DOCSLIB.ORG

THE AML JARGON-BUSTER Your Guide to Anti-Money Laundering Definitions

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
THE AML JARGON-BUSTER Your Guide to Anti-Money Laundering Definitions THE AML JARGON-BUSTER Your guide to Anti-Money Laundering definitions TERM DEFINITION TERM DEFINITION AML See Anti-Money Laundering Enhanced Due An enhanced form of customer due Diligence (EDD) diligence (CDD) that must be adopted Anti-Money The systems and controls that regulated when the firm has ascertained that the Laundering (AML) firms are required to put in place in customer poses a higher risk of money order to prevent, detect and report laundering. It typically requires the money laundering. collection of additional documentation, or further verification checks. Anonymous An anonymous account is one for which Account the financial institution holds no records FATF See Financial Action Task Force concerning the identity of the account holder. Most jurisdictions now prohibit Financial Action An inter-governmental organisation the use of anonymous accounts Task Force (FATF) founded by the G7 in 1989 to develop although numerous ‘anonymous’ a global set of standards to combat accounts and facilities are still offered money laundering. FATF is based in via the Internet. Paris, France and the latest version of its 40 recommendations were published Beneficial Owner The person who ultimately owns in February 2012. They focus on the (BO) an asset and on whom AML checks importance of taking a risk-based need to be carried out. On occasions, approach to combatting money particularly with offshore entities, the laundering and terrorist financing. identity of the beneficial owner may not be disclosed in the public domain. Financial The Financial Action Task Force Sufficient KYC checks will not be Intelligence Unit recommends that each country should deemed to have been carried out if the (FIU) establish a financial intelligence unit identity of the beneficial owner(s) is not (FIU) – a national central authority to established, and then verified as per the receive, analyse and act upon suspicious risk-based approach. activity reports and deal with AML matters. CDD See Customer Due Diligence FIU See Financial Intelligence Unit CFT See Countering the Financing of Terrorism Front Company A shell company or subsidiary that is intended to shield the owners from CTF See Countering Terrorist Financing liability or scrutiny. Such a company may be used for organised crime or Customer Due Customer due diligence (CDD) is the other illegal activities. Diligence (CDD) process by which a firm gathers sufficient information regarding a customer Integration The final part of the money laundering to enable it to adequately assess the process. The funds that were the potential AML risks the client poses. It proceeds of crime are fully integrated is often referred to within the industry into the financial system and are now as know your customer/client (KYC), perceived as ‘clean’. Such funds can although CDD tends to relate specifically be used without suspicion, since it is to AML, whereas the term KYC may also difficult (if not impossible) to link them be used where the firm is required to back to the original criminal activity. gather information regarding a client prior to providing a service (such as Know Your The activities that financial institutions investment advice) to the client. Customer/Client must perform to ascertain relevant (KYC) information about their clients for the Countering the The systems and controls that regulated purpose of doing business with them. Financing of firms are required to put in place in In the context of AML, the term is often Terrorism (CFT) order to prevent, detect and report the used interchangeably with customer financing of terrorism. due diligence (CDD) but KYC also applies in the context of the provision Countering An alternative term for countering the of certain services. For example, firms Terrorist Financing financing of terrorism (CFT). are typically required to gather certain (CTF) information from a client prior to providing investment advice. EDD See Enhanced Due Diligence [email protected] www.cclacademy.com © CCL Academy 2016. All rights reserved. TERM DEFINITION TERM DEFINITION Know Your The due diligence activities (such as RBA See Risk-Based Approach Employee (KYE) pre-employment checks) performed by a firm on its employees. Risk-Based A risk-based approach is considered by Approach (RBA) the Financial Action Task Force (FATF) to KYC See Know Your Customer/Client be the basis for effective implementation of AML controls. Under such an approach KYE See Know Your Employee countries, competent authorities and reporting entities (including financial Layering The second stage of the money institutions) are expected to identify, laundering process. The proceeds of assess and understand the money crime which have been introduced into laundering/terrorist financing risks they the financial system (via placement) are exposed to so that they can develop are disguised by the use of multiple the appropriate measures to mitigate transactions, or by other techniques, these risks. which are intended to make it increasingly difficult to link the funds to the original SAR See Suspicious Activity Report criminal activity. This may involve, for example, the transfer of funds between SDD See Simplified Due Diligence different accounts and currencies, the use of trade finance, or