Anti Money Laundering Blog

The US Securities and Exchange Commission has compiled a list of anti-money laundering laws and rules. These apply to brokerage firms. The guide aims at providing all the information available through a single location in order to allow the firms to easier comply with the regulations.

The summarized information in the research guide compiled by the staff of the US Securities and Exchange Commission is current as of January 1, 2007.

The SEC has assembled key laws, rules and guidance applicable to brokerage firms and posted it on its Web site. So, the Guide is available online.

The guide includes the requirements under the Patriot Act, the Bank Secrecy Act and other laws, as well as provides a list of contact information.

In accordance with the UAE’s Minister of Finance and Industry Dr Mohammed Khalfan bin Kharbash, money laundering has disastrous effects on the economies of Arab nations. This emphasizes the fact that Arab banks are lacking advanced technology and solutions for acquiring the necessary tools to better control operations and activities and, accordingly, combat this serious international crime.

Dr. Kharbash said that, according to recent studies, $5 billion worth of laundered money can cause losses worth up to $11.26 billion in GDP as well as loss of up to 250 000 jobs. The Minister reminded the fact that money laundering is ranked the 3rd highest yielding industry worldwide. It is preceded by foreign exchange and energy and accounts for about 5% of global GDP.

He said that the figures are staggering for the region. The warning by Dr. Kharbash seems to be useful for the public, especially before the summit scheduled on April 23, 2007, which will host top officials and representatives of 100 Arab banks. The event is aimed at highlighting the major challenges facing the banking sector in the Arab world.

Men are the ones to be more often the victims of Internet fraud. Also, they used to lose more money than women.

In accordance with annual report published by the FBI’s Internet Crime Complaint Center, a typical victim of Internet fraud is a 30-40-year-old man from New York, California, Florida, or Texas. As to victims of Internet fraud living outside the USA, a substantial number lived in the UK, Nigeria, Canada, Romania and Italy.

According to the report, in 2006 men lost USD 1.69 to every USD 1 that women lost.  

The 2006 Internet Crime Report is the 6th annual study based on complaints referred to law enforcement or regulatory agencies. Between January 1 and December 31, 2006, the web site received 207 492 complaints, which is a 10.4% decrease from the number of complaints filed in 2005. 

The total loss from all the referred fraud cases in 2006 was USD 198.44 million, while the total loss in 2005 was USD 183.12 million. An average loss per complaint in 2006 was USD 724.

According to the report, the most reported crime was Internet auction fraud which accounted for 44.9% of all fraud complaints. The fraud complaint that caused the highest loss was the Nigerian letter scam, followed by check fraud.

When it comes to age groups, the elderly used to lose the most to scammers. People of 60 and older lost more money than any other age group and reported losing about USD 866 per victim.

The problem of money laundering amounts has already been discussed previously. This is the continuation of the topic.

When talking about the particular money laundering cases, the estimated amounts laundered are exactly or approximately clear. However, when talking about money laundering on a global scale, laundered funds are harder to estimate. Money laundering is involved in secrecy and has a clandestine nature, and therefore is not easily subjected to statistical analysis. This is why all the estimated figures provided below have huge margin between.

The International Monetary Fund (IMF) that recognizes the importance of the problem of money laundering has estimated that the amount of funds laundered in one year all around the world could be between 2% and 5% of the world’s gross domestic product (GDP).

According to 1996 statistics, provided by IMF Working paper No. 96/55 (may 1996), this is between USD 590 billion and USD 1.5 trillion.

The United Nations Office on Drugs and and Crime (UNODC) provides slightly different figures. In accordance with its estimates, the amounts of money laundered yearly globally have ranged between USD 500 billion and USD 1 trillion.

Taking into consideration the above-mentioned estimates, it is obvious that money laundering is the problem to be paid great attention by each and any country of the world.

One of the valuable achievements of the Egmont Group is publishing Egmont 100 sanitized cases. This is a compilation published in 2001 to describe and analyze  100 sanitized cases on successes and learning moments in fighting money laundering and a product of contributions made by Egmont Group members.

After editing 100 cases, the Egmont Group produced a list of most frequently observed indicators that point at money laundering. They are as follows:

• large-scale transactions;
• atypical or uneconomical fund transfer to or from foreign jurisdiction;
• unusual business activity or transaction;
• large and/or rapid movements of funds;
• unrealistic wealth compared to client profile;
• defensive stance to questioning.