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References
See, e.g, the Security Council Resolutions 1267 (1999), 1333 (2000), 1363 (2001), 1373 (2001) and 1390 (2002).
The FATF was established in 1989, and at first it dealt with the money laundering in the context of drug trafficking, but later in 1996 its mandate was extended to the proceeds of other crimes including indirectly financing of terrorism. See, e.g. FATF, Annual Report: 1995–1996, on 28 June 1996, p.7; the 1996 Recommendation 4 and its interpretative note.
Indeed, the difficulty of defining soft law is expressed by many scholars. See, e.g., Schachter O (1997) “The Twilight Existence of Nonbinding International Agreement”, The American Journal of International Law, vol.71, pp.297–298; Chinkin CM (1989) “The Challenge of Soft Law: Development and Change in International Law”, International and Comparative Law Quarterly, vol.38, p.852; Tadeusz GW (1984) “A Framework for Understanding “Soft Law””, McGill Law Journal, vol.30, p.44; Guzman AT (2002) “A Compliance-Based Theory of International Law”, California Law Review, vol.90, pp.1879–1880.
See, Boyle AE (1999) “Some Reflection on the Relationship of Treaties and Soft Law”, International and Comparative Law Quarterly, vol. 48, pp.901–902; Chinkin CM, supra note 6, p.852; Abbott KW, Snidal D (2000) “Hard and Soft Law in International Governance”, International Organization, vol.54, pp.422–424; Elias O, Lim C (1997) “‘General Principle of Law’,’ soft’ Law and the Identification of International Law”, Netherlands Yearbook of International Law, vol.28, pp.44–45; Cullet P (1999) “Differential Treatment In International Law: Towards A New Paradigm of Inter-State Relations”, European Journal of International Law, vol.10, p.575.
Boyle AE, supra note 7, p.902.
Ibid.
Ibid.
Dupuy PM (1991) “Soft law and the International Law of the Environment”, Michigan Journal of International Law, vol.12, pp.429–430; Baxter RR (1980) “International Law in “Her Infinite Variety””, International and Comparative Law Quarterly, vol.29, pp.561–562; Chinkin CM, supra note 6, p.851; Elias O, Lim C, supra note 7, p.45.
Boyle AE, supra note 7, p.902.
Ibid., p.906.
Ibid., p.909; Abbott KW, Snidal D, supra note 7, p. 421; Tadeusz GW, supra note 6, p.49.
Boyle AE, supra note 7, p.909. For details of the scheme, see, Boyle AE (1997) “Dispute Settlement and the Law of the Sea Convention: Problems of Fragmentation and Jurisdiction”, International and Comparative Law Quarterly, vol.46, p.37.
Chinkin CM, supra note 6, p.862; Bothe M (1980) “Legal and Non-Legal Norms— A Meaningful Distinction in International Relations?”, Netherlands Yearbook of International Law, vol.11, p.88; Tadeusz GW, supra note 6, p.48; Contini P, Sand PH (1972) “Methods to Expedite Environment Protection: International Ecostandards”, The American Journal of International Law, vol.66, p.54.
Ibid., p.910. For the text of the non-compliance procedure revised in 1992, see, UN Doc., UNEP/OzL.Pro/WG.3/3/3, 9 November 1991 <http://www.unep.org/ozone/Meeting_Documents/adhoc/adhoc-nc-3-3-3.91-04-08.pdf>.
Ibid.
Abbott KW, Snidal D, supra note 7, p.422.
Bothe M, supra note 17, p.90, 92; Elias O, Lim C, supra note 7, p.45.
Bothe M, supra note 17, pp.90–92; Lipson C (1991) “Why are some international agreements informal?”, International Organization, vol.45, pp.514–518.
Boyle AE, supra note 7, p.903; Bothe M, supra note 17, p.90.
Boyle AE, supra note 7, p.903; Bothe M, supra note 17, p.92.