buying/selling assets Shell Bank Generally defined as ‘a foreign bank such as shares or bonds. without a physical presence in any country’. Correspondent banking Money Laundering The process by which criminals attempt relationships with such banks represent to hide and/or disguise the origins of a significant money laundering risk. the proceeds of crime. Simplified Due A simplified form of customer due Numbered Account A bank account which has a number, Diligence (SDD) diligence (CDD) that may be adopted rather than the name of the account when the firm has ascertained that the holder, as its title. As a result the customer poses a low risk of money account owner will not be identified in laundering. account documentation. However, the account is not strictly anonymous, since Smurfing A technique used in the placement banking regulations typically require of funds that are being laundered, the bank to know the identity of the whereby the funds are divided into client (in line with normal customer due smaller amounts so that such amounts diligence). will fall below the threshold at which the relevant financial institution Offshore Bank A bank that is domiciled in an offshore (or other body) is required to file a financial centre and conducts business suspicious transaction report. with non-residents of that jurisdiction. In some cases they have no physical STR See Suspicious Transaction Report presence in the jurisdiction and are subject to limited regulation. Such Suspicious Activity Suspicious activity report (SAR) is a banks are often perceived as a vehicle Report (SAR) generic term for the report(s) submitted for money laundering, although there by financial institutions and other are many legitimate offshore banks. bodies subject to AML regulations to the Financial Intelligence Unit (FIU) Onboarding The processes and procedures that when money laundering activity is need to be performed before a client suspected. Different terminology can trade or buy services from a may be used in different jurisdictions financial institution. For example, the for these reports. For example, in completion of CDD/KYC and agreement the United States there are SARs for on terms of businesses. financial institutions, SARC (Suspicious activity report for casinos) and SAR-S PEP See Politically Exposed Person (Suspicious activity report for securities brokers and dealers). Politically Exposed An individual who holds public office Person (PEP) or other prominent function, or who Suspicious The term given, in some jurisdictions, to has a close association with such a Transaction Report a suspicious activity report (SAR). Note person. By virtue of their position (STR) that in the UK a suspicious transaction PEPs are arguably more susceptible report (STR) relates to suspicions of to bribery, corruption and the misuse market abuse rather than money of state funds and therefore pose a laundering. higher risk of money laundering. As a result additional obligations (such as Transparency An international non-governmental enhanced due diligence) typically apply International (TI) organisation that monitors and when a firm has dealings with a PEP. publishes reports on corporate and public sector corruption. Its annual Placement The initial stage of the money Corruption Perception Index is a laundering process: the proceeds of common tool used by firms to assess crime are introduced into the financial the risks of doing business in foreign system. This is typically achieved by jurisdictions. disguising the funds as legitimate – for example, as the proceeds of business Ultimate Beneficial See Beneficial Owner activities. Owner (UBO) [email protected] www.cclacademy.com © CCL Academy 2016. All rights reserved..
Load more

Recommended publications
  • FINANCE Offshore Finance.Pdf
    This page intentionally left blank OFFSHORE FINANCE It is estimated that up to 60 per cent of the world’s money may be located oVshore, where half of all financial transactions are said to take place. Meanwhile, there is a perception that secrecy about oVshore is encouraged to obfuscate tax evasion and money laundering. Depending upon the criteria used to identify them, there are between forty and eighty oVshore finance centres spread around the world. The tax rules that apply in these jurisdictions are determined by the jurisdictions themselves and often are more benign than comparative rules that apply in the larger financial centres globally. This gives rise to potential for the development of tax mitigation strategies. McCann provides a detailed analysis of the global oVshore environment, outlining the extent of the information available and how that information might be used in assessing the quality of individual jurisdictions, as well as examining whether some of the perceptions about ‘OVshore’ are valid. He analyses the ongoing work of what have become known as the ‘standard setters’ – including the Financial Stability Forum, the Financial Action Task Force, the International Monetary Fund, the World Bank and the Organization for Economic Co-operation and Development. The book also oVers some suggestions as to what the future might hold for oVshore finance. HILTON Mc CANN was the Acting Chief Executive of the Financial Services Commission, Mauritius. He has held senior positions in the respective regulatory authorities in the Isle of Man, Malta and Mauritius. Having trained as a banker, he began his regulatory career supervising banks in the Isle of Man.
