Term
| Financial Action Task Force (FATF) |
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Definition
36 members of FATF; 34 jurisdictions and 2
regional organizations
FATF does not have the power to impose fines or penalties
against recalcitrant member-nations. |
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Term
| Financial Action Task Force (FATF) |
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Definition
The identification of risks and development of
appropriate policies.
The criminal justice system and law enforcement.
The financial system and its regulation.
The transparency of legal persons and arrangements
International cooperation. |
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Term
| Financial Action Task Force (FATF) |
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Definition
Endorsing and supporting the FATF 40
Recommendations
Agreeing to implement all of the FATF
Recommendations
Agreeing to undergo a mutual evaluation
Agreeing to participate actively in FATF |
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Term
| Financial Action Task Force (FATF) |
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Definition
The first
eight Special Recommendations were adopted on October 31,
2001 ninth on October 22, 2004 |
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Term
| Financial Action Task Force (FATF) |
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Definition
40 Recommendations provide a complete set of
The identification of risks and development of
appropriate policies.
The criminal justice system and law enforcement.
The financial system and its regulation.
The transparency of legal persons and arrangements
International cooperation. |
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Term
| Financial Action Task Force (FATF) |
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Definition
Group Topic Recommendations
I Legal Systems
n The scope of criminal
offenses and such measures
as confiscation.
1 – 3
II Measures taken by financial
and non-financial institutions
n Customer due diligence,
recordkeeping, etc.
measures for non-compliant
countries, and regulation and
supervision.
4 – 25
III Institutional Measures
n Powers and resources of
authorities and transparency
of legal persons
26 – 34
IV International Cooperation
n Mutual legal assistance,
extradition and other forms of
cooperation.
35 – 40 |
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Term
Financial Action Task Force (FATF)
The most important changes made to the Recommendations were
in 2003 and are as follows: |
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Definition
Expanded coverage to include terrorist financing.
Widened the categories of business that should be
covered by national laws, including real estate agents,
precious metals dealers, accountants, lawyers and
trust services providers.
Specified compliance procedures on issues such as
customer identification and due diligence, including
enhanced identification measures for higher-risk customers and transactions.
clearer definition of predicate offenses.
Encouraged prohibition of so-called “shell banks,”
Included stronger safeguards, notably regarding
international cooperation in |
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Term
| FATF also designated specific thresholds that trigger AML scrutiny |
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Definition
€15,000; for casinos, including Internet
casinos, it is €3,000; and for dealers in precious metals, when
engaged in any cash transaction, it is €15,000. |
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Term
| The Basel Committee on Banking Supervision |
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Definition
Its services are provided
exclusively to central banks and international organizations. |
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Term
| The Basel Committee on Banking Supervision |
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Definition
Basel Committee issued a Statement of Principles
called “Prevention of Criminal Use of the Banking System in recognition of the vulnerability of
the financial sector to misuse by criminals. |
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Term
| The Basel Committee on Banking Supervision |
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Definition
set out principles with respect to:
Customer identification.
Compliance with laws.
Conformity with high ethical standards and local laws and
regulations.
Full cooperation with national law enforcement to the extent
permitted without breaching customer confidentiality.
Staff training.
Record keeping and audits. |
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Term
| The Basel Committee on Banking Supervision |
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Definition
provided for disclosure of client information to enforcement
agencies and protection from civil suits brought by clients for
breach of client confidentiality |
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Term
| The Basel Committee on Banking Supervision |
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Definition
Core Principles for
Effective Banking Supervision,”
Banking supervisors must determine that banks
have adequate policies, practices and procedures in place,
including strict ‘know-your-customer’ rules, that promote high
ethical and professional standards in the financial sector and
prevent the bank being used, intentionally or unintentionally, by
criminal elements |
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Term
The Basel Committee on Banking Supervision
Customer Due Diligence for Banks: |
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Definition
Introduction.
2. Importance of KYC standards for supervisors and banks.
3. Essential elements of KYC standards.
4. The role of supervisors.
5. Implementation of KYC standards in a cross-border context. |
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Term
| The Basel Committee on Banking Supervision |
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Definition
- Banks should not only establish the identity of their
customers, but should also monitor account activity
to identify transactions that do not conform to the
normal or expected transactions for that customer or type of account.
-undertake regular
reviews of existing records |
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Term
| The Basel Committee on Banking Supervision |
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Definition
seven specific customer
identification issues:
-Trust, nominee and fiduciary accounts
-Introduced businesses.
-Client accounts opened by professional
intermediaries, such as “pooled” accounts
Politically exposed persons.
Non-face-to-face customers, i.e., customers who
do not present themselves for a personal interview.
Correspondent banking.
-Banks should develop customer acceptance policies
and procedures
-Private banking accounts should “under no
circumstances” be allowed to escape KYC policies
-Banks should make every effort to know the identity
of corporations
-Banks should use standard identification procedures
when dealing with “non-face-to-face” customers |
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Term
| The Basel Committee on Banking Supervision |
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Definition
-Periodic bank-wide employee training should be
provided that explains the importance of the KYC
policies and AML requirements.
