PRACTICAL SOLUTIONS
The Rs of combating
money laundering
T
he fight against money laundering and terrorist financing has
taken center stage the world over.
Financial institutions—banks in particular—must be involved in this fight.
Traditionally, banks have been more
concerned about revenue than anything
else. In the past, any person could walk
into a bank and open an account with a
lot of cash—and no questions would be
raised. The 9/11 events, however, changed
the scenario. Banks must now think
beyond the R of revenue generation. There
are other Rs banks have to think about.
Since the 9/11 events, there has been an
international, concerted effort to fight
money laundering and terrorist financing.
Developed and developing countries alike
have been concerned and have taken measures to deal with money laundering and
the financing of terrorism.
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The United Nations has taken the
leading role in dealing with money laundering, not only as it relates to drug trafficking, but also to all crimes that yield
illegally gained proceeds. A number of
conventions have been passed such as
the U.N. Convention against Illicit Traffic
in Narcotic Drugs and Psychotropic
Substances (Vienna, 1988) and the
U.N. Convention against Transnational
Orga nized Crime (Paler mo, 2000).
These two conventions defined money
laundering and required that member
countries criminalize it. The Vienna
Convention relates money laundering to drug trafficking as the predicate
offense, while the Palermo Convention
broadens the scope of predicate offenses.
The U.N. also passed the Convention
for the Suppression of the Financing of
Terrorism (1999) and Security Council
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repu
ion
tatio
nal
risk
resolution 1373 (2001), which compels all
member countries to enact laws against
terrorism and its financing.
Other international bodies such as
the Financial Action Task Force (FATF),
the Wolfsberg Group (of 11 global
banks), the Basel Committee on Banking
Supervision, the Egmont Group (of 108
worldwide financial intelligence units),
FATF-Style Regional Bodies (FSRBs),
the Commonwealth Secretariat, the
International Monetary Fund (IMF) and
The World Bank are all an integral part
of the international effort to curb money
laundering and terrorist financing. These
bodies, like th