Post by Sapphire Capital on Jul 24, 2008 3:28:50 GMT 4
Sierra Leone: Financial Institutions And Money Laundering
Standard Times Press News
Published 07/23/2008
Email:
davidmahdi@standardtimespress....
Money laundering is the practice of engaging in financial transactions in order to conceal the identity, source, and/or destination of money, and is a main operation of the underground economy. Money is "laundered" to conceal illegal activity, including the crimes that generate the money itself, such as drug trafficking. Money laundering conceals the source of illegal proceeds so that the money can be used without detection of its criminal source.
Financial institutions especially commercial banks and exchange bureaus have been both conscious and unconscious participants in money laundering activities. Banks have been major targets in laundering operations because they provide a variety of services and instruments, including cashier’s checks, traveler’s checks, and wire transfers (or money gram), which can be used to conceal the source of illicit proceeds. Similarly, criminals use financial establishments that provide money orders, traveler’s checks, money transfers, check cashing, currency exchange, and stored value services to hide or disguise the origin of funds derived from illegal activity. Money laundering is the attempt to conceal or disguise the nature, location, source, ownership, or control of illegally obtained money. This definition covers a wide range of activities.
Money laundering can be a complex process. It involves three different, and
Sometimes overlapping stages such as placement involves physically placing illegally obtained money into the financial system or the retail economy. Money is most vulnerable to detection and seizure during placement and layering involves separating the illegally obtained money from its criminal source by layering it through a series of financial transactions, which makes it difficult to trace the money back to its original source. Integration involves moving the proceeds into a seemingly legitimate form. Integration may include the purchase of automobiles, businesses, real estate, etc.
However, many Anti Money Laundering Networks recommend the term "Hide" to reflect the fact that cash is often introduced to the economy via commercial concerns which may knowingly or not knowingly be part of the laundering scheme, and it is these which ultimately prove to be the interface between the criminal and the financial sector
"Move": clearly explains that the money launderer uses transfers, sales and purchase of assets, and changes the shape and size of the lump of money so as to obfuscate the trail between money and crime or money and criminal.
"Invest": the criminal spends the money: he/she may invest it in assets such as buildings, or in his/her lifestyle such as womanising and excessive drinking and smoking. An important factor connecting these three stages of this process is the "paper trail" generated by financial transactions. Criminals try to avoid leaving this "paper trail" by avoiding reporting and record-keeping requirements.
One way through which money launderers avoid reporting and record-keeping requirement is by "structuring" transactions, coercing or bribing employees not to file proper reports or complete required records, or by establishing apparently legitimate "front" businesses to open accounts or establish preferred customer relationships. Some even use church/mosques names and NGOs accounts for such illegal transactions. In recent years, more countries have implemented laws to combat money laundering. Sierra Leone is no exception in this regard.
In 2005 The Anti-Money Laundering Act was passed into law; this followed a series of other acts such as The Banking Act of 2000, The Bank of Sierra Leone Act 2000, The Other Financial Act, 2001, which were part of the restructuring package of the financial sector of the country. But whether these laws are being enforced is a different kettle of fish altogether. Financial service regulators and enforcement agencies around the world are working to improve communications and share information in anti-money laundering efforts. More hands are needed in order to help combat money laundering and make our communities and our country a safer place to live and work.In the past, the term "money laundering" was applied only to financial transactions related to organized crime. Today, its definition is often expanded by government regulators to encompass any financial transaction which generates an asset or a value as the result of an illegal act, which may involve actions such as tax evasion or false accounting. As a result, the illegal activity of money laundering is now recognized as potentially practiced by individuals, small and large businesses, corrupt officials, members of organized crime (such as drug dealers or the Mafia), and even corrupt states, through a complex network of international companies and trusts based in offshore tax havens. The increasing complexity of financial crime, the increasing recognized value of so-called "financial intelligence" in combating transnational crime and terrorism, and the speculated impact of capital extracted from the legitimate economy has led to an increased prominence of money laundering in political, economic, and legal debate.
