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.

In the beginning of December, the US insisted that operations aimed to combat money laundering are coordinated fully with Mexico, amid controversy over a report that United States’ agents laundered drug proceeds to see how the system works.

State Department spokesman Mark Toner said that the operations aimed to disrupt money laundering networks are fully vetted and fully coordinated with Mexican authorities. Toner stressed: “The Drug Enforcement Administration (DEA) works with Mexican authorities to gather and use information about these criminal organizations to counter threats that they pose to both our countries”.

According to the Mexican government, bilateral work is done in an existing legal framework that covers activities of international authorities on the territory of Mexico.

However, many Mexican politicians want more information. The Senate security committee chairman in Mexico City, Felipe Gonzalez, said that President Felipe Calderon should report to Congress on the anti-money laundering operations. He suggested that the facts about what has been achieved in terms of arrests, seizures of funds and crime reduction should be revealed. It is worth noting that since 2006, when its government launched a major military crackdown against the powerful drug cartels, some 45 000 people have been killed in Mexico.

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.

The government of India has concluded talks with 16 countries in order to keep a tab on flow of laundered money. The Cayman Islands, the Channel Islands, the British Virgin Islands, and the Bahamas were among these 16 jurisdictions.

However, the Indian government did not reveal the obtained information on Indians having illegal accounts in foreign banks, citing confidential clause.

The Finance Ministry commented: “The Government of India has completed negotiations of 16 new Tax Information Exchange Agreements (TIEAs) with Bahamas, Bermuda, British Virgin Islands, Isle of Man, Cayman Islands, Jersey, Monaco, Saint Kitts and Nevis, Argentina, Costa Rica, Guernsey, Macau, Liberia, Marshall Islands, Congo and Gibraltar”. The Cabinet approved 9 of these agreements. TIEAs with Bahamas, Bermuda, British Virgin Islands and Isle of Man have been signed and have come into force.

According to the Finance Ministry, “Negotiations/renegotiations of Double Tax Avoidance Agreements (DTAA) with 37 countries were completed. DTAAs with Switzerland (amendment), Norway (revised), Mozambique (new), Columbia (new), Ethiopia (new), Singapore (amended) and Tanzania (revised) have already been signed”. Also, the amendments to tax treaty with Switzerland have been signed and approved by the Swiss Parliament. It will come into force when Switzerland completes its internal process after legislative approval.

The Western Union Company will host the 6th annual Anti-Money Laundering & Anti-Fraud & Compliance Conference in Denver. The event will be held on September 19-22, 2011.

The event that will include more than 200 attendees is held each year for compliance and fraud professionals from across the US and Canada to provide an interactive experience in preventing fraud and money laundering.

More than 40 experts from a variety of government organizations will speak, including the Federal Trade Commission, the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department, the Financial Transactions and Reports Analysis Centre (FINTRAC) of Canada’s Ministry of Finance, the Internal Revenue Service (IRS) and law enforcement from across the US.

Joe Cachey, Western Union’s Acting General Counsel and Chief Compliance Officer said:. “This event is a unique learning experience, allowing professionals from a wide variety of financial services firms to better identify and protect their organizations against fraud.”

The conference was introduced in 2006 with a view to provide continuing education to Western Union Agents on anti-money laundering best practices, regulations and law-enforcement trends. Since then, the event has grown into one of North America’s largest anti-money laundering/anti-fraud conferences for professionals from various industries.

The UK’s Financial Services Authority (FSA) has announced that 2 banks in Britain are being investigated for lax money-laundering controls. Also, other banks are likely to be handling the proceeds of corruption and other financial crime.

According to the FSA, it had referred 2 banks to its enforcement division for “serious weaknesses” in “high-risk” customer management.

The FSA published a review of how banks manage money-laundering risks adding that it is being considered “whether further regulatory action is required in relation to other banks, and further cases may be referred for enforcement”. The regulator stated: “Around a 3rd of banks, including the private banking arms of some major banking groups, appeared willing to accept very high levels of money-laundering risk if the immediate reputational and regulatory risk was acceptable”.

It is worth noting that ma of the failings identified by the FSA are the same as those it spotted 10 years ago when deposed Nigerian strongman Sani Abacha, his family members and associates used 42 UK bank accounts to turn over USD 1.3 billion (GBP 806.2 million) in 4 years.

The FSA said that more than 1/2 of banks visited this time around failed to have meaningful due diligence measures in higher-risk situations. Also, they failed to identify or record negative information about customers.

Around 1/3 of banks visited dismissed serious allegations about their customers without adequate review, and more than 1/3 failed to identify customers as “politically exposed persons” (PEPs), who are considered the most vulnerable to corruption because of their public prominence.

According to the FSA, 3/4 of banks did not always manage high-risk customers and PEP relationships effectively, and needed to do more to protect themselves from money laundering.

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.

In accordance with police statistics, a 30% increase in the number of cases of money laundering was reported in Sweden for 2010. Such result is the reason to establish a new agency with a view to combat money laundering in this country.

The figures that were released by the financial crimes police (Finanspolisen) reveal that the number of reported money laundering cases in Sweden increased by 3 000 to a total of 12 000 reported cases in 2010.

Sweden has been criticised for not doing enough to fight the problem. Now, the Swedish National Council for Crime Prevention considers the possibility to set up a national financial intelligence centre to be shared by Swedish Police, Customs, Tax agency and Economic Crime Authority. Daniel Vesterhav, researcher at the crime prevention council, said that this way it would be possible to free up resources, make use of each of the authorities’ expertise and increase the quality of operative intelligence.

According to the report, out of the 14,500 companies in Sweden obliged to report possible money laundering crimes within their own organisation, 90% of reports come from banks, foreign exchange companies and other money handling businesses.

It should be noted that no single tax adviser out of Sweden’s 159 obliged to report potential money laundering crimes to police filed any report in 2010.

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.

Thailand’s Anti-Money Laundering Office (AMLO) and Office of Insurance Commission (OIC) have joined with a view to control insurance businesses in Thailand. This move was announced following some drug dealers found to have bought policies for already deceased persons for drug money laundering purposes.

The acting secretary-general of AMLO, Seehanat Prayoonrat, and OIC secretary-general, Jantra Buranareuk,  signed a Memorandum of Understanding. This document is aimed at strictly supervising insurance firms and prevent criminals from using them as channels for money laundering or terrorist financing.

According to AMLO secretary-general Seehanat, the collaboration would be helpful for anti-money laundering work as insurance companies are obliged to report operating results to the OIC every 30 days.