Anti-Money Laundering & Combating Terrorist Financing Awareness Training

Md. Jakir HossainDeputy CAMLCOOctober 04, 2015

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Overview

• This training session has been designed to provide you with information and guidance as to how to comply with your anti-money laundering & Combating Terrorist Financing (AML/CTF) responsibilities.

• It covers the following:

1.What is money laundering? 2.How does it affect ? 3.What are the rules & penalties? 4.How do we Prevent/combat ML/TF?

Origin of Money Laundering

• Money laundering got its name from a string of laundries that the Mafia Don AL Capone used in the USA to front his illegal business.

• Al Capone --- Born 1899 and died 1947

• Leave school in 6th grade and Joined as Body Guard of Jhon Torrio Mafia Don and later taken over the charge after retirement of Torrio

• Earned a huge money in illegal way and evade tax through Laundry business

• Capon was convicted in 1931 for $1,000,000 tax evasion

What is money laundering Terrorist Financing?

Terrorist Financing : Terrorist financing can be simply defined as financial support, in any form, of terrorism or of those who encourage, plan, or engage in terrorism.

Predicate Offences as per MLP Act-2012• As per MLP Act-2012 there are 27 predicated

offences

1. corruption and bribery;

2. counterfeiting currency;

3. counterfeiting deed and documents;

4. extortion;

5. fraud;

6. Forgery;

7. illegal trade of firearms;

8. illegal trade in narcotic drugs, psychotropic substances and substance causing intoxication;

9. illegal trade in stolen and other goods;

10.kidnapping;

11.murder, grievous physical injury;

12.trafficking of women and children;

13.black marketing

14. Smuggling;

15. theft or robbery or dacoity ;

16. human trafficking ;

17. dowry;

18. Smuggling;

19. tax related offences;

20. infringement of intellectual property rights;

21. terrorism or financing terrorist activities;

22. adulteration or the manufacture of goods

23. racketeering;

24. offence relating to the environment

25. sexual exploitation

26. market manipulation using price sensitive

information

27. organized crime and participation in same

Stages of Money Laundering

The 3 stages of money launderingThe money laundering process is often described as taking place in three stages:

All three stages don’t have to occur for money laundering to have happened. If you suspect activity in any stage, always report your suspicion to the BAMLCO

The physical disposal of the initial proceeds derived from illegal activity.PLACEMENT

Separating illicit proceeds from their source by creating complex layers of transactions designed to disguise the audit trail and provide anonymity.

LAYERING

INTEGRATIONThe provision of apparent legitimacy to criminally derived wealth. The laundered proceeds re-enter the financial system, appearing as normal funds.

Stages of Money Laundering

The 3 stages of money launderingThe money laundering process is often described as taking place in three stages:

PLACEMENT

LAYERING

INTEGRATION

What are the rules/Act

• The Money Laundering Prevention Act-2012,

• Anti Terrorism Act-2009 (amended as on 2012 & 2013) &

• BFIU Master Circular 10 dated 28-12-2014.

• DBBL Manual on Prevention of Money Laundering and Combating Terrorist Financing(CTF)-2015

• Recently adopted ML&TF Risk Management Guidelines named as “DBBL Money Laundering and Terrorist Financing Risk Management Guideline-2015”

– Above laws and regulation are aimed at detecting and deterring money laundering and the financing of terrorist activities. This is a national priority.

– Similar laws around the world have the same objective.

Offences & penalties

MLP Act-2012

The above Money Laundering offences carry a penalty of minimum 2 years and maximum 12 years imprisonment or fine of Tk.10 lac or double the value of the property involved in money laundering whichever is higher or both. If the any entity done the offence of money laundering that entity will be fined for Tk.20 lac or double the value of the property involved, whichever is higher.

Money Laundering itself is an offence.Three principle money laundering offences:

• Concealing – Concealing, disguising, converting or transferring criminal property.

• Arrangements (including terrorism) - Entering an arrangement which facilitates the acquisition, use or control of criminal or terrorist property by another person.

