Archive for August, 2010

Mexico to pass new anti-money laundering legislation

Tuesday, August 31st, 2010

President of Mexico Felipe Calderon proposed new legislation aimed at fighting money laundering and cash smuggling and at preventing Mexican cartels from using billions in U.S. drug profits to finance their criminal organizations. Legislation introduced by  the Mexican president administration and named “unprecedented” by Calderon includes the following measures:

– It would be illegal to purchase real estate in cash;
– The purchase of vehicles, boats, airplanes and luxury goods would be limited to 100,000 pesos (about US$7,700) in cash. Violation of this rule would lead to being sentenced in prison up to 15 years.

If passed, new anti-money laundering law by Calderon would counter the common practice in Mexico, when even in legitimate transactions people prefer cash to avoid being taxed.

Senior Mexican official who investigates financial crimes, states that criminals in this country are increasingly using cash transactions to launder their vast profits. This official, as well as his U.S.  counterparts say that the criminals use billions of dollars in cash to buy airplanes, ranches and businesses to circumvent new Mexican laws that require banks to report large cash movements.

According to the National Drug Intelligence Center, each year Mexican drug cartels and their suppliers from Colombia generate, launder and remove from the U.S. US$18 billion to US$39 billion, largest part of it is transported in cash. It is stated in the recent report by Douglas Farah, a consultant for the Woodrow Wilson International Center for Scholars, that “very little is effectively being done to either impede the movement of drug money into the formal economy or significantly reduce the flow of bulk cash across the U.S.-Mexico border.” No more than 1 percent of this cash is seized by U.S. and Mexican agents.

Isle of Man’s authorities inform on the new Anti-Money Laundering Code

Tuesday, August 24th, 2010

The Department of Home Affairs of the Isle of Man informed all designated non-financial businesses and professionals operating in the island about the Proceeds of Crime (Money Laundering) Code 2010 that will enter into force on September 1, 2010. 

Speaking about the letter informing on the new anti-money laundering legislation, Home Affairs Minister of the British Crown Dependency said that one of the purposes of writing it was ‘to remind people of their responsibilities under anti-money laundering legislation, which was first introduced in September 2007’. Another purpose was to inform the persons and businesses required to comply with the legislation where they can access details of the new Code. He added that ‘compliance with AML laws is essential in ensuring the island is protected from people who would use it for laundering of funds for criminal or terrorist related purposes’, and for maintaining the international reputation of the island.

The Financial Supervision Commission of the Isle of Man also provided information about the update of the
Anti-Money Laundering and Countering the Financing of Terrorism Handbook
, in which new guidance on the new anti-money laundering code was included. Additional amendments have been made to suit the recommendations of the International Monetary Fund.

India became full member of the Financial Action Task Force

Tuesday, August 17th, 2010

India has been welcomed as full member of the Financial Action Task Force (FATF), and became the 34th country member of organization. Since February 2007, India has participated as an observer at FATF, having made its first steps in obtaining full membership. Since 2009, the country took important steps to meet FATF guidelines. The laws amended or passed by the Parliament of India to follow the requirements of FATF (among them the Prevention of Money Laundering (Amendment) Bill, 2009 aimed to combat money laundering, terrorist financing as well as cross-border economic offences) are now in line with FATF 40+9 recommendations, having enabled India’s entering into the organization.

US Charge d’Affaires in India Steven J White said in his comments on India’s membership in FATF that the country ‘has made significant progress over the last several years in moving toward an anti-money laundering and terrorist financing (AML/CFT) regime that meets international standards, and has committed itself to continue to improve its AML/CFT system.’

Anti-Money Laundering Consultation document issued by Ministry of Justice, New Zealand

Thursday, August 12th, 2010

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.