Money-Laundering: Financial Crime and Terrorism Are Global Issues. Martin Nimmo Discusses the Ways in Which Countries around the World Are Combating Money-Laundering

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Attempts by the European Union, and the UK in particular, to tackle money-laundering have received plenty of attention over the past few years. Recent efforts have culminated (at least for the time being) in the adoption of a third anti-money-laundering directive. But little has been written about ongoing activities to combat this type of crime outside the EU and the US. Importantly, a number of other jurisdictions have begun to introduce, or develop, successful and rigorous anti-money-laundering (AML) requirements.

In March the Financial Action Task Force--Groupe d'Action Financiere (FATF) agreed to remove the Cook Islands, Indonesia and the Philippines from its list of "non-co-operative" countries and territories (NCCTs) after these three states implemented AML systems including the following:

* Strict customer identification.

* Reporting of suspicious transactions.

* Bank examinations.

* The capacity to investigate and prosecute money-laundering cases.

* Financial intelligence units.

The FATF was created in 1989 as an intergovernmental body to develop and promote national and international policies to combat money-laundering and the financing of terrorism. It's a policy-making body that works to generate the political will needed to bring about legislative and regulatory reforms in these areas. The task force monitors its members' progress on implementing measures; reviews money-laundering and terrorist financing techniques and countermeasures; and promotes the adoption and implementation of appropriate measures worldwide. It achieves this by collaborating with other international bodies involved in combating money-laundering.

There are only three countries left on the NCCT list--Myanmar, Nauru and Nigeria--but even these have enacted substantial AML reforms, so the task force is likely to review their status once it has seen their implementation plans.

The UK's presidency of the G7 group of finance ministers and central bank governors (from the UK, US, France, Italy, Canada, Japan and Germany) in 2005-06 has focused on three areas of AML and counter-terrorist finance (CTF) activity:

* Improving the process for freezing terrorist assets.

* Enhancing information-sharing.

* Developing new tools and techniques to disrupt criminality. G7 members have already begun to freeze assets identified by:

* Establishing up-to-date contacts.

* Undertaking early and constructive consultation before designating.

* Sharing details of the criteria required for designation.

* Developing a template for identification information for the designation of cases.

They are also supporting the work of international bodies such as the FATF to improve information-sharing. There are many examples of increased AML activity around the world, but major trading countries, such as Malaysia, are taking comprehensive countermeasures. The Malaysian Anti-Money-Laundering Act 2001 applies to all money-laundering offences, including those that took place before it was enacted. It lists 119 different serious crimes that might be considered under the legislation. The danger to individuals who report suspicious actions is that, if these are not listed in schedule two of the act, they may have no statutory protection. But the principles under which the act was established are in line with other legislation, and Bank Negara Malaysia, the country's central bank, issued guidelines (Garis Panduan 9) in 2001. There are two reporting routes: one for reporting institutions (RIs) and one for individuals. RIs are required to disclose cash transaction reports and suspicious transaction reports to a competent authority. …