Anti-money laundering
Anti-money
laundering (AML) is a term mainly used in the financial and legal industries to
describe the legal controls that require financial institutions and other
regulated entities to prevent or report money laundering activities. Anti-money
laundering guidelines came into prominence globally after the September 11, 2001
attacks and the subsequent enactment of the USA PATRIOT Act.
Today, most financial institutions globally, and many non-financial institutions, are required to identify and report transactions of a suspicious nature to the financial intelligence unit in the respective country. For example, a bank must perform due diligence by ascertaining a customer's identity and monitor transactions for suspicious activity. To do this, many financial institutions utilize the services of special software, and use the services of companies such as World Compliance to gather information about high risk individuals and organizations.
United States federal law related to money laundering is implemented under the Bank Secrecy Act of 1970 as amended by anti-money laundering acts up to the present. Many people have confused Anti-Money Laundering (AML) with Anti-Terrorist Financing (ATF). Under the Bank Secrecy Act of USA, Money Laundering and Terrorist Financing are classified into two different categories when financial institutions file Suspicious Activity Reports (SAR) to Financial Crimes Enforcement Network (FinCEN) which is a US government agency. To effectively implement AML and ATF measures, The US government encourages financial institutions to work together for AML and ATF purposes in accordance with Section 314(b) of the USA PATRIOT Act. However, since financial institutions are required by law to protect the privacy of their clients, section 314(b) cooperation has not been generally adopted by financial institutions. To overcome this obstacle, the United Crimes Elimination Network (UCEN) has been established by AML and ATF professionals to achieve this global cooperation goal in compliance with the privacy laws of most countries.
Steps:
Money laundering involves three independent and often simultaneous steps
:
Placement - Physically placing bulk cash proceeds.
Layering - Separating the proceeds of criminal activity from their
origins through layers of complex financial transactions.
Integration - Providing an apparently legitimate explanation for the
illicit proceeds.
Additional information:
An entire industry has developed around providing software to analyze
transactions in an attempt to identify transactions or patterns of
transactions, that may constitute illegal financial activity. Financial
institutions face penalties for failing to properly file CTR (Currency
Transaction Report) and SAR (Suspicious Activity Report) reports,
including heavy fines and regulatory restrictions, even to the point of
charter revocation. These software applications effectively monitor bank
customer transactions on a daily basis and, using customer historical
information and account profile, provide a whole picture to the bank
management. Transaction monitoring can include cash deposits and
withdrawals, wire transfers, credit card activity, cheques (checks),
share (securities) dealing and ACH activity. In the bank circles, these
applications are known as BSA software or AML software.
Different standards exist in
different countries and, depending on the activity, demand different
action. For example; in the US a deposit of US$10,000 or more requires a
CTR, in Europe it is EUR 15,000, and in Switzerland it is CHF 25,000. In
some countries there is no CTR requirement. Suspicion of ML activity in
the US requires the submission of a SAR, while in Switzerland a SAR will
only get filed if that activity can be proved. As a result, thousands of
SARs are filed daily in the US, while in Switzerland the rate is much
lower.
The United Nations Office on Drugs and Crime maintains the International
Money Laundering Information Network, a website that provides
information and software for anti-money laundering data collection and
analysis.
How Rhino IT Security
Anti-Money Laundering Services Can Help:
* Reduces false positives.
o Users can easily refine scenarios and risk factors.
o Frees investigators to focus on high-risk events
rather than chasing down all simple alerts.
* Adapts to changing business needs and regulatory expectations.
o A flexible and scalable data model includes a broad
set of transaction types, products, channels and services.
o A point-and-click interface enables easy modification
of the system’s scenarios and risk factors.
o Ad hoc report generation lets you answer virtually
any question.
o Lower total cost of ownership over time since you
won't have to upgrade due to system obsolescence.
* Prioritizes high-risk events for investigation.
o Consistent and straightforward descriptions give
compliance staff clear explanations.
o Enables a more effective investigative process.
* Provides more accurate results based on enterprise wide knowledge
and security.
o Automatically monitors all known institutional risks.
o Risk scores customers based on prior behavior,
expected behavior and known CIP information across all accounts for
unmatched depth of analysis.
How
Rhino IT Security is Different:
* Transparency. The solution’s monitoring process is completely
transparent and easily understood. The solution provides a
significant analytical tool that works through logical processes,
bridging the gap between technology and compliance functions.
* Adaptability. The solution is part of the flexible SAS Business
Analytics Framework and is adaptable to each institution's risk
profile. Scenarios and risk factors are driven directly from the
bank's anti-money laundering risk assessment and can be easily
changed as the institution's or the industry's risks change.
* Depth of coverage. The solution does not merely assess
transactions; it employs scenarios and risks across a wide array of
an institution's specific knowledge to develop alerts that can
surface more suspicious activity that ever before possible. And as
anti-money laundering functions evolve to cover all of an
institution's financial crimes monitoring programs, the SAS Business
Analytics Framework gives institutions the flexibility to
accommodate changing requirements.