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Money Laundering: Back to Basics!

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by the Financial Intelligence Unit Tue, Nov 15. 2011

A country without money laundering would be one with significantly less crime, as most criminal conduct is committed to obtain a “profit”, that is, a financial gain. Money laundering allows for discreet investment of illegitimately obtained money. Our jurisdiction must be made hostile to those intent on laundering, hence the Proceeds of Crime and Money Laundering Act (PCMLPA) was passed in 2001.{{more}} As a result of the passing of this legislation, we are able to detect, investigate and prosecute the crime of money laundering and, as a consequence, systematically unravel the networks and or hierarchies of criminals.

PCMLPA Schedule 1 shows that financial institutions and relevant business activities are governed by the Act and are required to report suspicious transactions to the Financial Intelligence Unit (FIU). The FIU is tasked with the responsibility of receiving and analyzing these reports and investigating the crime of money laundering, terrorist financing and other serious crimes. Our goal is to have a financial and business sector free of money laundering, terrorist financing and other major financial crimes. This can be achieved through investigation, prosecution of these criminals and enforcement of dissuasive sanctions and implementation of clear policies.

These financial institutions and business entities have a vital role to play in combating the crime of money laundering and terrorist financing. They are required to take necessary steps to avoid being ensnared by these criminal acts. The first step towards preventive action is to understand what this crime of money laundering entails and how these criminals operate. A Money Launderer’s goal is to distance himself from his ill-gotten gains. To achieve this, launderers attempt to utilize the financial institutions and businesses as a vehicle to layer their illegal funds, with the intention of eventually integrating the same back into the economy as legitimate. Once the launderer has successfully “cleaned” these funds, he is now able to enjoy the fruits of his criminal act with impunity, as it becomes difficult to trace the funds at this stage.

To prevent abuse of its system, financial institutions and relevant businesses must have a compliance system in place that allows them to know and monitor their customers and transactions; train their employees in anti-money laundering and counter-terrorist financing; and report suspicious transactions to the FIU. It is good corporate practice for a financial institution to become educated about its customers and their financial activity, as it will enable it to offer products that will match the needs of its customers, in addition to complying with the PCMLPA. Further, entities and institutions should monitor and control their supply and distribution routes. Personnel in key positions relating to payments and distribution should be trained to identify suspicious activity. Open lines of communication must exist within the organization, so that information about suspicious activity can be easily passed on to the compliance officer.

Many financial institutions and businesses, whether knowingly or not, facilitate the use and transfer of illegal proceeds. Those who knowingly facilitate a money launderer are committing an offence under the PCMLPA. On the other hand, businesses that unknowingly participate, and are ultimately exonerated and recover seized assets, must endure hardship; disruption of business activities; time lost; money spent and reputational risk. Therefore, the desired approach is to ensure that your institution and/or business has an effective compliance system and is compliant with the PCMLPA and other legislations that govern your operation, as it relates to the crime of money laundering and terrorist financing. An effective compliance system will safeguard your institution from being a conduit for money launderers and terrorist financiers, whilst protecting your reputation.

Financial institutions, regulated business activities, law enforcement authorities and the society on a whole have a vital role to play in the fight against money laundering, terrorist financing and all serious crimes. We all must work together to safeguard our economy, enhance security of our person and property, and advance our democratic civilization. A reduction in money laundering will have a great impact on other crimes, as resources that were available to these criminals will be seized, forfeited and confiscated, thus retarding their movements. We, therefore, encourage all financial institutions, relevant business, law enforcement agencies and the public community of Saint Vincent and the Grenadines to work with us in putting these criminals out of business.

Visit us at www.svgfiu.com for related articles and more information on Money Laundering and Terrorist financing.

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