• Acquisition, use and possession - of known or suspected criminal proceeds (or funds)

Offences & penalties

Punishment against another 4 offences

• Violation of freezing order- imprisonment for maximum 3 years or equal value of freezing amount or both

• Disclosure of information- imprisonment for maximum 2 years or fine of not exceeding Tk.50,000/- or both

• Non co-operation regarding investigation – max 1 year imprisonment or fine for not exceeding Tk.25,000/- or both

• For providing wrong information- imprisonment for maximum 3 years or fine of not exceeding Tk.50,000/- or both

What are our duties & responsibilities?

•As per Sec 25 of MLP Act-2012 there are 4 major responsibilities for Bank:

1. To collect and preserve correct and complete information of customers

2. To preserve all documents of customer for 5 years from the date of account closure

3. To provide information to Bangladesh Bank as and when asked by Bangladesh Bank.

4. To monitor customer accounts and report of STR against any findings of suspicion.

Punishment for failure above: Fine of Minimum Tk.-50,000/- and Maximum Tk.25,00,000/-

In addition of above Bank’s license may be cancelled.

HOW TO COMBAT MONEY LAUNDERING AND TERRORIST FINANCING

Principal AML/CTF Controls

• Know Your Customer (KYC) – Robust systems in place to verify the identity of our customers and understanding the nature of the relationship.

• Monitoring, Recognition and Reporting of Suspicious Activity – All DBBL staffs must be on the look out for suspicious activity and have the ability to report suspicions to the BAMLCO/ CAMLCO.

• Education & Training of Staff

How do we fight it?

Know Your Customer

• The first step in any ML operation is opening the accounts where the proceeds of crime can be placed. This is why confirmation of identity and KYC is crucial. Front line Staff and Agents are our first line of defence against money laundering and terrorist financing.

• By knowing your customer, you will be able to understand what is potentially suspicious.

How do we fight it?

Monitoring & Reporting of Suspicious Activity

• As per Section 25 of MLP Act-2012 Banks/Fis should be vigilent in monitoring the activities of customers accounts so that any suspicion detected which must be reported as STR to the BFIU through the Central Compliance Unit of the Banks/Fis

• Tools for monitoring the customer accounts may be as follows:

• CTR

• TP exception Report

• Customer’s declaration regarding one-off transaction or

• Customer’s source of fund

• Transactions that are not consistent with the known circumstances of the customer, should raise suspicions.

• BM/BAMLCO must be regular in supervising the monitoring system and report to CCU time to time.

How do we fight it?

Money Laundering Reporting Officer ?

• BAMLCO in the Branch Level and CAMLCO in the Head Office Level• All DBBL staffs must use the Suspicious Activity Reporting (SAR) Form (Porishishto – GA of Master Circular)

4D technique for STR reporting

The 4D technique will help you consider whether what you have seen may relate to criminal activity and is therefore suspicious or whether it is unusual but with a logical explanation. The main headings of the 4D technique are as follows:

– Details – What has happened? Do I need to know more?– Dates – When did it happen? Is it a one off transaction or a series of transactions?– Doubts – What made me suspect this relates to criminal activity? How well do I know the customer? Does

anyone else know more?– Decision – You may decide;

(i) That you are suspicious and therefore need to report the activity to the BAMLCO,(ii) Not to report it as you have concluded that there is a logical explanation for the activity, or(iii) Monitor the account to better understand the activity before making a final decision.

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Escalation process of reporting

Officer from branch level BAMLCO/ Manager CAMLCO Managing Director If agreed about suspicion instruct CAMLCO for reporting to the BFIU

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Summary

In this course you have learnt

• The definition and process of money laundering.

• The legal requirements and consequences.

• How it affects DBBL and you personally.

• How to fight money laundering and terrorist financing as well as protect yourself and DBBL.

Be alert at all times – follow MLP Act-2012, ATA-2009(amendment-2013), BFIU Master Circular 10 and DBBL AML/CTF Manual-2015 & relevant Guidelines or contact CMALCO/DCAMLCO for advice CAMLCO-01713012991 DCAMLCO-01712074031

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Why we get together here

• The vital reason for gathering here is for the preparation to face the forthcoming Mutual Evaluation to be held October 11 – October 23, 2015

• What is waiting for Mutual Evaluation for our Bank?

• What we will have to do?

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Knowledge Test

• You will now be asked 40 questions on the subjects covered in this course.

• You will be given your score at the end and will be required to re-take the test until you meet the pass mark of 80%.

Good Luck !

Thank you.