Anti Money Laundering
The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities and with more than 200 countries and jurisdictions committed to implementing FATF Standards, help respond to prevent organized crime, corruption, and terrorism and in combatting Money Laundering and financing of terrorism (FT).
Financial Intelligence Unit – India (FIU)is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the finance minister in India. Being set by the Government of India as the central national agency responsible for receiving, processing, analyzing, and disseminating information relating to suspect financial transactions, FIU-IND is responsible for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in pursuing the global efforts against money laundering and related crimes.
Global, Regional trends and latest developments
Increased focus by Regulators across Geographies
In recent years, regulators have dramatically stepped-up enforcement of anti-money laundering (AML) and CFT laws and regulations. Today, it is not uncommon to see the US Justice Department and regulators announce multi-million-dollar criminal or civil fines as settlements for AML violations. Sometimes compliance-related fines exceed many hundreds of millions of dollars with a recent judgment reaching USD 9 billion. Similar cases have also been witnessed in the UK, Australia, UAE where huge penalties were imposed on large banks and other financial institutions and India is not an exception. With the increased focus on the upcoming FATF mutual evaluation, the Regulator and various Law Enforcement agencies have zero tolerance towards any sort of non-compliance. In the recent past, multiple cases of strictures and penalties on Banks and other financial institutions have been quoted on public platforms.
- The robust due diligence process
- Policies, Procedures, and processes focussing on this aspect
- Risk Assessment and better identification/reporting of risks
- Strong KYC/AML governance
- Robust AML monitoring framework and system
- Usage of utilities, etc.
- Board and Senior Management Involvement
- Effectiveness of governance
- Robustness of KYC profiling
- Source of funds and source of wealth
- Politically Exposed Persons (PEPs)
- Transactions in Dormant accounts
- Effectiveness of monitoring systems thresholds – periodic testing of thresholds
- Accounts that have been inactive suddenly experience large activity inconsistent with the normal practice of the client or their financial ability
- Beneficial Owner/Ultimate Beneficial Owner
- Effectiveness of management oversight and consideration of AML / Sanctions issues at senior management / key committees
- Follow–up actions after filing of STRs – continue or otherwise exit the relationship
- Enhanced Due diligence
- Data quality issues
- Staffing, training, and competency building
- Policy and procedures setting/strengthening.
- Playing an advisory role.
- Strengthening Monitoring and surveillance – transactions, trades, cash, sanctions
- Providing guidance on regulatory affairs and ensuring compliance to FIU/FATF mandate.
- Handling regulatory authorities
- Training and Awareness to key management handling AML portfolio
- Providing trained resources on the floor for execution support