Hi there, welcome to the first instalment of MemberCheck Explainers, a series of bite-sized videos, where we’ll talk about the all-important acronyms you REALLY need to know in AML risk management, what they mean, and why they matter.
You may have seen or heard some of these acronyms before and wondered, “Hmm, I definitely should know what those letters stand for..” but have just forgotten to google them later.
Well, don’t worry, we have you covered.
In our inaugural episode, we unpack the acronym, AML.
If you thought AML is short for Anti Money Laundering, then you’re on the ‘money’ Excuse the pun.
Did you know that the UNODC, or the United Nations Office on Drugs and Crime, estimates that two to five percent of the global GDP is laundered yearly?
That is equal to approximately $800 billion to $2 trillion US dollars of "dirty" money in circulation right now.
If money laundering were an economy, it would be the 5th largest in the world!
To combat this complex and persistent problem plaguing societies, economies, and organisations around the world, AML laws have been designed to make it harder for criminals to move and hide their illicit money.
Where did AML policies originate from you may ask?
The start of AML history can be traced back to 1970 in the USA, when Congress passed a set of policies called the BSA or the Bank Secrecy Act.
The act requires financial institutions to report certain transactions to the government, and it imposes strict record-keeping requirements.
In addition, the act imposes heavy penalties for violations, including prison
sentences and large fines.
Over the years, the bank secrecy act has been amended and strengthened several times to keep up with changing methods of money laundering.
Today, it remains an important tool in the fight against financial crime.
Fast forward 19 years after the introduction of the BSA, we saw the establishment of the Financial Action Task Force or F, an inter-governmental body to combat money laundering and terrorist financing.
Headquartered in Paris, the FATF is a policy-making body that works to continuously improve global standards for AML regulation and legislation.
Through its work across more than 200 countries and jurisdictions, and the private sector, the FATF plays a critical role in the global efforts to counter money laundering operations.
AML is a serious global issue; it is not a victimless crime. And as we’ve mentioned before, money laundering continues to present significant risks to economies, societies, and organisations.
Meeting AML obligations help protect organisations from being used for illegal purposes and protects their reputation.
In addition, complying with AML laws ensures that organisations are not inadvertently supporting criminal activity.
Failure to meet AML obligations will trigger specific legal actions from local and international financial intelligence agencies, such as AUSTRAC in Australia.
Legal actions include civil penalty orders, enforceable undertakings, infringement notices, and remedial directions that ensure organisations comply with the law.
To that end, AML compliance is therefore essential for all reporting organisations and entities operating in today's global marketplace.
And that concludes our quick rundown on all things AML.
I hope you learned a little bit about Anti Money Laundering today and what it could mean for you or your business.
Stay tuned over the course of our MemberCheck Explainer series to learn more about the appropriate and actionable procedures to identify, assess, and manage AML risks.
In the meantime, head over to our website to learn more about how we can help you build trusted interactions by mitigating fraud and risk.
Thank you for your time and bye for now!