Money Laundering Techniques : Reverse Money Laundering

By

 

Reverse money laundering

 

Reverse money laundering is a process that disguises a legitimate source of funds that are to be used for illegal purposes. It is usually perpetrated for the purpose of financing terrorism but can be also used by criminal organizations that have invested in legal businesses and would like to withdraw legitimate funds from official circulation. Unaccounted cash received via disguising financial transactions is not included in official financial reporting and could be used to evade taxes, hand in bribes and pay "under-the-table" salaries. For example, in an affidavit filed on 24 March 2014 in United States District Court, Northern California, San Francisco Division, FBI special agent Emmanuel V. Pascau alleged that several people associated with the Chee Kung Tong organization, and California State Senator Leland Yee, engaged in reverse money laundering activities.

The problem of such fraudulent encashment practices (obnalichka in Russian) has become acute in Russia and other countries of the former Soviet Union. The Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) reported that the Russian Federation, Ukraine, Turkey, Serbia, Kyrgyzstan, Uzbekistan, Armenia and Kazakhstan have encountered a substantial shrinkage of tax base and shifting money supply balance in favor of cash. These processes have complicated planning and management of the economy and contributed to the growth of the shadow economy.


Happy reading




Formerly Faculty for Finance & Associate Dean, IBS-Kochi MBA (Banking & Finance – CUSAT);CFA. Accredited Management Teacher from CME of AIMA, Delhi has been in Management Education from 1988. Exposure is in the field of Mutual Funds, Market Research, Project Report preparation & evaluation, Advertising & NGO Activities. This Chief Manager, UTI Asset Management Co Pvt. Ltd(1992-2003), Mumbai. Undergone training in Case Study method of teaching under Mr. Trevor Williams and Mr. Scott M Andrews conducted by the ECCH, UK . Published Books & Book Review, Series of academic articles and maintains a column on MFs under "Fund scan" in Business Manorama since January 2007,Contributes "Portfolio Doctor" column for 'Sampadyam' a wealth mgt publication in Malayalam from manorama group since February 2007, Listed her case studies at asiacase.com.Presented papers in national & international conferences on Mutual Funds. Faculty Member @ ASIET, Kalady from 2010 to June 2019. Dean @ SNGIST, N Paravur, Ernakulam from Sep 2019 -Jan 2021, I continue my efforts to spread the knowledge in area of Finance and contribute to Management Education

Comments

Post a Comment

Popular posts from this blog

National Risk Assessment (NRA): India

By
  India's National Risk Assessment (NRA) is  an ongoing exercise to identify sectors that are vulnerable to money laundering and terrorist financing (ML/TF) .  The NRA is based on recommendations from the Financial Action Task Force (FATF) and helps inform policy-making, resource allocation, and the implementation of effective AML/CFT measures. The NRA also ensures that national strategies address both domestic and international threats. The NRA provides a foundation for informed policy-making, resource allocation, and the implementation of effective AML/CFT measures . It ensures that national strategies are aligned with the specific risk landscape of the country and that they address both domestic and international threats. The subject matter of NRA  was discussed in the Anti-Money Laundering Steering Committee (AMLSC) set up with the approval of Finance Minister, and it was decided to conduct the NRA following the World Bank methodology. The Methodology requi...
Read more

Customer Due Diligence(CDD) : Individuals

By
Image
This post is based on RBI Master Circular dated Feb 25, 2016 updated on Jan 04, 2024  Part I - Customer Due Diligence (CDD) Procedure in case of Individuals For undertaking CDD, REs shall obtain the following from an individual while establishing an account-based relationship or while dealing with the individual who is a beneficial owner, authorised signatory or the power of attorney holder related to any legal entity: (a)     the Aadhaar number where,   (i) He is desirous of receiving any benefit or subsidy under any scheme notified under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services) Act, 2016 (18 of 2016); or (ii) He decides to submit his Aadhaar number voluntarily to a bank or any RE notified under first proviso to sub-section (1) of section 11A of the PML Act; or (aa) the proof of possession of Aadhaar number where offline verification can be carried out; or (ab) the proof of possession of Aa...
Read more

Periodic Updation of Customer Risk Profile

By
1. Preparation of Customer Profile from KYC Data In the initial years of KYC, RBI has been following a handholding approach as can be seen from their circular dated July 2009 and that of Feb 25, 2016 as updated on Jan 04, 2024. RBI requires REs to conduct risk profiling and risk categorization and periodic updation.  Extracts from RBI MD dated July 01, 2009 under Customer Acceptance Policy a)ii) Parameters of risk perception are clearly defined in terms of the nature of business activity , location of customer  and his clients, mode of payments, volume of turnover, social and financial status etc. to enable categorisation of customers into low, medium and high risk (banks may choose any suitable nomenclature viz. level I, level II and level III). Customers requiring very high level of monitoring, e.g. Politically Exposed Persons (PEPs) may, if considered necessary, be categorised even higher; b). Banks should prepare a profile for each new customer based on risk categorisatio...
Read more