Anti-money laundering: Some tips on compliance
According to Dermot Butler of Custom House Global Fund Services Limited,anti-money laundering is the rules and processes created to prevent money laundering, an act in which illegal assets, usually cash, are converted in legitimate channels so it appears they have been obtained legally.
Regulations and policies have been created to prevent anti-money laundering. One example is the Patriot Act, an amendment to the Bank Security Act adopted in response to the terrorist acts of September 11, 2001 that gives law enforcement agencies increased opportunities to tap into telephones and the Internet. This is just one of many anti-money laundering (AML) tools, most which have an impact on the banking, financial and investment communities.
Some of the other measures include those initiated by the FINRA (Financial Industry Regulatory Authority) a non-governmental agency regulating the securities industry. FINRA has set forth minimum standards for a company’s compliance program with anti-money laundering rules under their own Rule 3310. This includes senior management buy-in, independent testing of the program’s implementation, a reasonable design of the program to achieve the desired results and a reasonable design to ensure proper detection of suspicious activity.
According to Butler, there are several guidelines to follow to ensure anti-money laundering compliance: client verification, identification and confirmation of the asset source, and making sure the proceeds go back into the original remitting bank. Most of all, make sure the procedures are followed unfailingly by an educated staff, with checklists in place to safeguard the process.
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Sources cited within:
http://www.finra.org/industry/issues/anti-money-laundering
http://www.cftc.gov/industryoversight/antimoneylaundering/index.htm
http://www.customhousegroup.com/speeches/2003/01/what_is_anti_money_laundering_