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What is Money Laundering and Terrorist Financing?

What is money laundering?

The conversion or transfer of property derived from unlawful conduct for the purpose of concealing, or disguising, the illicit origin of the property, or of assisting any person who is involved in the commission of such an offence, to evade the legal consequences of the action; the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from unlawful conduct.

What is terrorist financing?

Terrorist financing came into the limelight after the events of terrorism on 9/11. The US passed the USA PATRIOT Act, among other reasons, to ensure that both combating the financing of terrorism (CFT) and anti-money laundering (AML) was given adequate focus by US financial institutions. The act also had extraterritorial impact and non-US banks having correspondent banking accounts or doing business with US banks had to upgrade their AML/CFT processes.

Initially the focus of CFT efforts was on non-profit organisations, unregistered money services businesses (MSBs) and the criminalisation of the act itself. The Financial Action Task Force on Money Laundering (FATF) made 9 special recommendations for CFT (first 8, with the addition of a 9th a year later). These 9 recommendations have become the global standard for CFT. Their effectiveness is almost always assessed in conjunction with AML.

The FATF Blacklist (the NCCT list) mechanism was used to coerce countries to bring about change.

Financial Investigation Unit

Ozanne Hall,  Mignot Plateau,  Cornet Street,  St Peter Port,  GY1 1LF,  Guernsey
Tel: 44 (0)1481 714081 Fax: 44 (0)1481 710466