Anti Money Laundering Blog

On 9 August, 2010 the Ministry of Justice of New Zealand released consultation document regarding the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the AML/CFT Act), which was passed in last year October. This document sets out proposals for regulations and codes of practice under the AML/CFT Act, and provides an opportunity to the interested parties to influence the positions established in the new regime, for example, which entities and transactions are to be exempt, applicable threshold values, customer due diligence (CDD), third party reliance and designated business group issues, as well as annual reporting requirements and other issues. The deadline for submission of proposals is 6 September 2010. 

The changes put forward in the proposals concern persons required to be authorised financial advisers  under the Financial Advisers Act 2008 (FAA). These persons will be included within the definition of “reporting entity”, meaning they will be required to comply with all the obligations set by the AML/CFT Act.

Certain exemptions are proposed for a number of entities and transactions, among them lawyers and accountants who provide financial adviser services, securities registries;  general risk-based insurance and reinsurance products, premium funding agreements that relate to insurance products not covered by the AML/CFT Act, low-value life insurance products, workplace-based and low-value superannuation funds, debt collection agencies, and some others. Transitional exemptions are proposed for a number of second-phase entities.

One of the fundamental issues that are not fully covered by the consultation document is that “there is still no guidance on what exactly money laundering is”, while reporting entities will be required to have AML/CFT programmes to detect, manage and eliminate the risk of money laundering.

As all the world makes attempts to fight money laundering, many countries are now requiring insurers to get additional information from their customers with a view to screen out possible launderers. For multinationals who are interested to do business in these countries, this means providing their insurers with a variety of documents obtaining the insurance they need.

It goes without saying that most multinationals are legitimate businesses and they are unlikely to use their insurer to launder money. Still, the insurance industry is vulnerable. In its National Money Laundering Strategy for 2007 report, the US government noted that the insurance industry has undergone a transformation and that it may appear increasingly attractive to money launderers. A range of investment services featuring financial products that can be purchased and subsequently transferred, redeemed, or sold, are now offered by agents and broker, which, according to the report, provides new opportunities for money laundering. The report says that numerous money laundering methods have been used to exploit insurance products, primarily life insurance and annuities.

To remind, some countries have been taking measures to crack down on the problem and improve their reputation in the international community. So, the governments of these countries are requiring insurers to obtain documents and take other actions to ensure not being used by criminal organizations to help launder illicit funds. Imposing these requirements on insurers is carried out by Mexico, Brazil, Argentina, Colombia and Malaysia.

For example, before getting insurance, multinationals with operations in Mexico must provide a number of documents including the following: a certified copy of the act of incorporation, federal taxpayer’s registry, a document that proves the address of the company in Mexico, a certified copy of the document showing the legal authority of the company’s representatives; a copy of the official identification of the legal representative, such as passport or card of military service. If the parent company in the US or Canada is included on the Mexican policy as a named insured or beneficiary, each non-Mexican company that is included under the admitted policy also will have to provide the insurer with similar documentation.

Israeli banks will no longer accept deposit checks drawn on Palestinian banks if the details of account holder are not printed on the checks using Latin characters.

This is a move that the Bank of Israel makes towards tightening its anti-money laundering regulations and bank customers identification procedures. It should be noted that the Bank for the first time is setting binding rules for financial activity with banks in the Palestinian Authority.

Supervisor of Banks Rony Hizkiyahu sent to a letter to the banks’ CEOs. He wrote that “there is a gap between international standards and Israel’s current guidelines concerning the prevention of money laundering”. He suggested that proper “know your customer” (KYC) policies and guidelines for regular monitoring of their activities are essential for the stability of the banking system.

The Indian Banks’ Association (IBA) has joined efforts with 10 banks in order to improve the customer verification system and monitoring of transactions. This is made to check money laundering activities in India.