    [Show full text]
  • Offshore Markets for the Domestic Currency: Monetary and Financial Stability Issues
    BIS Working Papers No 320 Offshore markets for the domestic currency: monetary and financial stability issues by Dong He and Robert N McCauley Monetary and Economic Department September 2010 JEL classification: E51; E58; F33 Keywords: offshore markets; currency internationalisation; monetary stability; financial stability BIS Working Papers are written by members of the Monetary and Economic Department of the Bank for International Settlements, and from time to time by other economists, and are published by the Bank. The papers are on subjects of topical interest and are technical in character. The views expressed in them are those of their authors and not necessarily the views of the BIS. Copies of publications are available from: Bank for International Settlements Communications CH-4002 Basel, Switzerland E-mail: [email protected] Fax: +41 61 280 9100 and +41 61 280 8100 This publication is available on the BIS website (www.bis.org). © Bank for International Settlements 2010. All rights reserved. Brief excerpts may be reproduced or translated provided the source is stated. ISSN 1020-0959 (print) ISBN 1682-7678 (online) Abstract We show in this paper that offshore markets intermediate a large chunk of financial transactions in major reserve currencies such as the US dollar. We argue that, for emerging market economies that are interested in seeing some international use of their currencies, offshore markets can help to increase the recognition and acceptance of the currency while still allowing the authorities to retain a measure of control over the pace of capital account liberalisation. The development of offshore markets could pose risks to monetary and financial stability in the home economy which need to be prudently managed.
    [Show full text]
  • Gray Areas of Offshore Financial Centers
    University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange Supervised Undergraduate Student Research Chancellor’s Honors Program Projects and Creative Work Spring 5-2008 Gray Areas of Offshore Financial Centers Matthew Benjamin Davis University of Tennessee - Knoxville Follow this and additional works at: https://trace.tennessee.edu/utk_chanhonoproj Recommended Citation Davis, Matthew Benjamin, "Gray Areas of Offshore Financial Centers" (2008). Chancellor’s Honors Program Projects. https://trace.tennessee.edu/utk_chanhonoproj/1167 This is brought to you for free and open access by the Supervised Undergraduate Student Research and Creative Work at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in Chancellor’s Honors Program Projects by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact [email protected]. Gray Areas of Offshore Financial Centers Matthew Davis Chancellor's Honors Program Senior Project Introduction Offshore finance often brings to mind illegal activities such as money laundering and tax evasion. Over the years, these shady dealings have become associated with offshore banking due to its lax regulations and strict adherence to client secrecy. On the other hand, offshore financial centers can also be used for legitimate reasons such as setting up offshore hedge funds. Many motives drive the move of funds offshore and increase the activity of offshore financial centers. Some are completely legal, while others focus more on criminal activity. Often, the line between these legal and illegal activities is a very thin one. Specific regulations cannot be made to cover every single new situation, and taxpayers are forced to make decisions about how to interpret the law.