For the detailed process how soft law approach enmeshed negotiating governments over time, see, Abbott KW (2001) “Rule-Making in the WTO: Lessons From the Case of Bribery and Corruption”, Journal of International Economic Law, vol.4, p.275.
Hillgenberg H (1999) “A Fresh Look at Soft Law”, European Journal of International Law, vol.10, p.506.
Boyle AE, supra note 7, p.905.
UNGA Resolution 1514(1960) titled “Declaration on the Granting of Independence to Colonial Countries and People”. See also, Western Sahara Advisory Opinion (1975), I.C.J. Report, para. 55, 57 and 58.
Baxter RR, supra note 11, p.564.
See, e.g, Tadeusz GW, supra note 6, pp.46–47; Chinkin CM, supra note 6, p.862.
Contini P, Sand PH, supra note 17, p.49; Gold J (1983) “Strengthening the Soft International Law of Exchange Arrangements”, The American Journal of International Law, vol.77, p.443.
Military and Paramilitary Activities in and against Nicaragua(1986), I.C.J. Report, para. 188.
Boyle AE, supra note 7, p.913.
FATF, “Annual Report: 2001–2002”, 21 June 2002, p.4.
FATF, “Annual Report: 1989–1990”, 7 February 1990, p.16.
FATF, “Annual Report: 2002–2003”, 20 June 2003, p.4.
FATF, “Review of the FATF Forty Recommendations: Consultation Paper”, 30 May 2002, pp.3–4.
FATF, “Annual Report: 2002–2003”, 20 June 2003, p.4.
See its use for Bali bombing (2002) as illustrated in APG, “APG Typologies Report 2003–04”, June 2004, p.38.
FATF, “Annual Report: 2002–2003”, 20 June 2003, p.5.
Ibid., p.1.
FATF, “Annual Report: 2003–2004”, 2 July 2004, p.1; FATF, “Mandate For the Future of the FATF”, 14 May 2004, p.4. The FATF was established by the G-7 Economic Summit in Paris in July 1989 as an independent international body whose Secretariat is housed at the OECD. It is a temporary body and its mandate has been renewed four times (1989–1994,1994–1999,1999–2004, 2004–2012). The thirty-one member jurisdiction of the FATF are: Argentina; Australia; Belgium; Brazil; Canada; Denmark; Finland; France; Germany; Greece; Hong Kong, China; Iceland; Italy; Japan; Luxembourg; Mexico; the Kingdom of the Netherlands; New Zealand; Norway; Portugal; the Russian Federation; Singapore; South Africa; Spain; Sweden; Switzerland; Turkey; the United Kingdom; and, the United States. The European Commission and the Gulf-Cooperation Council are also FATF members. In addition, the People’s Republic of China is an observer.
For the examples of these professions’ involvement in money laundering, See, e.g., Egmont Group, “FIU’s in action: 100 cases from the Egmont Group”, 2000, pp.50–69; Bell RE (2002) “The Prosecution of Lawyers for Money Laundering Offences”, Journal of Money Laundering Control, vol.1, no.1, pp. 17–22.
IMF (2004) Financial Intelligence Unit: An Overview, pp.39–42.
Of course, in 1990 and 1996 versions, the elements of risk based approach existed such as the reporting obligation based on the suspicion which stood in contrast with the objective threshold model. However, in 2003, this trend becomes stronger as illustrated by Recommendations 5, 23, and 24. Risk based approach allows the discretion of individual states and makes the application of AML/CFT framework flexible according to each state’s own assessment of the vulnerability of a certain domestic sector. See, FATF, “Annual Report: 2002–2003”, 20 June 2003, p.7; Interpretative Note to Recommendation 5, para. 9–13. For further discussions on the application of this concept in the context of the Forty Recommendations, see, FATF, “Review of the FATF Forty Recommendations: Consultation Paper”, pp.22–35.
