Anti-Money laundering

1. AML
Anti-Money Laundering Act
Money laundering:- Itis the process by which illegal funds and assets are
converted into legitimate funds and assets.
Terrorist Financing:- Itprovides funds for terroristactivity. Itmay involve
funds raised from legitimate sources, such as personaldonation and profits
frombusiness and charitable organizations, as well as from criminal sources, as
defines above
Objective of Money Laundering
 Hide- To reflect the fact that cash is often introduced to the economy via
commercial concerns which may knowingly or not knowingly bepart of
the laundering scheme, and it is these which ultimately proveto be the
interface between the criminal and the financial sector.
 Move- Clearly explains that the money launderer uses transfer, sales and
purchaseof assets, and changes the shape and size of the lump of
money so as to overshadow thetrail between money and crime or
money and criminal.
 Invest- The criminal spends the money: he/ she may invest it in asset, or
in his/her lifestyles.
Criminal Activities
 Kidnapping
 Extortion
 Bribery & Corruption
 Gambling Robbery Cheating
 Counterfeiting & Forgery
 TerroristAct
 Smuggling
 Drug Trafficking
 Prostitution

2. Stages of Money Laundering
 Placement: - To push the dirty Money into the clean system through
series of small banking transaction, so to avoid suspicions.
 Layering: - To disguisethe origin of funds for funding the property,
multiple accounts in different name setup. Objectiveis to hide the audit
trail of the transactions.
 Integration:- To use the legitimate money (proceeds from options) for
conducting legitimate transactions (buying property)
AML Stages Decode
 Placement
o Depositing smaller cash amounts in one or severalaccounts
o Purchasing cheques and then depositing the same into the bank
o Purchasing singlepremium insurancepolicy withoutpaying
attention to details and conditions for cancellation and
commissions
o Money smuggling over borders
o Buying precious/Valuable metals
 Layering
o Buying shares and then reselling the same
o Issuing severalcomplexbank transfer
o Issuing transfersagainstgoods
o Debt repayment
 Integration
o Repurchasing precious valuable assets, properties, lands
o Entering into or financing business projects
o Buying Goods
o Buying bonds, equity etc.
Money laundering Techniques
 Bulk cash smuggling: - Itinvolves literally smuggling cash into another
country for deposit into offshorebanks or other type of financial
institution that client secrecy.

3.  Structuring: - Italso referred to as “smurfing” is a method in which cash
is broken down smaller amount, which are then used to purchasemoney
order or other instruments to avoid detection or suspicion.
 Cash-intensivebusiness: - Itoccurs when a business that legitimately
Deals with large amounts of cash uses its accounts to deposit money
obtained fromboth everyday business proceeds and money obtained
through illegal means.
 Trade-basedLaundering: - Itis in which invoices are altered to show a
higher or lower amount in order to mask the movement of money.
 Shell companies: - Shell companies and trusts are used to disguisethe
true owner or agent of a large amount of money.
 Bank capture: - Itrefers to the useof a bank owned by money
launderers or criminals, who then funds through the bank without fear
of investigation.
 Real estate laundering: - Itoccurs when someonepurchases realestate
with money obtained illegally, then sells the property. This makes it
seems as if the profits are legitimate.
Causes of Money Laundering
 Absence of Money Laundering
 Evasionof Tax
 Increase inProfits
 To make black money appear white money
 Limitedrisks of exposure
PMLA (Preventionof money laundering act) 2002
Itis an act to preventmoney laundering and there causes and to punish those
who commit the offence of money laundering.
As per section 48 & 49 of the PMLA the officers of the directorate of
enforcement have been given powers to investigate cases of money
laundering. The officers havealso been authorised to initiate proceeding for
attachment of property and to launch prosecution in the designated special
court for the offence of money laundering.

4. FATF (Financial ActionTask Force) 1989
 Itwas formed in 1989 by a coalition of countries. This intergovernmental
agency was designed to develop and promote international cooperation
for combating money laundering.
 As of 2015 the FAFTis comprised of 34 different countries , but the
agency is always seeking to expand its membership to more regions.
 Headquarter in Paris, France; the FAFTalso works to combat the
financing of terrorism.
 Itmonitoring the progress of member countries in their anti-money
laundering measures.
 Reviewing trends and techniques in money laundering, reporting these,
as well as new counter measures, to member countries
 Promoting FAFTanti-money laundering measures and standards
globally.