If a person is making thousands of Leones in a week from a business (not unusual for a store owner) and wishes to deposit that money in a bank, it cannot be done without possibly drawing suspicion. In many countries, for example, cash transactions and deposits of more than a certain dollar amount are required to be reported as "significant cash transactions" to the central bank or other law enforcement agencies. In other jurisdictions suspicion-based requirements are placed on financial services employees and firms to report suspicious activity to the authorities. Methods to conceal the source are therefore required. One method of keeping this small change private would be for an individual to give money to an intermediary who is already legitimately taking in large amounts of cash. The intermediary would then deposit that money into an account, take a premium, and write a check to the individual. Thus, the individual draws no attention to himself, and can deposit his check into a bank account without drawing suspicion. This works well for one-off transactions, but if it occurs on a regular basis then the check deposits will form a paper trail and could raise suspicion.
Another method involves establishing a business whose cash inflow cannot be monitored, and funneling the small change into this business and paying taxes on it. All bank employees however are trained to be constantly on the lookout for any transactions which appear to be an attempt to get around the currency reporting requirements. Such companies should deal directly with the public, perform some service-related activity as opposed to providing physical goods, and reasonably accept cash as a matter of business. Dealing directly with the public ensures plausible anonymity of source. An example of a legitimate business displaying plausible anonymity of source would be hairstylist. Since it would be unreasonable for them to keep track of the identity of their customers, a record of their transaction amounts must be ostensibly accepted as evidence of actual financial activity. Service-related businesses have the advantage of anonymity of resources. A business that sells computers has to account for where it actually got the computers, whereas a plumbing company merely has to account for labour, which can be falsified.
Corrupt politicians and lobbyists also launder money by setting up personal non-profits organization to move money between trusted organizations, so that donations from inappropriate sources may be illegally used for personal gain.Despite the increased awareness and significant progress that has been made on several fronts, much remains to be done in the global effort to combat money laundering. It will remain important to sustain and strengthen these gains because focusing on money laundering is one of the most valuable tools law enforcement has to combat international crime. A focus on money laundering can accomplish what many other law enforcement tools cannot; it can be applied equally effectively to a wide variety of crimes, to any crime that must be financed or is committed for profit. Once in place, anti-money laundering measures can be used without any special tailoring to attack such threats as narcotic trafficking, alien smuggling, intellectual property theft, corruption, terrorism, and more.
To help prevent the laundering of cash and to obtain documentation that may be used to prosecute money launderers, the government requires banking institutions, and exchange bureaus to file specific reports and maintain records on certain cash transactions.
Therefore, there is need for all stakeholders in Sierra Leone to support national and international efforts against financial crime such as money laundering and drug trafficking.
Standard Times Press News
Published 07/23/2008
Email:
davidmahdi@standardtimespress....
Money laundering is the practice of engaging in financial transactions in order to conceal the identity, source, and/or destination of money, and is a main operation of the underground economy. Money is "laundered" to conceal illegal activity, including the crimes that generate the money itself, such as drug trafficking. Money laundering conceals the source of illegal proceeds so that the money can be used without detection of its criminal source.
Financial institutions especially commercial banks and exchange bureaus have been both conscious and unconscious participants in money laundering activities. Banks have been major targets in laundering operations because they provide a variety of services and instruments, including cashier’s checks, traveler’s checks, and wire transfers (or money gram), which can be used to conceal the source of illicit proceeds. Similarly, criminals use financial establishments that provide money orders, traveler’s checks, money transfers, check cashing, currency exchange, and stored value services to hide or disguise the origin of funds derived from illegal activity. Money laundering is the attempt to conceal or disguise the nature, location, source, ownership, or control of illegally obtained money. This definition covers a wide range of activities.
Money laundering can be a complex process. It involves three different, and
Sometimes overlapping stages such as placement involves physically placing illegally obtained money into the financial system or the retail economy. Money is most vulnerable to detection and seizure during placement and layering involves separating the illegally obtained money from its criminal source by layering it through a series of financial transactions, which makes it difficult to trace the money back to its original source. Integration involves moving the proceeds into a seemingly legitimate form. Integration may include the purchase of automobiles, businesses, real estate, etc.
However, many Anti Money Laundering Networks recommend the term "Hide" to reflect the fact that cash is often introduced to the economy via commercial concerns which may knowingly or not knowingly be part of the laundering scheme, and it is these which ultimately prove to be the interface between the criminal and the financial sector
"Move": clearly explains that the money launderer uses transfers, sales and purchase of assets, and changes the shape and size of the lump of money so as to obfuscate the trail between money and crime or money and criminal.
"Invest": the criminal spends the money: he/she may invest it in assets such as buildings, or in his/her lifestyle such as womanising and excessive drinking and smoking. An important factor connecting these three stages of this process is the "paper trail" generated by financial transactions. Criminals try to avoid leaving this "paper trail" by avoiding reporting and record-keeping requirements.
