Anti Money Laundering Blog

On December 5, the US House of Representatives passed a bill seeking to enhance the Anti-Money Laundering Act (AMLA). However, the document’s principal author claimed that the measure has been “watered down.”

According to Cagayan de Oro Rep. Rufus Rodriguez, who authored House Bill 4275, amendments to the measure approved by the House of Representatives weakened the proposed legislation.

Rodriguez said that substantial information was removed before the approval. For example, the provision allowing the Anti-Money Laundering Council (AMLC) to look into bank accounts of suspected money launderers without informing the account holder, given there is probable cause to do so was removed from the document.
This provision was dropped because of the proposal from House Minority Leader Edcel Lagman, who wanted to give the AMLC the power to inquire into the bank account of suspected money launderers only “after due notice and hearing.” This means that the Anti-Money Laundering Council will have to secure the approval of the Court of Appeals before it can look into questionable bank accounts, a a result, the depositor will also be informed of such an action.

A consultation on proposals to amend the Money Laundering Order 2008 and the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CTF) Handbook has been launched by the Jersey Financial Services Commission (JFSC) with a view to revise customer due diligence requirements.

The Consultation Paper has been launched prior a wider review of the basis for, and scope of, customer due diligence concessions in the Money Laundering Order that will take account of international standards set by the Financial Action Task Force (FATF).

According to the Commission, proposals in the Consultation Paper will clarify the additional customer due diligence measures to be taken when a relationship with a customer is established remotely and money laundering and terrorist financing risk is considered to be higher than usually. Also, the JFSC’s reviewed proposals should provide additional guidance on identifying countries with a higher risk of money laundering or terrorist financing. The proposals in the Paper will specify some additional due diligence measures to be applied where a customer has a connection to Iran or North Korea, and where a customer is considered to present a higher risk as a result of a connection to countries like Bolivia, Kenya, Nigeria, Sri Lanka, Syria, Turkey, etc. As the risk of money laundering or terrorist financing occurring is considered to be less for a particular customer, product or service, the proposals are to extend the circumstances in which it may be appropriate to simplify customer due diligence measures.

A consultation has been begun by Hong Kong’s Securities and Futures Commission (SFC) in order to solicit public comments on proposals for a new set of guidelines on anti-money laundering and counter-terrorist financing (AML/CTF). These guidelines will replace the existing Prevention on Money Laundering and Terrorist Financing Guidance Note published by the SFC.

The guidelines seek to provide guidance to the financial industry, relating to the operation of the relevant provisions of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO), which is to come into effect on April 1, 2012.

On July 8, 2011, the enacted AMLO was gazetted after 2 rounds of consultation that was conducted by the Financial Services and Treasury Bureau. It is aimed at enhancing the AML/CTF regime in Hong Kong financial sector with a view to meet the latest international standards, especially as regards customer due diligence (CDD) and record keeping.

The Hong Kong Monetary Authority (HKMA), SFC, Insurance Authority and the Customs and Excise Department have together drafted a set of guidelines containing generic guidance that is applicable to all financial institutions.

In the end of September, the Association of Certified Anti-Money Laundering Specialists (ACAMS) hosts its 10th Annual Conference at the ARIA Resort & Casino in Las Vegas. It should be noted that this is its largest gathering of anti-money laundering professionals in both the private and government sector since the association’s inception.

John Byrne, CAMS, ACAMS’ executive vice president, said: “Going into our 10th year, it’s amazing that not only has our association grown to well over 11,000 members worldwide, but that the membership has expanded so well into other industries. This conference highlights our mission that we are comprised of diverse representation from law enforcement, government regulators, bankers, securities broker dealers and money services businesses. The immense turnout only solidifies our mission of providing the best forum to bring together AML professionals for top-notch education, training and networking.”

“Additionally, the audience will hear from and have access to representatives from all of the regulatory bodies including FinCEN, the Federal Reserve, the OCC, FBI and FINRA. Meeting these speakers is essential to better understand your day-to-day challenges.”

On October 1-3, 2012, ACAMS will host its 11th Annual Conference once again at the ARIA Resort & Casino.

On August 18, Philippines’ Anti-Money Laundering Council Chief Vicente Aquino asked senators to amend the law so that terrorist financing was classified as a distinct crime.

Appearing before a hearing of the Senate Finance Committee, Aquino stated that there was a need to amend the existing Anti-Money Laundering Act (Amla) in order to enable the Philippines to comply with international standards. Currently, the Philippines is classified in the group of countries whose laws and institutions are vulnerable to money laundering.

The proposed Amla amendment would make the Philippines fully compliant with the OECD, which sets the rules in international monetary system.

Under the provisions of the existing anti-money laundering legislation, the India’s Enforcement Directorate is pursuing 1 269 cases. The government is mulling amendment and strengthening of the Act aimed to combat terrorist financing and other suspect transactions.

