Money Laundering and Terrorist Financing

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(relaxed techno music) Let's explore the concept of money laundering and its ties to terrorist financing. We will also discuss recommendations from the Financial Action Task Force that are considered the international standard for fighting money laundering and terrorist financing. When criminals make a profit illegally, they need a way to hide the source of the funds. This is done through money laundering. Money laundering is an attempt to make money obtained through criminal activities look legitimate. This way criminals can use their profits without revealing how they were obtained. Money laundering is a financial crime that is prevalent all over the world. The United Nations Office on Drugs and Crime estimates that money laundering makes up 2% to 5% of the global Gross Domestic Product per year. That's $800 billion to $2 trillion per year. Money laundering has been used in conjunction with these criminal activities. Drug trafficking, terrorism, embezzlement, and arms trafficking. For a criminal money laundering offense to occur, there are two elements that must be present. The act of laundering itself, which can be done through financial service providers or businesses, and a degree of knowledge or suspicion about where the funds came from or how the client obtained the funds. Terrorist financing is providing funds for terrorist activities. These funds can come from legitimate sources or from criminal activities. It does not matter where the funds came from. Terrorists financing is a crime based on what the terrorists will use the funds for. Money laundering and terrorist financing can be connected. Terrorists can use money laundering to make their funds seem legitimate. No organization or country is completely safe from the money laundering and terrorist financing. Here are some prominent examples. Wachovia at one point one of the largest banks in the U.S. Wachovia watched as Mexican gangs laundered more than $350 million through the bank. Nauru, the tiny island country was at one point a haven for shell corporations. It is estimated that $70 billion was hidden on behalf of the Russian mob in banks on the island, which is the third smallest country in the world. Bank of Credit and Commerce International, also known as BCCI. The bank laundered about $20 billion before being caught. Here are some indicators that money laundering or terrorist financing is occurring. There are questions about an individual's identity, Identification cannot be verified. There are statements alluding to involvement in criminal activities. An individual refuses to say where they obtained their funds. There are sudden changes to the transaction activity. An individual appears to be living beyond their means, or an individual uses multiple accounts at different organizations for no reason. These are some indicators specific to terrorist financing. There are transactions with an individual or organization in a high risk area. The client has been identified as someone who has traveled, attempted to travel, or intends to travel to a high risk area. Transactions involve individuals or organizations that have been identified as being linked to terrorist organizations or terrorist activities. Law enforcement has provided information that the individual or organization may be connected with a terrorist organization. The individual or organization expresses their support for violent extremism or radicalization, or the client has provided multiple variations of their name, address, phone number or other information used to identify them. Be sure to always be on the lookout for these indicators as you conduct business.