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.

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”

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.

A review mechanism will be set up by the Middle East and North Africa Financial Action Task Force (MENAFATF) in order to help the banking system and private sector to identify indicators, trends and threats of both money laundering and terrorist financing.

On January 10, when speaking at a workshop in Doha, Sheikh Ahmed bin Eid al-Thani, chairman of Qatar Finance Intelligence Unit, said that the event aimed to share experiences of the participants so that a mechanism could be finalized.

Many suspected cases that have not reached the level of money laundering have been received by the Qatar Finance Intelligence Unit in Qatar. However, he noted that the final decision will be for the prosecution and the courts.

Adek al-Kulaish, executive secretary of MENAFATF, said that the risk of money laundering and financing terrorism exists and threatens all countries. He noted that it was difficult to estimate the volume of money laundering and terrorism financing as precise figures are absent. He stated, “There are no figures on the global-level, with the exception of a study by the International Monetary Fund in 2003, but that has not been updated”.

A team from the Financial Action Task Force (FATF) is currently in India with a view to assess its legal and enforcement framework.

The assessment that will be made by the FATF team will set the ball rolling for New Delhi’s membership of the elite body.

The assessment ends on Friday, while the results will be published later.

On October 7, 2009, the State Bank of Viet Nam (SBV) and Bank Negara of Malaysia signed a memorandum of understanding on the exchange of information on money laundering.

The deputy governor of the SBV, Tran Minh Tuan, spoke at the signing ceremony. He said the 2 sides are planning to co-operate in collecting, analysing and providing information on money laundering practices.

It is worth noting that Vietnam has been a member of the Asia-Pacific Group on Money Laundering since 2007, and the country’s efforts to struggle money laundering and terrorist financing had shown its commitments to the international community.

Tuan said, “We have been trying our best to promote international co-operation by exchanging information with other countries in the world, especially among the group members” and noted that the SBV highly appreciated the co-operation of Bank Negara Malaysia.

The signing of the memorandum of understanding is a significant step to strengthen the close co-operation between the 2 central banks.

Regional efforts to fight money laundering and terrorist financing in Tanzania failed when the government prevented approval of a report that showed it in a bad light.

On August 20, 2009, in Maseru, a meeting of finance ministers tabled for adoption assessments of the efforts by Tanzania and South Africa to fight money laundering and terrorist financing. These reports had been already approved by officials of the regional body co-ordinating the fight against the illegal practices. So, they were to be adopted at ministerial level. So, South Africa put its report forward, while Tanzania did not.

Paul Vlaanderen, president of the Paris-based the Financial Action Task Force (FATF) said that postponement of the approval by the council of ministers was unexpected as approving the Tanzania report was on the ministers’ agenda.

A representative of the Eastern and Southern Africa Anti-Money Laundering Group said that not approving the report “may raise perceptions of higher risk from a money-laundering control perspective of the region and institutions that have correspondent relations with Tanzanian financial institutions”.

The officials of South Africa declined to comment.

The extent of the laundered money is not known, but in 1996 the International Monetary Fund (IMF) put it at 2-5% of the world’s GDP.

In the end of July 2009, Hong Kong’s Securities and Futures Commission (SFC) announced that it is awaiting public views on the framework of a legislative proposal regarding the anti-money laundering regulatory regime for the financial sector.

The legislative proposal on anti-money laundering is aimed to address issues identified by the Financial Action Task Force (FATF) in 2008 during the SAR’s anti-money laundering regime evaluation.

The consultation document includes details of the financial institutions subjected to the proposed legislation, the customer due diligence and record-keeping obligations to be met, the regulatory authorities’ powers in supervising compliance, criminal and supervisory sanctions for breaches of the obligations, and a proposed licensing system for anti-money laundering regulatory purposes.

The bill is expected to be presented to the Legislative Council in Quarter 2 of 2010.

On the 12th Annual Meeting of Asia/Pacific Group (APG) on Money Laundering, special attention is paid to the measures needed to be done to stop the flow of money through charities and non-profit organizations to terrorists.

During the opening ceremony of the week-long conference, the Home Affairs Minister of Australia Brendan O’Connor addressed the delegates saying that terrorism has become a transnational problem over the past decade, posing risks to international financial systems and global security, and that terrorist groups are funded not only through the drug trade and fraud, but also through legitimate sources such as charitable organizations and business profits. In his speech the Minister said that “The Asia/Pacific Group on Money Laundering plays a vital role in the fight against money laundering and terrorism financing.” 

Opposition spokesman James Wood talked on the importance of the mechanisms to prevent Australia allowing terrorist groups to launder money in the country. In his turn, Mr. O’Connor informed that new legislation has been introduced to strengthen the criminal asset confiscation regime with unexplained wealth provisions.

The 12th AGP Conference was opened on July 7, 2009 in the Brisbane Convention Centre, and the same day the federal government of Australia released a publication for non-profit organizations to help them safeguard against terrorism financing.

The conference consists of 40 delegations, including China and, for the first time, Papua New Guinea. Among the observers on the conference, there are the Australian Crime Commission, the World Bank and the International Monetary Fund.