    [Show full text]
  • Global Financial Services Regulatory Guide
    Global Financial Services Regulatory Guide Baker McKenzie’s Global Financial Services Regulatory Guide Baker McKenzie’s Global Financial Services Regulatory Guide Table of Contents Introduction .......................................................................................... 1 Argentina .............................................................................................. 3 Australia ............................................................................................. 10 Austria ................................................................................................ 22 Azerbaijan .......................................................................................... 34 Belgium .............................................................................................. 40 Brazil .................................................................................................. 52 Canada ................................................................................................ 64 Chile ................................................................................................... 74 People’s Republic of China ................................................................ 78 Colombia ............................................................................................ 85 Czech Republic ................................................................................... 96 France ............................................................................................... 108 Germany
    [Show full text]
  • Offshore Banking and the Prospects for the Ghanaian Economy
    GHAN F A O K N 7 A B 5 9 1 EST. OFFSHORE BANKING AND THE PROSPECTS FOR THE GHANAIAN ECONOMY RESEARCH DEPARTMENT BANK OF GHANA OCTOBER 2008 The Sector Study reports are prepared by the Research Department of Bank of Ghana for the deliberations of the Bank’s Board of Directors. The reports are subsequently made available as public information. This Study Report was prepared under the general direction of Dr. Ernest Addison. Primary contributors were Dr. Johnson Asiama and Ibrahim Abdulai. Further information may be obtained from: The Head Research Department Bank of Ghana P. O. Box GP 2674 Accra, Ghana. Tel: 233-21-666902-8 ISBN: 0855-658X TabLE of Contents 1.0 IntrodUction 1 1.1 History and Size 2 2.0 OVerVieW of Offshore FinanciaL Centres 4 2.1 Definitional Issues and Uses of Offshore Financial Centres 4 2.2 The Potential Risks from Offshore Operations and Country Experiences 7 3.0 FinanciaL SerVices Centre And Offshore Banking in Ghana 11 3.1 Background 11 3.2 Prospects and Benefits to the Ghanaian Economy 12 3.3 Channel of Influence between Offshore Banks and Domestic Banking Institutions 14 4.0 RegULation of Offshore Banks in Ghana 16 4.1 Why regulate 16 4.2 The Banking (Amendment) Act, 2007 (Act 738) and offshore banking 16 5.0 ConcLUsion and POLicy Recommendations 18 AppendiX 19 References 20 1.0 IntrodUction One of the key developments in the world economy during the last few decades has been the growing international mobility of capital. An element in this process has been the growth of offshore finance.
    [Show full text]
  • Offshore Bank Accounts by ZENRON Capital Inc
    Offshore Bank Accounts by ZENRON Capital Inc. Opening Offshore bank accounts can be a straight forward process if managed by an experienced corporate services firm like ZENRON Capital Inc. Offshore accounts typically offer a broader range of services than those offered by onshore banks. ZENRON Consultants provides strategic advice on offshore banking and manages the process for opening offshore bank accounts for our clients. 1. Opening an offshore bank account must be supported by detailed information on the individual, or company's activities. For an offshore corporate bank account information such as the company's clients and suppliers, as well as information about its management team (shareholders and directors) and financial projections can also be required. 2. ZENRON Consultants staff prepare the application form for opening the offshore bank account and attend a bank interview on the clients behalf. 3. Offshore banking jurisdictions usually require banks to enforce strict 'know your client' procedures as part of their Offshore corporate banking policies. Prior to opening offshore bank accounts, our clients are required to submit information on the company's activities and shareholders' and directors' details. 4. ZENRON Consultants collects the required due diligence and submits the application on the clients behalf. 5. Once approved, the bank will then issue internet banking passwords, check book, ATM cards and other necessary paperwork. Our consultants assist clients become familiar with using the account and the offshore banks services. 1. Offshore merchant account services - This type of offshore bank account allows you to accept credit card orders from your customers via an offshore credit card processing service provider.
    [Show full text]
  • LEVERAGING OFFSHORE FINANCING to EXPAND AFRICAN NON-TRADITIONAL EXPORTS: the CASE of the HORTICULTURAL SECTOR (New Case Studies)
    UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT UNCTAD Series on Innovative Financing in the Commodity Sector and Dynamic Industries LEVERAGING OFFSHORE FINANCING TO EXPAND AFRICAN NON-TRADITIONAL EXPORTS: THE CASE OF THE HORTICULTURAL SECTOR (new case studies) Prepared by the UNCTAD secretariat UNITED NATIONS New York and Geneva, 2007 UNCTAD/DITC/COM/2006/13 UNITED NATIONS PUBLICATION ISSN 1817-4515 Copyright © United Nations, 2007 All rights reserved ii TABLE OF CONTENTS Chapter Page Foreword....................................................................................................................... v Introduction.................................................................................................................. vii I. Risks and constraints in financing Africa’s horticultural trade.......................... 1 II. How can various parties play a role in structured finance for horticultural trade in Africa? ........................................................................................................ 7 A. The role of Governments...................................................................................... 9 B. The role of producers, exporters and associations ............................................... 12 C. The role of local banks......................................................................................... 13 D. The role of international banks............................................................................. 14 E. The role of offshore buyers and auction floors ...................................................
