FATF-GAFI (Financial Action Task Force )
The Financial Action Task Force (FATF) is the worldwide standard-setting body for anti-money laundering and fighting the supporting of terrorism (AML/CFT). To defend the international financial organization from money laundering and financing of terrorism (ML/FT) risks and to encourage greater compliance with the AML/CFT standards, the FATF categorizes jurisdictions that have strategic deficiencies and works with them to address those deficiencies that pose a danger to the universal financial system.
What is Anti Money Laundering?
According to AML law, financial institutes for example banks, investment companies, and real estate are essential to monitoring their customers proactively to avoid any probable money laundering and corruption.
You probably already know that companies that come under the monetary subdivision, for example, banks, payment processing firms, and insurance companies are necessary to comply with AML principles. However, there are some other companies for which is essential to follow AML rules.
These contain:
Law firms
Real estate brokers
Tax advisors
Casino & gambling operators
Virtual currency exchange (crypto)
Loan companies
Payment providers
Exchange service providerd
In accordance with the European Union anti money laundering authoritative instructions, the firms cited before need to employ e-KYC or electronic identity verification to authenticate their clients remotely. This verification can be done via both selfie-based or video-based ID verification
High-Risk Jurisdictions subject to a Call for Action
High-risk jurisdictions have important strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation. Intended for entirely countries recognized as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system from the ongoing money laundering, terrorist financing and proliferation financing (ML/TF/PF) risks emanating from the country. This list is frequently externally referred to as the “black list”.
• North Korea
• Iran
• Myanmar
Jurisdictions with strategic deficiencies
Jurisdictions under increased monitoring are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolving swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring. This list is often externally referred to as the ‘grey list.
Albania
Barbados
Burkina Faso
Cambodia
Cayman Islands
Democratic Republic of the Congo
Gibraltar
Haiti
Jamaica
Jordan
Mali
Morocco
Mozambique
Panama
Philippines
Senegal
South Sudan
Syria
Tanzania
Turkey
Uganda
United Arab Emirates
Yemen
Jurisdiction no longer subject to increased monitoring
Nicaragua
Pakistan
Money-Laundering Effects
Many people around the world try to corrupt financial institutions and obtain unlawful benefits by laundering money. Such illegal activities not only endanger a nation’s ability to maintain its financial stability, but also give rise to a number of social and security-related problems. Money laundering is a major factor in the funding of terrorists, arms dealers, and corrupt public officials.
now examine how money laundering destroys society and the economy.
Economy
Companies that engage in money laundering are less productive, which results in less tax revenue for the nation. Consider how damaging it would be to a nation’s overall tax collection if even 25% of its corporations engaged in money laundering activities.
Additionally, companies that engage in money laundering have an unfair competitive edge. The biggest threat to the survival of small firms is the ability of such companies to sell their goods for less money. Small businesses lose clients because they are unable to compete in this way.
Society
Acts of money laundering may have political and social impacts if they are not successfully fought. By making investments and giving bribes to public authorities, money launderers can infiltrate and take control of important financial institutions in the nation.
As a result, governments and legal authorities will have to spend more money on AML laws and law enforcement, which would increase public spending.
What Does AML Actually Do?
It is the goal of anti-money laundering laws and regulations to monitor criminal activities such as the trade of illegal goods, the misuse of public funds, tax dodging, and price manipulation.
Criminals frequently attempt “launder” the money they obtain from illegal activities like drug trafficking. They frequently pass their money through a legitimate company as one of their main methods of disguising their illicit funds. As a result, it is recommended for every business to detect and prevent illegal activities.
While specific payment transactions and criminal behaviors are covered by anti-money laundering legislation, it should be standard practice in every financial institution to spot and stop illegal activity.
Companies in the financial sector are required to confirm the identification of their clients and keep an eye on their transactions. They are responsible for more than just keeping an eye on transactions; they must also notify the authorities of any suspicious activities, including an unexpected increase in funds or withdrawals. The KYC component includes the full process (Know Your Customer).
To avoid their operations being utilized by criminals for money laundering activities, all financial institutions, including banks, payment processing organizations, and insurance companies, must comply with KYC regulations.
AML Software (Software Antiriciclaggio)
AML compliance is crucial for all firms, there is no doubt about that. Most businesses do not, however, have a budget to cover the costs associated with the AML setup. A Financial Times article claims that large corporations and well-known financial institutions spend millions of dollars annually to stop money laundering, which is impossible for startups and small enterprises to do.
What then is the answer? So these companies can upgrade their AML defense system without breaking the bank by investing in cutting-edge technologies.
Thankfully, there are AML compliance software options available that not only make the difficult AML compliance process simpler but are also affordable.
AML software is a computer tool that enables companies to examine consumer information and spot fraudulent activities. This application sorts and categorizes consumer data according to the amount of suspicion.
