Anti Money Laundering (AML) Learnings from Banks：反洗钱（AML）借鉴银行

1、Anti Money Laundering (AML) Learnings from BanksCompliance Group-AMLJuly 16, 2021AgendaKYC/ AML/ CFT OverviewThe 3D approach Controls & Checks Banks V/s Insurance CompaniesElements of AML Framework in BanksSummary2AgendaKYC/ AML/ CFT OverviewThe 3D approach Controls & Checks Banks V/s Insurance Comp

2、aniesElements of AML Framework in BanksSummary3Know Your Customer (KYC)Reserve Bank of India (RBI) circular on AML/ KYC states: “The objective of KYC/AML/CFT guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist finan

3、cing activities. KYC procedures also enable banks to know/understand their customers and their financial dealings better which in turn help them manage their risks prudently Banks should frame their KYC policies incorporating the following four key elements:a) Customer Acceptance Policy;b) Customer

4、Identification Procedures;c) Monitoring of Transactions; andd) Risk Management.4What is Money Laundering?Section 3 of the Prevention of Money Laundering Act (PMLA), 2002 defines the offence of money laundering as under: “ 3. Whosoever directly or indirectly attempts to indulge or knowingly assists o

5、r knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering. Money Laundering is the process by which illegal funds and assets are converted into legitimate funds

6、 and assetsThe International monetary fund in 1996 estimated per year laundering volume between USD 600 bn and USD 1.5 tn.Illegal/ Dirty moneyLegal/Clean Money5Stages of Money LaunderingPlacement Stage - easy to detect start of MLLayering Stage - Relatively Difficult to detectIntegration Stage - Alm

7、ost impossible to detect PlacementLayeringIntegrationA/c 1A/c 2A/c 5A/c 4A/c 3A/c 8A/c 7A/c 6A/c 9Investment6What is Terrorist Financing? The United Nations International Convention for the Suppression of the Financing of Terrorism broadly defines an act of terror as:a) An act which constitutes an o

8、ffence within the scope of and as defined in one of the treaties listed by the United Nations (UN); orb) Any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the hostilities in a situation of armed conflict, when the purpos

9、e of such act, by its nature or context, is to intimidate a population, or to compel a government or an international organisation to do or to abstain from doing any act. The act of financing such an act of terror can be termed as Terrorist Financing.7Money Laundering V/s Terrorist Financing8The AML

10、 Transition in India for BanksAugust 16, 2002 - The Reserve Bank of India (RBI) released its first circular on “Guidelines on Know Your Customer norms and “Cash transactions January 17, 2003 Prevention of Money Laundering Act (PMLA) published in the GazetteNovember 24, 2004 - The first set of compre

11、hensive guidelines on Know Your Customer (KYC) Guidelines Anti Money Laundering Standards issuedJuly 1, 2005 PMLA Rules November 27, 2006 India becomes an observer at the Financial Action Task Force (FATF)March 6, 2021 Amendment to PMLA, 2002November 12, 2021 Amendment to PMLA Rules, 2005June 25, 20

12、21 India becomes a member of the FATF9AML framework in IndiaCBDT-DGIT/CCITCBEC-DGDRI/DGCEIEDREICRAWIBEOW of CBIEOW of PoliceEnforcement AgenciesRBISEBIIRDARegulatory AgenciesBanking CompanyFinancial InstitutionsIntermediariesReporting AgenciesForeign FIUsCBDT-DGIT/CCITCBEC-DGDRI/DGCEIEDREICRAWIBEOW

13、of CBIEOW of PoliceEnforcement AgenciesRBISEBIIRDARegulatory AgenciesForeign FIUsPrevention of Money Laundering Act,2002 (PMLA)Prevention of Money Laundering RulesRBI Master Circular on KYC/AML/CFT/Obligation of Banks under PMLA, 2002 FIU-INDScheduled Offences included in PMLA 2021KidnappingCriminal

14、 ActivitiesTerrorist ActGambling, Robbery, CheatingExtortionSmuggling(arms, people,goods)ProstitutionCounterfeiting & ForgeryBribery & CorruptionDrug Trafficking11AgendaKYC/ AML/ CFT OverviewThe 3D approach Controls & Checks Banks V/s Insurance Companies Elements of AML Framework in BanksSummary12AM

15、L approach-3D ConceptDeterringAdherence to KYC NormsDetectingActivity IndicatorsTransaction MonitoringDisruptingReporting transactions13AgendaKYC/ AML/ CFT OverviewThe 3D approach Controls & Checks Banks V/s Insurance Companies Elements of AML Framework in BanksSummary14Risk Comparison between Insur

16、ance & Banking0-1: Low Risk1-2: Medium Risk2-3: High Risk15Risk Comparison between Banking & OthersFigures in percentage for the FY 2021-09 (Source: FIU Annual Report)16AgendaKYC/ AML/ CFT OverviewThe 3D approach Controls & Checks Banks V/s Insurance Companies Elements of AML Framework in BanksSumma

17、ry17Enterprise - Wide AML FrameworkElements of AML Framework in BanksEnterprise - Wide AML Framework Know Your Customer (KYC)Due diligence measuresBasic EnhancedCentralised Account Opening CentersName ScreeningAccount opening stageLegacy customersScreening of Cross Border TransactionsPerformed on th

18、e basis of pre defined rules based on product , customer and transaction riskIdentification of unusual transactionsConfirmation of SuspicionTransaction MonitoringTrainingFIU Reporting*Regulatory InterfaceUpdates to Senior MgmtAudit* Includes STR, CTR, CCR, NPOR18Typologies observed Large value and v

19、olume of cash deposits followed by immediate RTGS payment or transfer.Large value of RTGS or transfer followed by immediate withdrawal/ transfers.Issuing large number of cheques.Cash deposits across various branches followed by withdrawals, transfer.Frequent closure and subsequent opening of accounts.Sudden activity in a dormant account.19Typologies observed .contd High number of debit and credits by way of small value cheques.Large value inward remittance followed by cash withdrawals.Inward remittance to one account followed by