Reference Guide to Anti-Money Laundering and Combating the Financing of Terrorism

292 Pages·2006·2.12 MB·English

by  World Bank Group

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Anti-Money Laundering and
Combating the Financing of Terrorism
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Reference Guide to
Anti-Money Laundering and
Combating the Financing of Terrorism
Second Edition
and Supplement on
Special Recommendation IX

Reference Guide to
Anti-Money Laundering and
Combating the Financing of Terrorism
Second Edition
and Supplement on
Special Recommendation IX
© 2006 The International Bank for Reconstruction and Development/The World Bank/
The International Monetary Fund
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Washington DC 20433
Telephone: [phone]
Internet: www.worldbank.org
E-mail: [email protected]
All rights reserved
First printing of Second Edition and Supplement on Special Recommendation IX, January 2006
1 2 3 4 5 10 09 08 07 06
This volume is a product of the staff of the International Bank for Reconstruction and
Development/The World Bank/The International Monetary Fund. The findings, interpretations,
and conclusions expressed in this paper do not necessarily reflect the views of the World Bank, the
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ISBN: 0-8213-6513-4
ISBN-13: 978-0-8213-6513-7
eISBN: 0-8213-6514-2
DOI: 10.1596/978-0-8213-6513-7
Library of Congress Cataloging-in-Publication Data has been applied for.
Cover and publication design: James E. Quigley, World Bank Institute.
Cover photos: Comstock.
www.amlcft.org
iv
Contents
Foreword ix
Acknowledgments xi
Abbreviations and Acronyms xiii
Introduction: How to Use this Reference Guide xv
Part A: The Problem and the International Response
Chapter I: Money Laundering and Terrorist Financing:
Definitions and Explanations I-1
A. What Is Money Laundering? I-2
B. What Is Terrorist Financing? I-4
C. The Link Between Money Laundering and Terrorist Financing I-5
D. The Magnitude of the Problem I-6
E. The Processes I-7
F. Where Do Money Laundering and Terrorist Financing Occur? I-9
G. Methods and Typologies I-9
Chapter II: Money Laundering Impacts Development II-1
A. The Adverse Implications for Developing Countries II-2
B. The Benefits of an Effective AML/CFT Framework II-7
Chapter III: International Standard Setters III-1
A. The United Nations III-2
B. The Financial Action Task Force on Money Laundering III-7
C. The Basel Committee on Banking Supervision III-13
D. International Association of Insurance Supervisors III-16
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Reference Guide to Anti-Money Laundering and Combating the Financing of Terrorism
E. International Organization of Securities Commissioners III-18
F. The Egmont Group of Financial Intelligence Units III-19
Chapter IV: Regional Bodies and Relevant Groups IV-1
A. FATF-Style Regional Bodies IV-1
B. Wolfsberg Group of Banks IV-4
C. The Commonwealth Secretariat IV-8
D. Organization of American States–CICAD IV-9
Part B: The Elements of an Effective AML/CFT Framework
Chapter V: Legal System Requirements V-1
A. Criminalization of Money Laundering V-2
B. Criminalization of Terrorism and the Financing of Terrorism V-15
C. Seizure, Confiscation, and Forfeiture V-15
D. Types of Covered Entities and Persons V-19
E. Supervision and Regulation—Integrity Standards V-23
F. Laws Consistent with Implementation of FATF Recommendations V-26
G. Cooperation Among Competent Authorities V-26
H. Investigations V-27
Chapter VI: Preventive Measures VI-1
A. Customer Identification and Due Diligence VI-2
B. Record Keeping Requirements VI-16
C. Suspicious Transaction Reporting VI-18
D. Cash Transaction Reporting VI-24
E. Balancing Privacy Laws with Reporting and Disclosure Requirements VI-26
F. Internal Controls, Compliance and Audit VI-27
G. Regulation and Supervision—Integrity Standards VI-27
H. Legal Entities and Arrangements VI-28
Chapter VII: The Financial Intelligence Unit VII-1
A. Definition of a Financial Intelligence Unit VII-3
B. Core Functions VII-4
C. Types or Models of FIUs VII-9
D. Possible Additional Functions VII-15
E. Organizing the FIU VII-17
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Content s
F. Privacy Safeguards VII-19
G. Information and Feedback VII-23
Chapter VIII: International Cooperation VIII-1
A. Prerequisites for Effective International Cooperation VIII-2
B. General Principles of International Cooperation Against
Money Laundering VIII-5
C. International Cooperation Between FIUs VIII-6
D. International Cooperation Between Financial Supervisory Authorities VIII-8
E. International Cooperation Between Law Enforcement and
Judicial Authorities VIII-11
F. Considerations for Fiscal Matter Offenses VIII-13
Chapter IX: Combating the Financing of Terrorism IX-1
A. Ratification and Implementation of United Nations Instruments IX-2
B. Criminalizing the Financing of Terrorism and Associated
Money Laundering IX-4
C. Freezing and Confiscating Terrorist Assets IX-5
D. Reporting Suspicious Transactions Related To Terrorism IX-7
E. International Cooperation IX-8
F. Alternative Remittance Systems IX-9
G. Wire Transfers IX-10
H. Non-Profit Organizations IX-12
I. Cash Couriers IX-13
J. Self-Assessment Questionnaire on Terrorist Financing IX-17
Part C: The Role of the World Bank and International Monetary Fund
Chapter X: World Bank and International Monetary Fund
Initiatives to Fight Money Laundering and Terrorist Financing X-1
A. Awareness Raising X-3
B. Development of a Universal AML/CFT Assessment Methodology X-5
C. Building Institutional Capacity X-6
D. Research and Analysis X-9
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Reference Guide to Anti-Money Laundering and Combating the Financing of Terrorism
Annexes
I. Websites for Key Organizations, Legal Instruments,
and Initiatives Annex I-1
II. Other Useful Websites and Resources Annex II-1
III. United Nations Anti-Terrorist Conventions Referred to in the
International Convention for the Suppression of the Financing
of Terrorism Annex III-1
IV. The Financial Action Task Force Forty Recommendations on
Money Laundering and Interpretative Notes Annex IV-1
V. The Financial Action Task Force Special Recommendations
on Terrorist Financing Annex V-1
VI. The Financial Action Task Force Interpretative Notes
and Guidance Notes for the Special Recommendations on
Terrorist Financing and the Self-Assessment Questionnaire Annex VI-1
VII. Cross-Reference of The Forty Recommendations to
Reference Guide Annex VII-1
VIII. Cross-Reference of the Special Recommendations to
Reference Guide Annex VIII-1
Diagrams
The Processes of Money Laundering and Financing of Terrorism I-8
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