AML/CFT

Money laundering is the process of concealing the origins of money obtained illegally by passing it through a complex sequence of banking transfers or commercial transactions. Often linked in legislation and regulation, terrorism financing and money laundering are conceptual opposites. Money laundering is also the process where cash raised from criminal activities is made to look legitimate for re-integration into the financial system, whereas terrorism financing cares little about the source of the funds, but it is what the funds are to be used for that defines its scope.

Money laundering involves three steps: The first is “placement” and involves introducing cash into the financial system by some means. The second is known as “layering” and involves carrying out complex financial transactions to camouflage the illegal source of the cash. Finally, “integration” is the acquiring of wealth generated from the transactions of the illicit funds.

The Financial Action Task Force put pressure on governments around the world to increase surveillance and monitoring of financial transactions and share this information between countries. Since 2002, governments around the world upgraded money laundering laws and surveillance and monitoring systems of financial transactions. Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) regulations have become a much larger burden for financial institutions and enforcement has stepped up significantly.