-Internal
auditors and compliance officials should regularly
monitor staff performance and adherence to KYC |
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Term
| The Basel Committee on Banking Supervision |
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Definition
The four key elements of KYC, according to this paper
are:
Customer identification;
Risk management;
Customer acceptance; and
Monitoring. |
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Term
| The Basel Committee on Banking Supervision |
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Definition
elements necessary for
a sound KYC program:
These elements consist of risk
management, customer acceptance and identification policies, and
ongoing monitoring of higher-risk accounts |
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Term
| European Union Directives on Money Laundering |
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Definition
first European Union Directive on Prevention of the Use of the
Financial System for the Purpose of Money Laundering (Directive
91/308/EEC) was adopted by the Council of Europe in June 1991. |
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Term
| European Union Directives on Money Laundering |
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Definition
The EU can adopt measures
that have the force of law even without the approval of the national
Parliaments of the various member states. Plus, European law
prevails over national law in the case of directives. |
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Term
| European Union Directives on Money Laundering |
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Definition
In this respect, EU Directives have far more weight than the
voluntary standards issued by groups such as the Basel Committee
or the Financial Action Task Force. |
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Term
| European Union Directives on Money Laundering First Directive |
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Definition
The first directive of 1991 was confined to drug trafficking, as
defined in the 1988 Vienna Convention. However, member states
were encouraged to extend the predicate offenses to other crimes. |
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Term
| European Union Directives on Money Laundering Second Directive |
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Definition
amended the prior one. The Second Directive
required stricter money laundering controls across the continent |
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Term
| European Union Directives on Money Laundering Second Directive |
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Definition
“criminal activity”
was expanded to cover not just drug trafficking, but all
serious crimes, including corruption and fraud against
the financial interests of the European Community.
-brought bureaux de change and money
remittance offices under AML coverage
-Directive said that knowledge of criminal conduct
can be inferred from objective factual circumstances |
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Term
| European Union Directives on Money Laundering Second Directive |
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Definition
-The conversion or transfer of property with
knowledge that it is derived from criminal activity
-Concealing or disguising the nature, source,
location, disposition, movement, rights with respect
to, or ownership of property
-The acquisition, possession or use of property,
knowing, when it is received, that it was derived
from criminal activity
-Participation in, association to commit, the attempt
to commit, and the aiding, abetting, facilitating or
counseling the commission of any of the mentioned
actions. |
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Term
| European Union Directives on Money Laundering Second Directive |
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Definition
Covered groups included: auditors,
external accountants, tax advisers, real estate agents,
notaries and legal professionals. |
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Term
| European Union Directives on Money Laundering THIRD DIRECTIVE |
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Definition
Third EU Directive on the Prevention of the Use of the Financial
System for the Purpose of Money Laundering and Terrorist
Financing |
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Term
| European Union Directives on Money Laundering THIRD DIRECTIVE |
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Definition
Defining “money laundering” and “terrorist financing” the manipulation of money
derived from crime, but also the collection of money or
property for terrorist purposes |
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Term
| European Union Directives on Money Laundering THIRD DIRECTIVE |
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Definition
15,000 Euros for reporting. customer identification and suspicious
activity reporting obligations to trusts and company
service providers, life insurance intermediaries and
dealers selling goods |
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Term
| European Union Directives on Money Laundering THIRD DIRECTIVE |
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Definition
Detailing a risk-based approach to customer due
diligence |
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Term
| European Union Directives on Money Laundering THIRD DIRECTIVE |
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Definition
Protecting employees who report suspicions of
money laundering or terrorist financing |
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Term
| European Union Directives on Money Laundering THIRD DIRECTIVE |
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Definition
comprehensive statistics regarding the use of and results the follow-up given to those reports; and the annual
number of cases investigated, persons prosecuted and persons convicted. |
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Term
| European Union Directives on Money Laundering THIRD DIRECTIVE |
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Definition
| Requiring all financial institutions to identify and verify the “beneficial owner” of all accounts held by legal entities or persons. |
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Term
| European Union Directives on Money Laundering THIRD DIRECTIVE |
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Definition
Credit institutions;
Financial institutions;
Auditors, external accountants and tax advisors;
Legal professionals;
Trust and company service providers;
Estate agents;
High value goods dealers who trade in cash over
15,000 Euro; and
Casinos. |
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Term
| European Union Directives on Money Laundering THIRD DIRECTIVE |
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Definition
The scope of the Third Money Laundering Directive differs from the
Second Money Laundering Directive in that:
It specifically includes the category of trust and
company service providers.
It covers all dealers trading in goods who trade in cash
over 15,000 Euros.
The definition of financial institution includes certain
insurance intermediaries. |
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Term
| European Union Directives on Money Laundering THIRD DIRECTIVE |
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Definition
There were three main points of contention with regard to the
Third Directive: the definition of politically exposed persons
(PEPs); the inclusion of lawyers among those who are
required to report suspicious activity; and the precise role of a
“comitology committee.” |
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Term
| European Union Directives on Money Laundering THIRD DIRECTIVE |
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Definition
Close associates must be identified only when their relationship
with a PEP is publicly known or when the institution suspects there
is a relationship. Finally, the commission said persons should
not be considered PEPs after at least one year of not being in a
prominent position. |
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