attack ML/FT globally.

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International Standards Simon Goddard 31 August 2012 MOLI Serbia

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  1. International StandardsSimon Goddard31 August 2012MOLI Serbia

  2. International Standards • Cornerstones for common approach to legislation and procedures to attack ML/FT globally • Unchecked, money laundering can destabilise financial institutions, financial sectors and, in certain cases, entire economies.

  3. International Standards • United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna Convention, 1988) • Vienna Convention does not use the term money laundering, but defines the concept and calls upon countries to criminalize the activity • Under the convention the only predicate offenses for money laundering are crimes related to drug trafficking. • Does not address preventive aspects of money laundering. • Serves as a basis for several FATF Recommendations on preventing, detecting, and prosecuting money laundering.

  4. International Standards • The International Convention against Transnational Organized Crime (the Palermo Convention, 2000) • Contains a broad range of provisions to fight international organized crime. Countries that ratify the convention must implement its provisions through passage of domestic laws.

  5. International Standards • The International Convention against Transnational Organized Crime (the Palermo Convention, 2000) • With regard to money laundering, it obliges each ratifying country to: • Criminalize money laundering and include all serious crimes (not just drug trafficking) as predicate offences to money laundering; • Establish regulatory regimes to deter and detect all forms of money laundering; • Cooperate and exchange information, both domestically and internationally, and consider the establishment of a financial intelligence unit

  6. International Standards • International Convention for the Suppression of the Financing of Terrorism (the SFT Convention, 1999) • This convention requires ratifying countries to criminalize terrorism, terrorist organizations, and terrorist acts. It applies to the offense of direct involvement or complicity in the intentional and unlawful provision or collection of funds, whether attempted or actual, with the intention or knowledge that any part of the funds may be used to carry out any of the offences described

  7. International Standards • Council of Europe ‘Strasbourg’ Convention on Search, Seizure, and Confiscation of the Proceeds of Crime 1990 • Council of Europe ‘Warsaw’ Convention on Search, Seizure, and Confiscation of the Proceeds of Crime and of the Financing of Terrorism 2005

  8. International Standards • UN Security Council Resolution 1373 (2001) • Binding upon all UN member countries • Obligates all member counties to criminalize actions relating to the financing of terrorism.

  9. International Standards UN Security Council Resolution 1373 (2001) Obligates countries to: Deny all forms of support for terrorist groups Suppress the provision of safe haven or support for terrorism, including freezing funds or assets of persons, organizations, or entities involved in terrorist acts Prohibit active or passive assistance to terrorist Cooperate with other countries in criminal investigations and in the sharing of information about planned terrorist acts

  10. International Standards • UN Security Council Resolution 1267 (1999) and its successors • This Resolution is binding upon all UN member countries (as are its successors) formed to freeze assets of the Taliban. • Followed by Resolution 1333, which dealt with freezing the assets of Osama Bin Laden and Al- Qaeda. • Later resolutions1363, 1390, 1452, and 1455 established monitoring arrangements, merged lists of assets to be frozen, and took other measures to improve implementation.

  11. Financial Action Task Force (FATF) Inter-governmental body which develops and promotes policies, both at national and international levels, to combat money laundering and terrorist financing. Works to generate the necessary political will to bring about national legislative and regulatory reforms Monitors members' progress in implementing necessary measures, reviews AML/CFT techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally. Collaborates with other international bodies

  12. 40 Recommendations - Key Elements • Money laundering offence linked to all serious offences • Trace, freeze and confiscate assets • All ‘cash dealers’ covered • Ban anonymous accounts • Know your customer (KYC) • Transaction Reporting • Statutory protection • Regulatory framework • Inter agency co-operation

  13. 40 Recommendations - Key Elements • Mutual legal assistance and extradition • Information exchange and reciprocity • Bilateral and multi lateral treaties • Offshore branches apply ‘home’ rules • High risk customers • Cross border cash and non cash flows • Shell companies and tax havens • Identify risks from new technologies • Training and supervision of staff

  14. Key elements of an AML/CFT strategy 1. Law Appropriate laws and regulations 2. Prevention Procedures, supervision of financial institutions and reporting to authorities 3. Detection Financial intelligence analysis & law enforcement 4. International cooperation

  15. Essential Elements 1. Laws & Regulations Creating a legal framework which enables action to be taken against Money Laundering Defining Money Laundering as a Crime Specifying penalties and procedures Permitting freezing, seizure and forfeiture

  16. Essential Elements • 2. Prevention - Procedures & supervision • Establish obligations for financial services KYC - client identification & record retention Monitor accounts for unusual activity Suspect Transaction Reporting (STR) • Comprehensive AML procedures Training Compliance program

  17. Essential Elements • 3. Detection - Analysis & enforcement • Effective intelligence analysis Access to financial intelligence for investigators (e.g. following terrorist activity) Analysis of financial transactions leading to targets for predicate crimes, financial crime, money laundering or its facilitation • Support FIU analysis with specialist investigation expertise (e.g. drug trafficking)

  18. Essential Elements • 4. International Cooperation • Should be as broad as possible and cover as a minimum: • assistance for administrative matters i.e between financial market supervisory authorities( Banks, securities companies, insurance companies), • tax(fiscal) , customs, police and • money laundering matters (FIU to FIU)

  19. Investigate Analysis and Intelligence Gather Evidence Interview Witness Confirm offence Evaluation Target Selection Collect & Collate Data Analysis & Intelligence (eg. Police records) Disseminate Suspicious targets STR CTR Law SEC & Reg SEC FIU – Assisted by Reg SEC & Law SEC From Start to Finish Prosecute/Regulate Info Criminal Action Civil Action Admin remedies Revoke Licence Fin SEC Law SEC & Reg SEC

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