Money Laundering and Terrorist Financing Risks

Unchecked money laundering negatively affects a country's economy, society, and reputation, often leading to corruption and criminal activity.

A country seen as a money laundering haven attracts organized crime groups.

Jurisdictions with limited predicate crimes, types of organizations covered, and enforcement mechanisms are easily exploited by money launderers.

Money laundering often fuels corruption as organized crime groups bribe officials and other stakeholders to bypass regulations.

Corruption in public and private sectors is often connected to money laundering; involving bribery among government officials, legal professionals, financial institutions, and law enforcement.

Potential economic consequences include decreased foreign investment, loss of tax revenue, instability, and risks to privatization efforts, along with reputational damage.

Money laundering thrives in jurisdictions with insufficient regulatory capacity to supervise and monitor compliance with laws and regulations.

Money laundering causes distortions in the economy, leading to instability and potential risk of international sanctions, as well as reputational harm for a country.

To promote international standards for preventing and detecting money laundering and terrorist financing.

Career enhancement through education, certification, and training.

The process of making illegally obtained money seem legitimate.

A credential recognizing AML expertise, internationally recognized.

Anti-money laundering.

Providing resources to support terrorist activities.

Global standards for anti-financial crime practitioners.

Platforms to facilitate collaboration among AML/CFT professionals worldwide.

Placement, layering, and integration are the steps to make money look clean.

The first stage in money laundering, where large sums of cash are broken down and positioned for further actions.

The second stage in money laundering where funds are moved through multiple financial transactions to lose a paper trail.

The final stage in money laundering, where the laundered money re-enters the financial system as legitimate funds.

Programs and measures taken to prevent money laundering and terrorist financing within an organization.

A person responsible for ensuring an organization complies with AML/CFT regulations.

A person holding or having held a prominent public position.

Breaking down large cash deposits into smaller transactions to avoid detection.

A smaller-scale application of structuring.

Arrangement between banks in different jurisdictions to process transactions for each other.

Using international trade transactions to launder money.

Informal network for transferring money.

Digital form of currency, such as cryptocurrency, not regulated by central banks.

Actions taken by governing bodies (e.g., US, UN, EU) to restrict economic and financial transactions with specific countries, entities, or individuals as a response to security threats.

Broad sanctions prohibiting virtually all transactions with a specific country.

Sanctions focused on specific industries, entities, or individuals.

US government agency enforcing economic and trade sanctions.

List of individuals, entities, or groups subject to US sanctions.

Significant societal costs arising from money laundering, including increased government spending on law enforcement and the treatment of addiction.

Countries with significant deficiencies in anti-money laundering/counter-terrorism financing regulations.

Damage to an organization's image due to negative publicity regarding its practices or associations, leading to decreased trust from customers, depositors, and investors.

An organization's inability to easily access enough funds to meet its financial obligations due to withdrawal of deposits or limited access to reliable funding sources.

Potential for financial loss caused by internal failures, ineffective processes, or external events that disrupt operations, such as losing correspondent banking services or facing increased borrowing costs.

Exposure to lawsuits, fines, penalties, and potential closure due to illegal activities, including investigations by regulators or law enforcement.

Reduced profits from losing high-quality borrowers, investors, or customers due to reputational damage or decreased trust stemming from money laundering activities.

Loss of banking services provided by another bank, which is essential for international transactions and can significantly disrupt an organization's operations.

Financial burdens resulting from investigations by regulatory bodies or law enforcement due to potential money laundering activities, including penalties and legal fees.

Government confiscation of assets belonging to an individual or organization suspected of involvement in money laundering, leading to financial losses and potential business disruption.

A situation where a respondent bank is also a correspondent to a third bank, creating layers of relationships.

Correspondent banks may have limited information about a respondent's customers and their anti-financial crime controls, increasing the risk of money laundering.

Deutsche Bank faced a $150 million penalty for failing to monitor its high-risk correspondent relationships with Danske Bank Estonia and FBME Bank, which led to billions in suspicious transactions.

Deutsche Bank had internal warnings about FBME and Danske from the start, but didn't take action.

A high-risk correspondent relationship of Deutsche Bank, facilitating suspicious transactions linked to money laundering by Russian oligarchs.

The individual(s) who ultimately own or control a company, even if their name isn't on official documentation.

A US agency that combats financial crimes, including money laundering and terrorist financing.