One way through which money launderers avoid reporting and record-keeping requirement is by "structuring" transactions, coercing or bribing employees not to file proper reports or complete required records, or by establishing apparently legitimate "front" businesses to open accounts or establish preferred customer relationships. Some even use church/mosques names and NGOs accounts for such illegal transactions. In recent years, more countries have implemented laws to combat money laundering. Sierra Leone is no exception in this regard.
In 2005 The Anti-Money Laundering Act was passed into law; this followed a series of other acts such as The Banking Act of 2000, The Bank of Sierra Leone Act 2000, The Other Financial Act, 2001, which were part of the restructuring package of the financial sector of the country. But whether these laws are being enforced is a different kettle of fish altogether. Financial service regulators and enforcement agencies around the world are working to improve communications and share information in anti-money laundering efforts. More hands are needed in order to help combat money laundering and make our communities and our country a safer place to live and work.In the past, the term "money laundering" was applied only to financial transactions related to organized crime. Today, its definition is often expanded by government regulators to encompass any financial transaction which generates an asset or a value as the result of an illegal act, which may involve actions such as tax evasion or false accounting. As a result, the illegal activity of money laundering is now recognized as potentially practiced by individuals, small and large businesses, corrupt officials, members of organized crime (such as drug dealers or the Mafia), and even corrupt states, through a complex network of international companies and trusts based in offshore tax havens. The increasing complexity of financial crime, the increasing recognized value of so-called "financial intelligence" in combating transnational crime and terrorism, and the speculated impact of capital extracted from the legitimate economy has led to an increased prominence of money laundering in political, economic, and legal debate.
If a person is making thousands of Leones in a week from a business (not unusual for a store owner) and wishes to deposit that money in a bank, it cannot be done without possibly drawing suspicion. In many countries, for example, cash transactions and deposits of more than a certain dollar amount are required to be reported as "significant cash transactions" to the central bank or other law enforcement agencies. In other jurisdictions suspicion-based requirements are placed on financial services employees and firms to report suspicious activity to the authorities. Methods to conceal the source are therefore required. One method of keeping this small change private would be for an individual to give money to an intermediary who is already legitimately taking in large amounts of cash. The intermediary would then deposit that money into an account, take a premium, and write a check to the individual. Thus, the individual draws no attention to himself, and can deposit his check into a bank account without drawing suspicion. This works well for one-off transactions, but if it occurs on a regular basis then the check deposits will form a paper trail and could raise suspicion.
Another method involves establishing a business whose cash inflow cannot be monitored, and funneling the small change into this business and paying taxes on it. All bank employees however are trained to be constantly on the lookout for any transactions which appear to be an attempt to get around the currency reporting requirements. Such companies should deal directly with the public, perform some service-related activity as opposed to providing physical goods, and reasonably accept cash as a matter of business. Dealing directly with the public ensures plausible anonymity of source. An example of a legitimate business displaying plausible anonymity of source would be hairstylist. Since it would be unreasonable for them to keep track of the identity of their customers, a record of their transaction amounts must be ostensibly accepted as evidence of actual financial activity. Service-related businesses have the advantage of anonymity of resources. A business that sells computers has to account for where it actually got the computers, whereas a plumbing company merely has to account for labour, which can be falsified.
Corrupt politicians and lobbyists also launder money by setting up personal non-profits organization to move money between trusted organizations, so that donations from inappropriate sources may be illegally used for personal gain.Despite the increased awareness and significant progress that has been made on several fronts, much remains to be done in the global effort to combat money laundering. It will remain important to sustain and strengthen these gains because focusing on money laundering is one of the most valuable tools law enforcement has to combat international crime. A focus on money laundering can accomplish what many other law enforcement tools cannot; it can be applied equally effectively to a wide variety of crimes, to any crime that must be financed or is committed for profit. Once in place, anti-money laundering measures can be used without any special tailoring to attack such threats as narcotic trafficking, alien smuggling, intellectual property theft, corruption, terrorism, and more.
To help prevent the laundering of cash and to obtain documentation that may be used to prosecute money launderers, the government requires banking institutions, and exchange bureaus to file specific reports and maintain records on certain cash transactions.
Therefore, there is need for all stakeholders in Sierra Leone to support national and international efforts against financial crime such as money laundering and drug trafficking.