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The Washing Machine - Fighting Money Laundering in the Middle East
institutions adopt the FATF’s Forty money laundering techniques to evade
Recommendations on combating authorities’ attention and protect the
money laundering. identity of their sponsors and the ultimate
beneficiaries of the funds.
Three Stages of Money Laundering
Challenges in the Middle East
The money-laundering process
comprises three main stages: Fighting money laundering is not easy
for any financial institution. In the
1. Placement is the physical disposal of Middle East, cultural customs, terrorism
bulk cash proceeds derived from illegal and smuggling make the detection of
activity.
doubtful cash transfers particularly
2. Layering is separating the illicit challenging. That is why banks and other
proceeds from their source by financial institutions must be more alert
creating complex layers of financial in monitoring customer activities and
transactions. Layering confuses the knowing their customers.
audit trail and provides anonymity.
In order to implement a robust anti-
3. Integration is re-injecting of the money-laundering (AML) program in a
laundered money back into the legal financial institution, senior management
economy in such a way that funds re- must support it and empower employees
enter the financial system as legitimate to ask uncomfortable questions; set up
business proceeds. proper controls and strictly enforce them
in order to detect suspicious transactions
Is Terrorist Financing Similar to or activities; and make timely reports
Money Laundering? to financial intelligence units about
suspicious activities.
Terrorism financing is the process
of reverse laundering, but tends to In some Middle Eastern countries,
use smaller amounts than is the case these obligations are often perceived as
with money laundering. This process conflicting with customer relationships
uses funds raised from legitimate and cultural customs. For example, a bank
sources such as personal donations and employee who fails to discharge AML
profits from businesses and charitable compliance responsibilities - whether
organizations, as well as from criminal wittingly or to avoid asking a customer
sources. Terrorists use the same uncomfortable questions -
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