In the post-9/11 era, Anti Money Laundering (AML) legislation and compliance to AML requirements have become key focus areas for banks, law firms, asset management firms, auditors and similar regulated service providers. World-Check, the leading global AML intelligence solution, provides an overview of AML compliance and the laws underlying this area of regulatory compliance.
According to the latest KPMG Global Anti Money Laundering Survey, published in 2007, a staggering US$ 1 trillion per year is being laundered by financial criminals, drugs dealers and arms traffickers worldwide. With this much laundered money in the wrong hands, criminal syndicates are able to expand their operations, resulting in more violence, higher levels of addiction and a range of related socio-economic problems throughout the world.
Laundered money is also known to finance highly coordinated international terrorist activities; a phenomenon that poses a clear and present danger to worldwide political and economic stability.
As such, Anti Money Laundering and the Combating of Terrorist Financing (CTF) can only be treated as pressing objectives of global concern. A sharp worldwide increase in the amount of wealth in private hands, combined with the multinational expansion of leading financial institutions, further necessitated the expansion of supranational legislation and law enforcement structures to combat money laundering and related financial crimes.
History of Anti Money Laundering Compliance Laws
Although AML compliance has been accentuated by recent global developments, it is by no means a new regulatory issue. Modern Anti Money Laundering regulations are to a large extent informed by the earlier experiences of the Swiss banking community, where financial scandals involving the likes of Nigeria’s General Sani Abacha and the Philippines’ Marcos family resulted in extremely bad publicity for the institutions involved.
The arrival of the new millennium was marred by a series of coordinated acts of terrorism and a number of massive corporate scandals involving the likes of Enron and Riggs formerly a leading American financial institution.
These events highlighted the fact that money laundering had taken on epic proportions over time, and that the proliferation of new technologies and communication platforms had created countless opportunities for fraud, money laundering and other elicit financial activities. They also accentuated the need to “know your customers”, and led to the creation and implementation of a range of KYC and AML laws aimed at preventing financial criminals from accessing and abusing financial systems.
Given the fact that the greatest majority of criminal activities generating profits only start generating a traceable paper trail once funds are introduced into the financial system, it was deemed necessary to approach AML compliance and law enforcement in a way that clamped down on abuses of the world’s official banking and financial systems. To this end, regulatory, legislative and law enforcement agencies set out to create an AML compliance framework and cross-border law enforcement regime aimed at holding financial institutions accountable for their clients’ transactional activities.