Canadian law requires financial organizations to develop a risk-based approach to their Anti-Money Laundering (AML) programs.
To have an effective, efficient and economical program, you first have to comprehend your organization's risk exposure to criminal money laundering and terrorist financing. It is critical to provide the necessary training to ensure your staff has a comprehensive understanding of how criminals and terrorists utilize our financial systems to move their money.
Every financial institution, money service business, real estate agent, securities dealer, jewellery store and accountant is mandated with the responsibility of developing policies and procedures to combat money laundering. This includes the duty to be aware of trends in money laundering and the ways in which money launderers adapt their methods.
The financial industry’s responsibility to identify and stop money laundering affects its entire business process and failure to do so is loaded with risk. Such risks include:
A financial institution need only look to enforcement actions to understand its degree of risk, but money laundering in the post-9/11 world also makes big headlines outside of the industry.
Terrorists use a wide variety of methods to move money within and between organizations, including transactions within the financial sector, the physical movement of cash by couriers, and movement of goods through the trade system. Charities and alternative remittance systems have also been used to disguise terrorist movement of funds. Terrorist organizations have become extremely adaptable and are relying on many of the same practices traditionally employed by organized crime groups.
Disrupting funding flows creates a hostile environment for both criminal and terrorist organizations. It forces them to continuously be adaptive and look to the weakest link. To avoid having your organization being viewed as a weak link, it is essential to have systemic safeguards which protect your organization from criminal abuse and to focus on counter-terrorism intelligence.
"Know your customer, know their business" continues to be the anti-money laundering mantra. But the responsibilities of staff in financial services have been broadened by the Proceeds of Crime Act to include not just reporting of attempted money laundering by organized crime or terrorists, but any illegal activity – for example, the deposit of funds not declared to the Minister of Inland Revenue, bogus insurance claims or Social Security scams.