Anti Money Laundering

Anti Money Laundering (AML) is the term used to describe the legal and regulatory framework that aims to prevent, detect, and punish the illegal practice of money laundering. Money laundering is the process of concealing the origin, ownership, or destination of illegally obtained or taxable money by moving it through legitimate businesses, banks, or other entities. Money laundering can facilitate various crimes such as terrorism, drug trafficking, tax evasion, fraud, corruption, and human trafficking.

Some of the common methods of money laundering are:

• Cash Smuggling: Physically moving cash across borders to deposit it in offshore banks or businesses that are less regulated or monitored.
• Trade-Based Laundering: Over- or under-invoicing the value of goods or services in international trade transactions to transfer money across borders or disguise its source.
• Shell Companies: Creating fake or inactive companies that exist only on paper to hide the true ownership or origin of money or assets.
• Layering: Moving money through multiple accounts, transactions, or entities to obscure its trail and make it harder to trace.
• Integration: Reintroducing the laundered money into the legitimate economy by investing it in legal businesses, properties, or assets.

AML regulations require financial institutions and other entities that deal with money to implement policies and procedures to prevent, detect, and report money laundering activities. Some of the AML measures include:

• Customer Due Diligence (CDD): Verifying the identity and background of customers and assessing their risk profile and source of funds.
• Transaction Monitoring: Screening and analyzing transactions for any suspicious or unusual patterns or behaviors that could indicate money laundering.
• Record Keeping: Maintaining records of customer information, transactions, and documents for a certain period of time as required by law.
• Reporting: Filing reports to the relevant authorities or agencies when money laundering is suspected or detected, such as Suspicious Activity Reports (SARs) or Currency Transaction Reports (CTRs).
• Training and Awareness: Educating and training staff on the AML policies and procedures and the indicators and risks of money laundering.