Recommendation 16. For the detailed discussion on the qualifications imposed on the reporting of suspicious transaction in relation to non-financial institutions, see, FATF, “Review of the FATF Forty Recommendations: Consultation Paper”, 30 May 2002, p.86, 90, 94, 98, 101, 106, and 109.
The AML/CFT framework can be divided into four categories: (a) public sector; (b) private sector; (c) a bridging mechanism; and, (d) international cooperation. For backgrounds of this categorisation, see, Gilmore WC (2004) Dirty Money: The evolution of international measures to counter money laundering and the financing of terrorism, 3rd edn, pp.19–23 and pp.93–94; Mitsilegas V (2003) Money Laundering Counter-Measures in the European Union: A New Paradigm of Security Governance versus Fundamental Legal Principles, pp.8–14; UN (1998) “Commentary on the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988”, pp.65–70. For further details, see also, Section 2.3.1.1 of Chapter Two.
Generally, money laundering predicate offence means the original offence that precedes money laundering offence. However, there is some controversy on the nature of financing of terrorism as money laundering predicate offences because in some case, it is difficult to prove the unlawfulness of the money related to terrorism when terrorist activity has not taken place yet. For a detailed discussion, see, e.g., Kersten A (2002) “Financing of Terrorism—A Predicate Offence to Money Laundering?”. In: Pieth M (ed) Financing of Terrorism, See also, FATF, “Interpretative Note to Special Recommendation II”, 2 July 2004.
Recommendation 1, para. 6. For a relevant discussion, see, Schott PA (2003) Reference Guide to Anti-Money Laundering and Combating the Financing of Terrorism, p.V-10.
FATF, “Interpretative Note to Special Recommendation III”, 3 October 2003; FATF, “Freezing of Terrorist Assets: International Best Practice”, 3 October 2003.
While criminal confiscation is operating in personam (against a specific person) and needs a criminal confiscation, the civil confiscation is an in rem (against a thing) procedure by nature and is not conditional upon a criminal confiscation. For an overview of the civil confiscation, see, Palm CW (1991) “RICO Forfeiture and the Eighth Amendment: When is Everything too much?”, The University of Pittsburgh Law Review, vol.53, at section II; Jankowski MA (1990) “Tempering the Relation-Back Doctrine: A More Reasonable Approach to Civil Forfeiture in Drug Cases”, Virginia Law Review, vol.76, p.165; Tonry M (1997) “Forfeiture Laws, Practices and Controversies in the US”, European Journal of Crime, Criminal Law and Criminal Justice, vol.5, pp.294–307; Gallant MM (2005) Money Laundering and the Proceeds of Crime: Economic Crime and Civil Remedies. For details of civil confiscation, see also, Section 2.3.1.2 of Chapter Two, and its footnote 68.
For justification of the reversed burden of proof, see, Stessens G (2000) Money Laundering, p.67; Bell RE (2003) “The Confiscation, Forfeiture and Disruption of Terrorist Finances”, Journal of Money Laundering Control, vol.7, no.2, p.113; Gallant MM (2005) Money Laundering and the Proceeds of Crime: Economic Crime and Civil Remedies, pp.30–32; Smellie A (2004) “Prosecutorial Challenges in Freezing and Forfeiting Proceeds of Transnational Crime and the Use of International Asset Sharing to Promote International Cooperation”, Journal of Money Laundering Control, vol. 8, no.2, p.107. Particularly, Smellie notes that someone who acquires property lawfully should be able to establish that fact with relative ease as the standard is only a balance of probabilities. See also, Section 2.3.1.2 of Chapter Two and its footnote 68.
This section should be understood in the context of the responsibilisation strategy. As explained in Chapter Two, since there is a limit to the capacity of a state in preventing crime in every corner of society in the modern era, contemporary governments have developed a strategy by which a government delegates its responsibility for crime control to relevant actors in the private sector. It regards the private sector as a valuable counterpart to share the burden of policing society and at the same time, attempts to utilise the expertise and resources of the private sector to the maximum. See, Garland D (1996) “The Limits of the Sovereign State: Strategies of Crime Control in Contemporary Society”, The British Journal of Criminology, vol.36, p.448; Mitsilegas V, supra note 57, p.12.
