Money laundering is all about giving legal status to proceeds of crime. With the increase and complexity of money laundering activities, different rules are formulated to counter the threat at the national and international level.
The Financial Action Task Force, also known by its French name, Groupe d'action financière, is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In 2001, its mandate was expanded to include terrorism financing.
Different countries are adopting the recommendations issued by FATF as legislation.
European Union is bringing a new package in 2021 to transfer the directive to a regulation to automatically enforce it in member states. A supervisory system to have supervision at European Union level and to increase cooperation at national level between financial intelligence units at state level. (Anti-money-laundering package 2021 - European Parliament).
UK before Brexit has enforced European Union 5th directive as was bound to implement union legislation, but sixth directive is not adopted as UK is of the opinion that its framework covers the majority of sixth directive. The six directive also held liable entities for money where it has occurred for their benefit by a person under their authority due to lack of supervision or control (Recent AML Enforcement Trends in the UK).
In the UAE the national committee for combatting money laundering and financing of terrorism and illegal organization (NAMLCFTC) has issued anti money laundering and combating financing of terrorism guidelines to be published on the website of NAMLCFTC. These are published for financial institutions, designated non-financial institutions and professions etc. and also for the awareness and action of licensed authorities. Six risk assessment reports were approved by the (NAMLCFTC) related to terrorist financing, trade-based money laundering, misuse of legal persons, non-profit organizations, lawyers and the gold sector.
Professional bodies like ACCA and ICAEW have issued guidelines for the member firms and individual to ensure proper policies, controls and procedures regarding money laundering. Policies, controls and procedures should be reviewed to assess any change in risk.
Compliance depends on the size of firm, client locations, range of services and dealing with risky businesses and from risky jurisdictions. An anti-money laundering policy should have the following components: introduction, roles and responsibilities, risk assessment, customer due diligence, politically exposed persons, beneficial ownership, reporting suspicious transactions, record keeping, and review.
Training should be provided to all staff of firm whether directly involved with assignment or not. Procedure’s volume and complexity depends on size of firm, the service provided and the assessed level of client risk.
The procedures to be included are gaining sufficient information about your clients and to identify, report and keep record of suspicious transactions (Combating money laundering author Rachel Power is director of O’Dwyer Power).
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