Anti Money Laundering Blog

The International Monetary Fund (IMF) is providing held to 16 African countries to step up their fight against money-laundering and against using their lucrative gold and diamond industries for funding terrorism.

To reach this goal, the IMF offers technical assistance programs and seminars that are aimed to help African countries address institutional weaknesses. It should be noted that, in the last few years, a number of reports have raised concerns about the links between the trade in precious minerals and illicit financial flows, corruption, drug trafficking, arms smuggling and terrorist financing.

The work of the Monetary Fund is financed in large part through a multi-donor topical trust fund on Anti-Money Laundering and Combating the Financing of Terrorism (the AML/CFT TTF) launched in May 2009 contributions from the United Kingdom, Switzerland, France, Luxembourg, the Netherlands, Norway, Qatar, Saudi Arabia, South Korea, and Kuwait.

As the 1st stage of the technical assistance, representatives from 6 French-speaking African countries are taking part in a 5-day workshop held in Tunis. The workshop is jointly organized by the African Development Bank and the IMF’s Legal Department. Another workshop will be held in Tunis in June for representatives of a group of English-speaking African countries.

As the 2nd phase of the assistance, participating countries will draw up national AML/CFT strategies with support from Fund-backed experts. Continued efforts to curb money laundering and terrorist financing will be supported by IMF staff through long-term technical assistance programs.

According to the IMF’s data, Africa produces an estimated USD 19 billion in gold per year and USD 6 billion in diamonds. But an unknown amount is laundered or siphoned each year for criminal purposes. All countries that participate in the project either produce or trade in precious metals or stones, mainly gold and diamonds.

The Organisation for Economic Cooperation and Development (OECD) is planning to list tax offences as a form of money laundering.

This move could influence the position of Switzerland. If tax offences were classified as money laundering, lawyers, tax advisors, accountants and bankers engaged in such offences would get up to 3 years in prison. Also, banking secrecy law would not be acting as currently.

It should be noted that Switzerland came under pressure from the OECD in 2009, when it placed Switzerland on its “grey list” of tax havens for not being cooperative enough. To go off this list, a series of accords on sharing tax information had to be negotiated.

On February 24, 2010, Pakistan’s Senate standing committee on finance unanimously approved the Anti-Money Laundering and Combating Terrorism Financing Bill 2009. The approved legislation is aimed at effectively checking suspicious business transactions used for terrorist financing.

The committee which, under the chairmanship of Ahmed Ali, gave formal approval of the bill linked the approval of the Bill with a condition that the Ministry of Finance and committee would together prepare proposed amendments in the Anti-Money Laundering and Combating Terrorism Financing Act within a year.

The Anti-Money Laundering and Combating Terrorism Financing Ordinance is to expire on March 26, 2010, therefore, due to the urgency of the issue, the proposed bill should have been passed by the Senate as soon as possible. As the Bill has been approved by the Senate, it will be sent to Prime Minister to obtain necessary approval to have a status of a law.

It was discussed that FATF blacklisted 8 countries for for alleged money laundering and terrorism. The list included Ecuador, Iran, Pakistan, Angola, Ethiopia, North Korea, Turkmenistan, and Sao Tome and Principe.

In a news conference, Ecuador protested its inclusion on this blacklist. The country does not think of itself as failing to comply with standards against money-laundering and terrorism financing.

Foreign Minister Ricardo Patino said: “We completely reject this perverse insinuation”. He noted that the country had received international praise for measures to regulate its financial system. He also added that rich countries who are judging poorer jurisdictions on their record should first of all put their own house in order. He said: “We honestly do not think the nations of the North have the moral authority to put us on that list. Let’s see in the future who should be on that list”

According to the announcement made by Abdulrahim Mohammed Al Awadi, Assistant Executive Director and Head of the Anti-money Laundering and Suspicious Cases Unit (AMLSCU) of the UAE, on February 19, 2010, the Central bank of the UAE signed a memorandum of understanding (MoU) on anti-money laundering with Finland.

The document was signed by Abdulrahim Mohammed Al Awadi and Marku-Aho, Head of National Bureau of Investigation/Financial Intelligence Unit of Finland. The agreement was signed on the sidelines of the joint FATF-MENAFATF plenary meeting that was held at the Central Bank of UAE premises in Abu Dhabi.

The memorandum of understanding included mutual co-operation in different areas of interest to both parties. The agreement regarded financial information related to money laundering and terrorism financing with a view to support, enhance and strengthen policies of fighting money laundering and tourism financing.

This signing shows the UAE’s commitment to share financial information with its global partners in order to coordinate the efforts against money laundering and other financial crimes.

On February 19, the US Treasury Department said in a statement that a global anti-corruption body has blacklisted 8 countries for alleged money laundering and terrorism financing as well as stepped up calls for sanctions against Iran.

The Treasury Department welcomed the FATF statements noting: “We also welcome FATF’s renewed call today for its members and all jurisdictions to apply effective counter-measures to protect their financial sectors from the money laundering and terrorist financing risks emanating from Iran.”

The Financial Action Task Force (FATF) has identified 8 countries that have strategic deficiencies in alleged money laundering and terrorism financing. This inter-governmental body named Iran, Pakistan, Angola, Ecuador, Ethiopia, North Korea, Turkmenistan, and Sao Tome and Principe as they may be posing a risk to the international financial system.

Switzerland and Canada have recently concluded negotiations that regarded extending administrative assistance in tax-related issues in accordance with the Organization for Economic Cooperation and Development’s (OECD) standard and on other points. The countries have initialed a Protocol of Amendment on the existing double taxation agreement (DTA) between Switzerland and Canada.

The initialed text will first remain confidential. However, the Swiss cantons and business associations will be notified of the content in a brief report and will be allowed to submit their comments.

The complete text of the double taxation agreement will be published after being signed.

Tavid, Estonian exchange company, has been implicated in one the largest money laundering schemes in the history of the CEE region. This is the 2nd money laundering scheme with the participation od the Estonian exchange company in the past 3 years.

The company is claimed to receive a payment of 45 million kroons in late 2007 to its Nordea Bank account. This payment was made by Stern Treid LLC. Stern Treid LLC is a company that is partially owned by Yuri Kasjanov, a Russian citizen who is the subject of a major money laundering probe in Bulgaria. This company had signed a contract with Tavid under which the company was to transfer more than 200 million kroons to Tavid.

It is believed that the money has originated in Russia and has bee laundered through a series of fake sales agreements in Bulgaria to be transfered back to Russia through the Estonia company.

Former President of Guatemala Alfonso Portillo faces money laundering charges in the US.

Portillo is charged with embezzling tens of millions of USD in public funds. These money was allegedly laundered through bank accounts located in the United States and Europe as well as in other places. According to prosecutors, the money laundering took place allegedly through at least 2006.

It should be noted that Portillo was the president of Guatemala from 2000 to 2004. He came into power promising to erase corruption, however his own government mired in the same accusations as his predecessors.

Guatemalan authorities started searching for the ex-president after the US requested his extradition.

According to Kuwait’s economic expert Dr Jamal Abdulrahim. Kuwait has been suffering due to the prevalence of money laundering and human trafficking that are harmful to the nation.

In a seminar on the moral and financial crimes in Kuwait, Abdulrahim said that “the law is rarely enforced in the country” and added that people either disregard the law or just lack information on the existing legislation. He stressed the importance of developing the judicial system as this is crucial in following up money laundering cases, especially since the local courts lack the required skills regarding money laundering.

He recommended that harsher punishments should be applied to those involved in human trafficking and money laundering. Also, both crimes should be merged to impose a 7-year jail sentence.