    [Show full text]
  • Banking Crisis: the Impact of the Failure of the Icelandic Banks
    House of Commons Treasury Committee Banking Crisis: The impact of the failure of the Icelandic banks Fifth Report of Session 2008–09 Report, together with formal minutes Ordered by the House of Commons to be printed 31 March 2009 HC 402 Published on 4 April 2009 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Treasury Committee The Treasury Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of HM Treasury, HM Revenue & Customs and associated public bodies. Current membership Rt Hon John McFall MP (Labour, West Dunbartonshire) (Chairman) Nick Ainger MP (Labour, Carmarthen West & South Pembrokeshire) Mr Graham Brady MP (Conservative, Altrincham and Sale West) Mr Colin Breed MP (Liberal Democrat, South East Cornwall) Jim Cousins MP (Labour, Newcastle upon Tyne Central) Mr Michael Fallon MP (Conservative, Sevenoaks) (Chairman, Sub-Committee) Ms Sally Keeble MP (Labour, Northampton North) Mr Andrew Love MP (Labour, Edmonton) John Mann MP, (Labour, Bassetlaw) Mr George Mudie MP (Labour, Leeds East) John Thurso MP (Liberal Democrat, Caithness, Sutherland and Easter Ross) Mr Mark Todd MP (Labour, South Derbyshire) Mr Andrew Tyrie MP (Conservative, Chichester) Sir Peter Viggers MP (Conservative, Gosport) The following members were also members of the committee during the inquiry: Mr Philip Dunne MP (Conservative, Ludlow), Mr Stephen Crabb MP (Conservative, Preseli Pembrokeshire), Mr Siôn Simon MP, (Labour, Birmingham, Erdington) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No. 152. These are available on the Internet via www.parliament.uk.
    [Show full text]
  • Payment Systems in Singapore
    Payment systems in Singapore Singapore Table of contents List of abbreviations............................................................................................................................. 319 Introduction .......................................................................................................................................... 321 1. The institutional aspects............................................................................................................ 321 1.1 The general legal and regulatory framework .................................................................. 321 1.2 The role of the Monetary Authority of Singapore ............................................................ 322 1.2.1 Development and regulation of payment systems................................................ 322 1.3 The role of other private and public sector bodies .......................................................... 322 1.3.1 Singapore Clearing House Association (SCHA)................................................... 322 1.3.2 Association of Banks in Singapore (ABS)............................................................. 323 1.3.3 Electronic Payments Technical Committee (EPTC) ............................................. 323 1.3.4 Controller of Certification Authorities (CCA) ......................................................... 323 1.4 The role of financial intermediaries ................................................................................. 323 1.4.1 Banks 323 1.4.2 Banking liberalisation
    [Show full text]
  • Offshore Financial Centers: Parasites Or Symbionts? Andrew K. Rose And
    Offshore Financial Centers: Parasites or Symbionts? Andrew K. Rose and Mark M. Spiegel* Your local crime-lord has one. So do most drug-dealers, white-collar criminals, and Mafioso. Have you got an offshore bank account? Offshore financial centers are often accused of facilitating tax evasion, money laundering, and any number of nefarious activities. Prominent offshore centers have reputations for facilitating all manner of these unsavory practices, though ample opportunities for such activities may also exist for local banks with branches in Gibraltar, Guernsey, Jersey, and the Isle of Man. All told, there are some forty offshore financial centers (OFCs) spread around the world, mostly in Europe and the Caribbean. There is widespread suspicion that most of them reduce the costs of illicit activity in their neighbors, leading many to characterize OFCs as parasites. While OFCs might encourage bad behavior, their net impact may not be bad for the economy. By providing competition for domestic banks, offshore banks also (inadvertently) lower costs for anyone using the domestic financial system. In their forthcoming article ”Offshore Financial Centers: Parasites or Symbionts?” Rose and Spiegel quantify the indirect competitive benefits of OFCs, and show that they more than offset the costs. That is, OFCs are more accurately viewed as symbionts than parasites. Offshore financial centers (such as the Cayman Islands or Panama) are jurisdictions that oversee a disproportionate level of financial activity by non-residents. Financial activity in OFCs is usually dominated by the provision of intermediation services for larger neighboring countries. In this paper, the authors ask two distinct questions concerning the causes and consequences of OFCs.
