The Anti-Money Laundering (AML) Regime
Overview of the Report
The Anti-Money Laundering (AML) Regime is a collection of standards, norms, and rules set by the Financial Action Task Force (FATF). This framework establishes the legal and operational framework for countering money laundering and terrorist financing (Nance, 2018). The 2006 Anti-Money Laundering (AML) report by the World Bank provided an assessment of the global AML landscape and identified the key challenges and opportunities to improve the effectiveness of AML measures. The report found that progress had been made in strengthening AML laws and regulations, but more needed to be done to ensure an effective and comprehensive AML framework (World Bank, 2006). The report highlighted the importance of an effective AML framework in preventing the abuse of the financial system for illicit activities and in tackling the financing of terrorism. It noted the proliferation of AML measures adopted by countries. Still, it argued that these measures needed to be better integrated and complemented by efforts such as improved customer due diligence and increased international cooperation.
Flowchart
An intergovernmental organization called the Financial Action Task Force (FATF) was created to tackle risks to the integrity of the global financial system, such as money laundering and the funding of terrorism. It functions as a global forum for creating regulations and standards to counteract these dangers, and a variety of international regulatory bodies make up its membership. The FATF closely collaborates with these regulators to make sure they take the proper steps to accomplish the intended goals (Pol, 2018). Financial institutions are required to adhere to the FATF’s anti-money laundering guidelines, namely recommendation IX. According to this advice, financial institutions must take further steps to improve the identification of suspicious actions, such as transaction monitoring and client due diligence. Investigating and bringing cases of financial crime to justice is another important role that law enforcement agencies play in the battle against money laundering (World Bank, 2006). To combat tax evasion and illegal financial flows, nations can exchange financial account information using the Common Reporting Standards (CRS), a mechanism that has been universally accepted. The Global Forum on Transparency and Exchange of Information for Tax Purposes, which was established by the OECD and G20 nations, established the criteria on which CRS is based. To deter tax evasion, this system enables participating countries to automatically communicate data on the bank accounts that taxpayers in other participating jurisdictions have.
Summary
The fundamental elements and Special Recommendation IX of the World Bank’s AML Regime were issued in 2006. (SR IX). Establishing a financial intelligence unit (FIU), requiring customer due diligence (CDD) and record-keeping, reporting suspicious transactions, and international coordination are essential elements (World Bank, 2006). A risk-based approach, a national AML/CFT strategy, a sufficient degree of legislation, a thorough AML/CFT system, monitoring and assessment, capacity building, and international collaboration are all emphasized in SR IX.
References
Nance, M. T. (2018). The regime that FATF built: An introduction to the Financial Action Task Force. Crime, Law and Social Change, 69(2), 109-129. Web.
Pol, R. F. (2018). Anti-money laundering effectiveness: assessing outcomes or ticking boxes? Journal of money laundering control. Web.
What is Anti-Money Laundering? (n.d.). Sanction Scanner. Web.
World Bank. (2006). A reference guide to anti-money laundering and combating the financing of terrorism second edition and supplement on special recommendation IX. Washington, DC: World Bank. Web.