Basically, the CDD regime of the Special Recommendations and the 2003 Forty Recommendations is heavily influenced by the Basel Committee’s “Customers due diligence for banks”(2001). For relevant discussions, see, Gilmore WC, supra note 57, p.108; Zagaris B (2003) “Basel Group Supports FATF’s Revised Recommendations”, International Law Enforcement Reporter, vol.19, issue 9, pp.333–334.
FATF, “Review of the FATF Forty Recommendations: Consultation Paper”, 30 May 2002, pp.9–10.
For the issue of simply attempted and not completed transactions, see, FATF, “Review of the FATF Forty Recommendations: Consultation Paper”, 30 May 2002, p. 43.
Recommendation 6. For the details of the guideline of the Basel Committee, see, BCBS, “Customer due diligence for banks”, October 2001, pp.10–11. This document suggests several measures such as: banks should gather sufficient information from a new customer, and check quickly available information, in order to establish whether or not the customer is a PEP; banks should investigate the source of funds before accepting a PEP; and, the decision to open an account for a PEP should be taken at a senior management level.
Recommendation 9. For the details of the guidelines of the Basel Committee, see, ibid., pp.9–10. The document suggests that all beneficial owners of the accounts held by the intermediary should be identified. However, at the same time, the document show some flexibility by providing that banks may not need to look beyond the intermediary, for example, when the intermediary applies the same CDD standards to client as the bank does.
See, the 2001 EU Directive Amending Council Directive 91/308/EEC on Prevention of the Use of the Financial System For the Purpose of Money Laundering, Article 2.a. For further details, see, Gilmore WC, supra note 57, p.109, pp.202–206.
Recommendation 12. For a further discussion on the qualification, see, FATF, “Review of the FATF Forty Recommendations: Consultation Paper”, 30 May 2002, pp.79–110.
FATF, “Interpretative Note to Special Recommendation IX”, 22 October 2004.
FATF, “Interpretative Note to Special Recommendation VII”, 10 June 2003.
Wire transfer was the main tool of financing the 9/11 terrorists. See, Gunaratna R (2002) Inside Al Qaeda: Global Network of Terror, pp.64–65.
See, BCBS, “Customer due diligence for banks”, October 2001, p.12. The Basel Committee suggests that banks should gather sufficient information about their respondent banks, and if they have strong suspicion on the nature of the respondent banks, they should refuse to enter into or continue a correspondent banking relationship with the respondent banks.
See, e.g., IMF (2004) Financial Intelligence Unit: An Overview, pp.39–42; Zagaris B (2005) “Lawyers Challenge to Money Laundering Delays Gatekeepers Law in Zimbabwe”, International Enforcement Law Reporter, vol.21, issue 5, p.177.
See, e.g., Recommendations 5, 23 and 24. For the benefit of the “risk-based approach”, see, Bazley S, Foster C (2004) Money laundering: business compliance, pp.118–119. Bazley and Foster emphasise that businesses which have limited financial resources must apply these resources in a responsible manner by concentrating on those areas that are more likely than others to face regulatory risk, and that regulators who also do not have limitless resources should have a process by which they can focus its attention on those things which matters most in the market place.
For a comparison between simplified CDD procedures and reinforced CDD procedures resulting from the risk-based approach, see, Gilmore WC, supra note 57, pp.108–109.