    [Show full text]
  • A Guide to the Finar Cial Corporate Bank Records
    If you have issues viewing or accessing this file, please contact us at NCJRS.gov. I i I I A Guide to the I Finar cial '~":' "~i: :":~ ' ' +~" ~::':: : ii '.' ..':: i- . -- ::. .::- "'i+.. I .. :- "i .. ':.i:.:::::-~:!' .., " ~ ' : ': "::::":~ :.' :'~ .... -:- i !, .i::: .::.;i::-:, . "::}' " " I ....... o£ = :i ":: ' " - _ . "'! " '~ ' :: I I | iiii ......................... -...................... ...... I :~:L .... ,+i ii: : : :!::: ::: :. % ...... : I Corporate I eq I IX) Bank Records I IX) Seco~ d Eg/tion I January 1998 I I I i~78t~ I National White Collar Crime Center I Richard L. Johnston, Director ! I I A Guide to the I I I Financial Analysis I I of Personal and Corporate I I Bank Records ! I by Marilyn B. Peterson, C.C.A., C.F.E. I Second Edition i I ! I I i I I ! ! I Published by the National Whjt~ CoIla~m~e Center: 1001 Boulders Parkway, Sujte~450 ~..,+. ~ ., ~ ,. -. ! Richmond, VA 232251:,5~112 :~ ~" "~.-- 1-800-221-4424 .. ~. ,. " k ~- .... ----~--"~ ,~". -" . I 1-804-323-3563 ::/~--~- ,-. ~2 ; "r- -~ - 4 L ', ~ ~,..~ ', I Additional copies available, for purcliaseJ r >, "~' ; i I First edition, May" ! 9 96~L ......." ~' -"" ......."'~< " i Section edition, Jan.uary<1998 . e, ' " '- , I I Copyright ©1995 by Marilyn B. Peterson 2nd Edition copyright © 1997 by Marilyn B. Peterson I All rights reserved. I I This project is supported by grant number 96-WC-CX-0001, awarded by the Bureau of Justice Assistance, Office of Justice Programs, U.S. Department of Justice. The Assistant Attorney General, Office of Justice Programs, coordinates the activities i of the following program offices and bureaus: Bureau of Justice Assistance, Bureau of Justice Statistics, National Institute of Justice: Office of Juvenile Del nquency Prevention, and the Office of Vict ms of Crime.
    [Show full text]
  • The Role of Offshore Financial Centres in Globalization
    *THE ROLE OF OFFSHORE FINANCIAL CENTRES IN GLOBALIZATION by Prem Sikka University of Essex, UK. * I am grateful to Lesley Catchpowle and John Christensen for their insightful comments and suggestions. Special thanks are also due to the Research Promotion Fund operated by the University of Essex for funding this work. Address for correspondence: Prem Sikka Department of Accounting, Finance and Management University of Essex Colchester Essex CO4 3SQ, UK. e-mail:[email protected] 1 THE ROLE OF OFFSHORE FINANCIAL CENTRES IN GLOBALIZATION Abstract Capitalism is inherently crisis-ridden, but shows little sign of exhausting itself. It continues to develop new ways of reinvigorating itself and generating economic returns for capital. Globalisation is considered to be the most advanced phase of capitalism. The Offshore Financial Centres (OFCs) are an integral part of globalisation. They facilitate growing mobility of finance by facilitating no/low tax, no/low regulation, secrecy and anonymity to enable footloose capital to roam the world. Their policies play a key role in tax avoidance/evasion, money laundering, flight of capital, degradation of regulation, instability and economic underdevelopment, and have serious consequences for people everywhere. Professional intermediaries, such as accountants and lawyers, play a key role in the development and expansion of OFCs. Despite the veneer of liberal democracy, some OFCs are captured by the finance industry and advance the interests of financial capital. Many OFCs are nurtured and protected by leading Western hegemons with developed capital and financial markets. This paper encourages scholars to study the operations, functions, policies and politics of OFCs by drawing attention to their significance and impact on societies.
    [Show full text]