A working committee has been set up by IBA. The committee was headed by ICICI Bank Senior General Manager Sanjay Chaugle. Its task was preparing revised guidance notes on know your customer (KYC) and anti-money laundering operations.

Monitoring of transactions and record keeping in a more automated manner was given a particular attention. Record keeping is automated by means of creating a database for names to filter defaults. The focus will be put on a software that detects suspicious transactions.

The recent focus on anti-money laundering operations and know your customer is part of India’s efforts to join the Financial Action Task Force (FATF). India is going to share details of the legislation amendments with FATF by the end of the year 2008 in order to pave its way for the entry into this group by next year.

Money laundering worldwide is estimated at USD 1.5 trillion. According to Bahrain Tribune, a senior banker said that money laundering is a serious challenge to the financial institutions in the region and it is difficult for them to take all possible measures in order to keep the businesses clean.

Senior executive group corporate governance at al khaliji, Niall Coburn, said that Know Your Customer principle is continueing to be the cornerstone of anti-money laundering. According to him, corporate governance and international best practices are to assist the financial institutions with developing and advancing areas of businesses. He said that al khaliji is a next generation bank that is implementing international best practice standards to prevent itself from dirty money issues.

Mr. Coburn said that “As part of implementing this goal by adopting international best practice, al khaliji is one of the endorsement partners of Complinet 2nd GCC regulators’ Summit” that was held in Bahrain on February 19 and 20.

Coburn, as a moderator, explained and discussed the financial reliance on banks for long-term infrastructure development and the pressure to expand and consolidate. He also discussed such issues as the growth of Islamic Banking and compliance and corporate standards.

On November 27, 2007, IPSA International Inc., an international independent risk advisory firm providing investigative and consulting services in the areas of Anti-Money Laundering (AML), Due Diligence, Asset Location and Recovery, Fraud and Intellectual Property, announced that William Goss has joined the company as a Director of Anti Money Laundering Consulting Services for the New York office.

Mr. Goss will deal with direct growth strategies for IPSA’s AML practice area as well as will manage anti-money laundering engagements and other risk mitigation projects in the region.
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William Goss has more than 25 years of experience in the investigative industry. He has held numerous senior level management and sales positions that included Charter Officer and Director of Sales for Regulatory Data Corp (RDC), a Know Your Customer and Enhanced Due Diligence database company formed by 20 of the world’s largest financial institutions. Before he joined IPSA International, Goss operated his boutique anti-money laundering and bank secrecy act consulting firm that served global financial institutions.

Mr. Goss is an industry expert who has spoken for New York State Department of Labor and hedge fund conferences on such issues as Enhanced Due Diligence Investigations and the Fair Credit Reporting Act.

On May 27-28, 2007, the 2nd Annual Middle East Anti-Money Laundering Forum took place in Bahrain, UAE to highlight the need to ensure pursuing more efforts for eliminating money laundering by financial institutions.

Annual Middle East Anti-Money Laundering Forum aims at maintaining successful anti-money laundering strategies using knowledge, teamwork and greater transparency and understanding changes in regulatory guidelines.

The 2nd Middle East Ant-Money Laundering Forum was a good opportunity for professionals to learn decisive and effective anti-money laundering strategies. The Forum offered unique information on the latest changes to guidelines and best practices on anti-money laundering strategies all over the world. The review of evolving technological solutions and training methods for financial institutions was also on the list.

The event was attended by some 60 specialists from the GCC and Middle East countries.

Head of Compliance of Oman International Bank (OIB), Hany Abou-El-Fotouh, has presented his speech at the forum. He told the delegation, that it has been agreed that Know Your Customer (KYC) procedure was very important and that this due diligence and bank regulation must be observed by financial institutions in order to identify their customers and do financial business with them.

Abou-El-Fotouh emphasized the importance of adequate staffing the compliance units of financial institutions. Also, he stressed the importance of on-going training on all aspects of money laundering control to ensure employees’ being up-to-date regarding money laundering and suspicious transactions and their identification.