The Interpretative Notes for Recommendation 5 set out examples of customer where simplified or reduced CDD measures could apply are:-Financial institution-where they are subject to requirement to combat money laundering and terrorist financing consistent with the FATF Recommendations and are supervised for compliance with those controls;-Public companies that are subject to regulatory disclosure requirements;-Government administrations or enterprises;-Life insurance policies where the annual premium is no more than USD/ €1,000 or a single premium of no more than USD/ €2,500;-Insurance policies for pension schemes if there is no surrender clause and the policy cannot be used as collateral; and,-A pension, superannuation or similar scheme that provides retirement benefits to employees, where contributions are made by way of deduction from wages and the scheme rules do not permit the assignment of a member’s interest under the scheme. For the justification for the simplified CDD measures, see, FATF, “Review of the FATF Forty Recommendations: Consultation Paper”, 30 May 2002, p.25.
Recommendation 16. For the detailed discussion on the qualifications imposed on the reporting of suspicious transaction in relation to non-financial institutions, see, FATF, “Review of the FATF Forty Recommendations: Consultation Paper”, p.86, 90, 94, 98, 101, 106, and 109.
Originally, there were three options as follows:-Option 1: An agreed minimum list of dealers in high value items e.g., dealers in precious stones or metals, or in works of art or auctioneers;-Option 2: Such other dealers in high value items as are perceived by each jurisdiction to be vulnerable to money laundering.-Option3: Option 1or 2, but only if it involves cash transaction (including multiple linked transactions) exceeding a certain threshold e.g., USD/€15,000. For the revised 2003 Forty Recommendations, the Option 3 was chosen. See, FATF, “Review of the FATF Forty Recommendations: Consultation Paper”, p.89.
For example, with regard to lawyers, notaries, other independent legal professionals and accountants, they do not have to exercise due diligence for all their activities but only for the following activities:-Buying and selling of real estates;-Managing of client money, securities or other assets;-Management of bank, savings, or securities accounts;-Organisation of contributions for the creation, operation or management of companies; and,-Creation, operation or management of legal persons or arrangements, and buying and selling of business entities. These provisions are heavily influenced by the 2nd EU money laundering directive (2001) and the limited Swiss approach. For relevant discussions, see, Gilmore WC, supra note 57, p.109; Zagaris B (2003) “FATF Gatekeepers Likely to Settle on a Modified Swiss Version of the Law”, International Enforcement Law Reporter, vol.19, issue 7, pp.249–250.
This is a suspicion-based reporting model. For an overview of this model, see, Stessens G (2000) Money Laundering: A New International Law Enforcement Model, p.161. For the comparison of a suspicion-based model and a threshold-based model, see, Noble PK, Golumbic CE (1998) “A New Anti-Crime Framework For the World: Merging The Objective and Subjective Models for Fighting Money Laundering”, New York University Journal of International Law and Politics, vol. 30, p. 79; Grant TD (1995) “Toward a Swiss Solution for an American Problem: An Alternative Approach for Banks in the War on Drugs”, Annual Review of Banking Law, vol.14, p.225. See also, Section 2.3.1.3 of Chapter Two of this book and its footnote 121.
FATF, “Annual Report: 2002–2003”, 20 June 2003, p.5.
Indeed, by the negligence standard, it is not necessary to prove that a responsible officer actually suspected illegality, but just that a reasonable person should and would have suspected illegality based on the circumstances surrounding the transaction. Thus, the negligence standards test is generally regarded as a wider reporting requirement than the standard of intent. See, FATF, “Review of the FATF Forty Recommendations: Consultation Paper”, p.43; FATF, “Guidance notes for the Special Recommendations on Terrorist Financing and the Self-Assessment Questionnaire”, 27 March 2002, p.4.
FATF, “Review of the FATF Forty Recommendations: Consultation Paper”, p.43.
A similar position can be found in the preamble of the 2nd EU Money Laundering Directive (2001) which stipulates that: “Where independent members of professions providing legal advice which are legally recognised and controlled, such as lawyers, are ascertaining the legal position of a client or representing a client in legal proceedings, it would not be appropriate under the Directive to put these legal professionals in respect of these activities under an obligation to report suspicion of money laundering.” These difficulties in reconciling a reporting obligation with the professional secrecy rules have been frequently indicated in literature. For relevant discussions, see, e.g, Gilmore WC, supra note 57, pp.202–206; Mitsilegas V, supra note 57, pp.146–151; IMF (2004) Financial Intelligence Unit, pp.39–41. For an overview of professional confidentiality, see also, Auburn J (2000) Legal Professional Privilege: Law and Theory, pp.57–78.
