Anti Money Laundering Blog

 On October 27, 2007, Palestinian officials announced that President Mahmoud Abbas has tightened up Palestinian money-laundering laws that are aimed to deny cash to rival Hamas Islamists and to boost foreign confidence in Palestinian banks.

Abbas broke with Hamas after this group seized the Gaza Strip in June 2007, and his efforts have become in line with Israeli and Western efforts to put the group in a financial isolation.

Formally Hamas is avoided by Palestinian banks. However, according to Palestinian and Israeli officials, it has managed to find alternative funding in the form of foreign donations handled by Islamic charities or local businesses. In accordance with the new regulations issued by President Abbas, such dealings are penalised with a 3- to 15-year jail term and up to USD 145 000 fine.

Palestinian President intends to reassure Israel and the US that Palestinian banks conform to international limits on doing business with groups that in the West are recognized as terrorist. Deputy governor of the Palestine Monetary Authority, Jihad Wazir, said, “This law would assure international banks they can do business with Palestinian banks because they are complying with international standards”.

As music legend Taliep Petersen’s diary proves, money laundering, diamonds and forex trading were among of the deals in which Taliep Petersen and his wife Najwa were involved in before Taliep, a famous South African singer, composer and director of many popular musicals, was shot dead on December 16, 2006.

The evidence was provided to the Wynberg Regional Court on October 25, 2007, by Suleiman Effendi, Najwa’s 19-year-old son from a previous marriage.

The evidence was given as an affidavit and read out in court during Najwa Petersen’s 2nd bail application. Her 1st bail application was refused as well as an attempt to appeal the decision in the Cape High Court was was rejected. However, now she is claiming to have new facts indicating that she should be released on bail.

Suleiman Effendi said he knows state witness Faheem Hendricks (who is currently under witness protection.), who claimed that Petersen had approached him to find hitmen to commit the murder. According to Effendi, Hendricks had been at their Athlone home several times since October 2006. He paid visits to take money from Petersen.

Suleiman Effendi said that his mother and Taliep were involved in transactions with diamonds and dollars and frequently traveled to Namibia to obtain USD.

 Risk and compliance solutions provider Fortent  conducted a survey of top money laundering compliance officers.

The survey reveals that Asia has experienced the biggest increase in money laundering risk. 30% of respondents at institutions with global operations identified it this way.

Another finding of the survey was that trade finance and beneficial ownership are top areas of expected regulatory interest over next 5 years. Asia and the Middle East were identified as regions of particular concern for trade finance.

It should be noted that 71% of respondents considered retail banking to be the most sensitive line of business as regards money laundering risk.

According to the survey, private banking and electronic “cash” systems are increasingly “hot” areas that have to be observed over the next 3 years. These include smart cards, debit cards and online value transfer systems that influence the economy.

George Faux, Group Executive, Client Relationship Management of Fortent, said that the information collected from a diverse group of global financial institutions reveals that “there are significant concerns - not the least of which is that more than 60% of respondents expect criminal activity to increase”.

Previously, the FATF worries over terrorist financing and money laundering in Iran have been discussed. After the FATF determined that Iran’s lack of a comprehensive anti-money laundering and combating the financing of terrorism regime, the Financial Crimes Enforcement Network (FinCEN) issued guidance on this country.Â

On October 16, 2007, FinCEN has issued Guidance to Financial Institutions on the Increasing Money Laundering Threat Involving Illicit Iranian Activity, which is available online.

It should be noted that the quidance provides hyperlinks to both the FATF and UN documents on Iranian sanctions as well as discusses the use of intermediaries and shell companies, and the Free Trade Zone located in Iran’s Kish Island offshore centre, for evading sanctions.

On October 12, 2007, the Paris-based Financial Action Task Force, an international financial watchdog, said it was worried about Iran’s lack of comprehensive measures for fighting terror financing and money laundering. The organisation suggested that its problem is “a significant vulnerability within the international financial system”, which includes lack of satisfactory legislation and regulations.

The FATF contacted Iran, along with other countries, in order to ask them to reveal and erase vulnerabilities in their systems. Iran was the only country not to respond. The other countries were not named by the organisation’s representative.

Rick McDonell, the group’s executive secretary said, “The FATF has repeatedly attempted to engage with Iran,” and added, “To date this has proved impossible, although this is still our aim”.

The DIFX Academy held the course at the Dubai International Financial Centre (DIFC) in conjunction with the US regulator FINRA, Complinet, a provider of information on compliance issues, and the University of Reading in the UK.

The candidates who attended a 3-day course and succeeded in the exam received a Certificate in Compliance and Anti-Money Laundering from the DIFX Academy, which is the leader of financial training in the region.

The course attended by executives and compliance officers of leading financial services and other organisations will be repeated in a year.

According to Hamed Ali, Executive Officer of the Dubai International Financial Exchange (DIFX), the DIFX Academy aims to provide financial services courses of the highest quality in order to support the capital markets growth in the region. He said that the course offers detailed information on regulatory issues inside the DIFC and beyond as well as such issues as Sharia compliance, anti-money laundering mechanisms and procedures, etc.

The Indian government is going to strengthen the Securities and Exchange Board of India Act to include insider trading as money laundering. Then, the stock market regulator will be able to take action against this type of crime.

Generally, insider trading is a way to bring unaccounted money into the system. Previously, insider trading and money laundering it have been discussed as regards how how insider trading differs from money laundering and how it is identified.

According to the government of India, including insider trading as money laundering “will help smoothen the functioning of the exchange”.

It is proposed that Section 24 of the SEBI Act, relating to insider trading, is included in the ambit of the Prevention of Money Laundering Act.

The initiative is said to be taken after the recommendations of the FATF suggesting numerous measures to fight money laundering.

More than a dozen West African nations met at UN headquarters in New York to discuss the problem of combating terrorism.

The United Nations announced that the meeting was aimed at discussing a more targeted and regional approach to building the ability of West African nations to fight terrorism not only within their borders, but also across the region. According to the UN, the West African nations were joined by some 20 donor and international organizations.

The meeting was sponsored by the UN Security Council’s Counter-Terrorism Committee’s Executive Directorate (CTEF). It intended to find ways to apply the various United Nations and regional resolutions aimed to fight combat terrorism, including  Security Council Resolution 1373 and the Global Counter-Terrorism Strategy adopted by the General Assembly in September 2006.

Although the UN agreed that the threat of terrorism in most West African countries is not high, they must take this problem seriously and do everything they can to fight it. The UN reminded that terrorists and their supporters might use instabilities and weaknesses in West Africa to recruit and train members as well as to fund and launch terrorist attacks.