Money Laundering (AML/CFT/ML/TF...):
Money Laundering is the processes of making dirty money (which earns or obtained illegally) look clean. Such money derives from illegal sources or illegal activities (such as drug trafficking, human trafficking, corruption, gambling, fraud, bribery, etc.) and the earner conceals the origin of money or the origin sources of money. In one word, the money which derives or obtains from illegal activities is called the dirty money which is called Money Laundering. Money Laundering is a punishable offence and/or criminal offence. Today, Money Laundering is a burning issue in banking or financial sector. The ill-motive person or criminals uses banking channel, applying different tricky financial transactions, to make 'dirty money' to 'clean'.
Money Laundering is the tricky way to enable the illegal money to be used legally. The Purpose of Money Laundering includes: Disguising original source of funds, changing the form of asset(s), and moving the asset(s) to one place to another especially non-cooperative jurisdictions countries.
Terrorist Financing (TF) is the process of founds/money to sponsor or facilitate terrorist activity. The main purpose of terrorist financing happen to facilitate the terrorist organization or terrorist group mostly for political or religion purpose. The money/fund of terrorist financing may derives from both legitimate or illegitimate sources.
The difference between Money Laundering and Terrorist Financing (TF): In Money Laundering funds/money derives/obtains from illegal activities whereas in Terrorist Financing funds/money derives/obtains from both legal or illegal sources.
Three stages in Money Laundering:
1. Placement - injecting/entering the 'dirty money' into the financial system through different ways such as breaking up large amounts of money into smaller sums and deposit to different bank accounts using different banks of local and international.
2. Layering - segmenting the funds through a series of transactions such as converting deposited cash into monetary instruments or investing the 'dirty money' funds in stocks, bonds, etc.
3. Integration - it is the final stage of money laundering at which money integrated into the legitimate economic and financial system which seems to be legal funds/money.
Trade-based money laundering happens through:
- Over-invoicing
- Under-invoicing
- Short shipping
- Over shipping
- Multiple invoicing
- Deliberate obfuscation of the type of goods
- Phantom shipping
- And more.
Channels used for Trade-Based Money Laundering: Correspondent Banking, Bank Capture, Payable Through Accounts, Shell Bank, Concentration A/C, e-Fund Transfer, and more.
Combating the Financing of Terrorism (CFT): CFT refers to creating blocks or making restriction (through government laws, regulations, and other means or ways) of funds/money which designated for terrorists purpose or Terrorist Financing (TF). Combating the Financing of Terrorism (CFT) and Anti-money Laundering (AML) both uses almost same means or ways to restrict funds to enter into financial system and uses for terrorist activities.
Published Date: 30/06/2023
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