To this end, first of all, it would be necessary to conduct a thorough risk assessment identifying the areas which are more likely than others to face a regulatory risk. For a relevant discussion, see, Bazley S, Foster C (2004) Money laundering: business compliance, p.118.
For example, in order to prevent the abuse of alternative remittance systems, the paper “International best practices” points out five areas of focus: (a) Licensing/registration; (b) Identification and awareness raising; (c) Anti-money laundering regulations; (d) Compliance monitoring; and, (v) Sanctions. In each area, very detailed procedures are illustrated. For details, see, FATF, “Interpretative Note to Special Recommendation VI”, 14 February 2003; FATF, “Combating the Abuse of Alternative Remittance System: International Best Practices”, 20 June 2003.
For detailed strategies, see, FATF, “Combating the Abuse of Non-Profit Organisations: International Best Practices”, 11 October 2002. For example, the monitoring regime of governments could be extended to the following areas: the securing of the transparency of the financial accounting of non-profit organisations; the overseeing of the implementation of projects of non-profit organisations, including field inspection; the examination of the administrative and managerial documents, etc.
The 1996 Recommendation 6 vs. the 2003 Recommendation 17. For discussions on the corporate liability between different legal systems, see also, Schott PA (2003) Reference Guide to Anti-Money Laundering and Combating the Financing of Terrorism, p. V-9; Council of Europe, “Liability of enterprises for offences: Recommendation No.R(88) adopted by the Committee of Ministers of the Council of Europe on 20 October 1988 and explanatory memorandum”, 1990, pp.10–11; Savla S (2001) Money Laundering and Financial Intermediaries, pp.186–188.
Recommendation 25. The provision of feedback is of significance to promote a climate of mutual trust between the public sector and the private sector. Thus it could elicit more proactive cooperation from the private sector. For detailed guidelines, see, FATF, “Annual Report 1997–1998: Annex E-Providing Feedback to Reporting Financial Institutions and Other Persons: Best Practice Guidelines”, June 1998.
With the introduction of the responsibilisation strategy into the private sector, there could be generated a flow of substantial financial data from the private sector to the public sector, for example by way of record-keeping and reporting requirements. The FIU acts as an intermediary between the two sectors in effect providing a service of information-filtering, and encouraging a climate of mutual trust (Stessens G (2000) Money Laundering, p. 185). For detailed functions and categorisations of the FIU, see, IMF (2004) Financial Intelligence Units: An Overview, pp.33–82; Mitsilegas V, supra note 57, 2003, pp.155–170.
Recommendations 13 and 26. For the revised definition of the FIU, see “Statement of Purpose of the Egmont Group of Financial Intelligence Units”, 23 June 2004.
For an overview of international cooperation in criminal matters, see, McClean D (2002) International Co-operation in Civil and Criminal Matters.
See, e.g., FATF, “Annual Report: 2002–2003”, 20 June 2003, p.7.
The specific removal of the fiscal offence exception was in the main due to the treatment that this issue is afforded in NCCT criteria 18 and 22 (Gilmore WC, supra note 57, p.107).
Article 14 of the ICSFT stipulates: “None of the offences set forth in article 2 shall be regarded for the purposes of extradition or mutual legal assistance as a political offence or as an offence connected with a political offence or as an offence inspired by political motives.” For an overview of the relationship between terrorism and the political offence exemption, see, e.g., Gilbert G (1998) Transnational Fugitive Offenders in International Law, pp.203–246, and pp.251–261.
FATF, “Annual Report: 2002–2003”, 20 June 2003, p.7.