According to Indian Minister of State for Finance S S Palanimanickam, of the 1 269 cases registered as on March 31, 2011, 11 cases fall under the Unlawful Activities (Prevention) Act, on account of their suspected connection with terrorist financing. He said: “The number of money laundering cases registered by the Directorate of Enforcement under the PMLA has increased from 1 014 cases as on March 31, 2010, to 1 269 cases as on March 31, 2011, based on Scheduled Offences registered and reported by the concerned agencies”.

Palanimanickam said: “The government is proposing amendments to the Prevention of Money Laundering Act. The proposed amendments are at a draft stage and are yet to be finalised”.

He added that India is a member of the Financial Action Task Force (FATF), the Asia/Pacific Group on Money Laundering (APG), the Eurasian group on combating money laundering and financing of terrorism and the Egmont Group of Financial Intelligence Units.

The new legislation, entitled the Stop Tax Haven Abuse Act, has been introduced by Carl Levin, the Democrat Chairman of the US Senate Permanent Subcommittee on Investigations. The Act is aimed to fight so-called offshore tax loopholes.

When introducing the legislation, Levin stated that the United States cannot afford offshore tax abuses that are robbing the Treasury of USD 100 billion in lost revenue yearly and increasing the tax burden on Americans. It should be noted that this is the 5th Congress in which Levin has introduced a comprehensive bill to fight offshore and tax shelter abuses.

A number of provisions from past bills have made it into law. Levin’s efforts also helped spur enactment of the Foreign Account Tax Compliance Act (FATCA) that is designed to obtain information on overseas investments by US residents. It is worth noting that, when Levin was a member of the Senate, he co-sponsored Levin’s offshore tax bills in 2005 and 2007.

A provision of the bill would close an existing tax loophole that allows credit default swap payments to escape taxation if sent from the US to persons offshore, such as an offshore hedge fund or foreign bank. The bill would treat credit default swap (CDS) payments sent offshore from the US as taxable US-source income.

In accordance with the announcement made by the Isle of Man’s Treasury Minister, Anne Craine, a public consultation has been launched on proposals to further strengthen the offshore jurisdiction’s protection against money laundering and other financial crime.

Currently, all companies registered under the 2006 Companies Act must have a local resident agent in order to identify the beneficial ownership of the company if this is requested by the regulatory authorities in the course of enquiries. However, companies incorporated under the 1931 Companies Act are not required to have such an agent, while many of them are in fact administered by licensed Corporate Service Providers which effectively act as registered agents.

There is a proposal to introduce a requirement, similar to that already in operation in Guernsey, for all 1931 Act companies to appoint a local resident agent.

For locally-owned companies this could simply mean nominating an existing officer or shareholder of the company as the resident agent, accordingly, there will be no extra cost to the business. For companies administered by licensed Corporate Service Providers this would simply amount to the Corporate Service Provider acknowledging that they provide services to those companies. There also would be no extra costs incurred by the company or the Corporate Service Provider.

Minister explained: “The current difference in requirements between the 2006 and 1931 Acts creates an inconsistency in the island’s approach to access to information about the beneficial ownership of companies. The discrepancy means there is a perception, in the case of 1931 Act incorporations, that some companies are weak links in the chain of accountability. This perception creates a reputational risk for the Isle of Man.”

She said that this issue has been raised by the International Monetary Fund (IMF) in its assessment of the island’s defences against money laundering and other financial crime. She noted that it is in the interests of the the Isle of Man’s economy and its international reputation to maintain high regulatory standards as recognised by bodies such as the IMF.

According to the chairman of the Senate committee on banks, a move to give the Anti-Money Laundering Council (AMLC) the power to freeze suspicious bank accounts even without court approval may be approved at the committee level soon.

Senator Sergio Osmena III, who is also author of the bill and the chairman of the sub-committee on amendments to the Anti-Money Laundering Act, said that the approval might be in August. He said he sees a need to revise the law.

AMLC executive director Vicente Aquino insists on giving the council power to impose an “executive freeze.”

It should be reminded that, under the current legislation, the AMLC needs to inform the owner of a suspicious account that the council is investigating his finances.

On April 28, Mexico’s Senate approved an anti-money laundering law that targets the financial structures of the drug cartels becoming increasingly powerful in the country.

According to the new legislation, the Attorney General’s Office is required to establish an investigations unit. The new unit will target money laundering and require that financial institutions develop better identification and monitoring of their clients’ activities.

The law provides that cash transactions in buying real estate, vehicles, boats, airplanes, jewelry and stocks with a value of more than 200,000 pesos (USD 7 300) are forbidden.

According to a press release issued by the Senate, USD 25 billion dollars are estimated to be laundered in Mexico every year.