This book sets out to be a handbook for financial crime experts within companies. It seeks to provide them with sufficient information to enable them to understand the key issues that relate to two of the largest problems faced by financial institutions today: money laundering and terrorist financing.
This is an intermediate text, providing detailed information to enable the key issues to be understood and the regulatory framework appreciated. Since the market for money laundering and terrorist financing is, by its nature, global, so is this text. Consequently, whilst different rules and regulations are implemented into local legislation, it is the global standards which underpin all of these local requirements. Therefore, such global standards as exist at the time of writing this text are included within the book.
We have also provided summary guidance on the financial crime and terrorist finance rules and regulations operating in all of the major global financial centres. In the case of Europe, due to the similarity of the regulations based upon the relevant directives, which are discussed in this work, we have not provided an analysis for every country. As always, this material can only be up to date as at the date that the book has gone to print. If you require detailed rules and regulations regarding a specific market, then you should refer to the actual rule book or local legal advice to provide final guidance. This book will, however, provide you with the outline information that you will require for the majority of issues you face on a day-to-day basis.
Money laundering is one of the few growth industries that seem to be prospering at present. As a consequence of this, the regulatory structures have been developing globally and the quality of investigation improving. Offshore financial centres have been under the spotlight not just due to their data secrecy requirements but also since they have historically been used by the unscrupulous to hide income from local taxation authorities, thereby avoiding tax.
As a consequence of the increased investigation of these areas, the number of prosecutions has increased. Throughout this book we do provide examples of cases where prosecutions have been successful, and indeed these are included within the country profiles which form the majority of this book. Since it is clearly important that any case referred to has completed its legal pathway, cases can only be used after their conclusion, which can take a number of years.
The following are some examples of recent prosecutions:
Sometimes the investigations undertaken by the crime agencies can result in successful prosecution, as shown by the following press release from the United Kingdom's Serious Organised Crime Agency (SOCA), which, in 2013, became the National Crime Agency (NCA):
Clearly, international contacts are also required to detect major money-laundering rings. Another press release from the UK's Serious Organised Crime Agency highlights this clearly:
This book aims to provide all bank employees with the basic information that they need to be part of the global attempt to identify and prosecute those involved in money laundering or terrorist financing, whilst explaining the key terms and associated risks. It should be part of an education and awareness campaign conducted throughout the financial institution to raise people's knowledge of key requirements and expectations, ensuring that each firm complies with the local rules and regulations promulgated in their jurisdiction by their relevant authority. In the course of the following chapters we shall explain some of the approaches that a bank needs to adopt to deter money laundering and to enable terrorist financing to be identified.
Where possible or appropriate we have included references to relevant rules and regulations within the body of the book, where the reader may find additional information if required.
In writing any book the author needs a good team around them. In this case, my colleagues at Risk Reward Limited and, in particular, Gurmeet Rathor and Grant Duranti have provided both content and assistance throughout the development of this book. Without their help this book would never have been completed.
Rules in this area do, of course, change and while every attempt has been made to ensure that everything included herein is fully up to date at the time of printing, additional research (or additions to this never-ending book) may be required in the future.
I do hope that you find this book helpful and comprehensive, and remember that if you are working for a bank and money laundering or terrorist financing have not yet been identified, it does not mean that they are not around – it just means that you have not found them yet.
Dennis Cox Risk Reward Limited London October 2013
