Page 39 - Banking Finance April 2018

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International Bodies have initiated efforts to prevent and
apprehend money launderers. Financial Institutions across
the globe have also put in place check points to detect
transactions involving money laundering. Recent anti money
laundering laws have developed with the modern war on
drugs. In more recent times anti money laundering
legislation is seen as adjunct to the financial crime of terrorist
financing.
and inspection, in order for a buyer to claim them. This
The problem of TBML is significant and difficult to detect. process serves a variety of economic and national security
Like most forms of money laundering, sophistication of interests and can also be a vital point of interest to combat
structuring and the ability to co-mingle illicit transactions TBML.
with legitimate transactions makes it very difficult to detect.
Transactions are stitched together in a way where Financial Institutions, Regulators and other related parties
individually, they may appear on their face to be legitimate, are investing huge resources in technology to improve their
and can only be detected when looked at across a broad ability to identify anomalies in payments, non-documentary
spectrum to identify the illicit pattern. and documentary trade. An integrated combination of data
analytics from Customs, Shipping Companies, Financial
The Financial Action Task Force on Money Laundering was Institutions and Regulators, could offer a vastly improved
established to combat the growing problem of money ability to identify patterns of illicit behavior, illicit flows and
laundering. The task force was charged with studying have a material impact on interdicting TBML. Further there
money laundering trends, monitoring legislative, financial is a need for stronger focus on training programs to better
and law enforcement activities taken at the national and identify trade based money laundering techniques, the need
international level, reporting on compliance and issuing for more effective information sharing among all concerned.
recommendations and stands to combat money laundering.
Red Flag indictors : Trade Regulators have come out with
Anti-money laundering (AML) is mainly used in financial and a number of red flag indicators that are routinely used to
legal industries to describe the legal controls which are identify trade based money laundering activities. Exchange
required to be initiated to prevent, detect and report money of trade related information with other related agencies
laundering transactions. AML guidelines came into like, customs, regulators, financial intelligence units, tax
prominence globally as a result of formation of Financial authorities and financial institutions be voluntary rather than
Action Task Force (FATF) and the formation of an mandatory.
international frame work of AML standards. FATF initiated
a process to identify those countries where deficiencies are An effective AML program requires a jurisdiction to
persisting in their law and non co-operative countries, which criminalize money laundering and giving the relevant
are being made public. regulators powers to initiate appropriate action, also share
information with other countries as appropriate and require
A starting point for all stake holders is to continuous the financial institutions to identify their customers, establish
education, awareness, procedures and compliance risk based controls, keep records, report suspicious activities
discipline. As technology continues to evolve rapidly, more etc.
tools to combat TBML will be available. Unfortunately,
criminal organizations are always working to stay one step There are a number of practical steps, like building better
ahead, often utilizing some of the same technology. awareness, capacity building to identify trade-based illicit
activity, which could be undertaken to improve the capacity
Customs clearance is a vital check point where all goods of all the related parties to the international trade, to
entering a country must have proper classification, valuation combat trade-based money laundering. T

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