See, e.g., FATF, “Methodology for Assessing Compliance with Anti-Money Laundering and Combating the Financing of Terrorism Standards”, 11 October 2002; FATF, “Methodology for Assessing Compliance with the FATF 40 Recommendations and the FATF 8 Special Recommendations”, 27 February 2004.
Lee LLC (1999) “The Basle Accords as Soft law: Strengthening International Banking Supervision”, Virginia Journal of International Law, vol.39, pp.16–17. See also (visited on 1 March 2004) <http://www.bis.org/bcbs>. As of 1 June 2005, its membership consists of 13 countries: Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, United Kingdom and United States.
Schott PA, supra note 62, p.III-12.
Ibid., p.III-12.
(visited on 1 June 2005) <http://www.bis.org/bcbs/aboutbcbs.htm>.
FATF, “Methodology for Assessing Compliance with Anti-Money Laundering and Combating the Financing of Terrorism Standards”, 11 October 2002, p.4; FATF, “Annual Report: 2002–2003”, 20 June 2003, p.4.
Schott PA, supra note 62, p.III-13.
For a further analysis, see, Drage J (1993) “Countering Money Laundering: The Response of the Financial Sector”. In: Macqueen HL (ed) Money Laundering, p.65.
<http://www.bis.org/publ/bcbs30a.pdf>.
BCBS, “Core Principles for Effective Banking Supervision”, p.8.
See, e.g., IMF/ World Bank, “Enhancing Contributions To Combating Money Laundering: Policy Paper; Annex II”, 26 April 2001, pp.29–32.
(visited on 31 March 2004) <http://www.bis.org/publ/bcbs61.htm>.
BCBS, “Core Principles Methodology”, p.5
Ibid., p.5.
Ibid., p.2. This division facilitates the discerning of the priority among the criteria.
For the details of the criteria, see ibid., pp.33–34.
<http://www.bis.org/publ/bcbs85.htm>.
Reputational risks take place where a bad reputation may result in the loss of confidence by depositors, creditors and the general market place. Operational risk is with regard to a situation where failed internal processes, or systems may bring about direct or indirect loss to banks. Legal risks exist where banks may be subject to lawsuits resulting from the failure to observe mandatory KYC procedures. Concentration risks are concerned with a situation where banks are exposed to single borrowers or groups of related borrowers without knowing precisely who the customers are (BCBS, “Customer due diligence for banks”, pp.4–5). For a further discussion, see, Codd E (2003) “Reputational Risk”. In: Clark A, Burrell P (eds) A Practitioner’s Guide to International Money Laundering Law and Regulation, 1st edn, pp.69–76.
For a relevant discussion, see, Clark A, Russell M (2003) “Know Your Customer”. In: Clark A, Burrell P (eds) A Practitioner’s Guide to International Money Laundering Law and Regulation, 1st edn., pp.88–89.
See, Schott PA, supra note 62, p.III-15.
Pieth M, Aiofi G, “The Private Sector becomes active: The Wolfsberg Process”, p.3.
Ibid., p.3.
Ibid., p.3.
Ibid., p.3.
For examples of the banking scandals, see, e.g., US Senate, “Minority Staff Report for Permanent Subcommittee on Investigation; Hearing on Private Banking and Money Laundering: A Case Study of Opportunities and Vulnerabilities”, 9 November 1999; Hinterseer K (2002) Criminal Finance: The Political Economy of Money Laundering in a Comparative Legal Context, pp.262–264.
Pieth M, Aiofi G, “The Private Sector becomes active: The Wolfsberg Process”, p.5.
Ibid., p.5.
It could be said that one of the main achievements of the banking industry in the early 21st century has been to win the regulators over to follow a “risk-based approach” when developing norms rather than a “rule-based approach”(Aiofi G, “The Private Sector becomes active: The Wolfsberg Process” Ibid. pp.5–6).
Ibid., p.5.
See, Wolfsberg Group, “Wolfsberg Press Releases”, 30 October 2000.
<http:///www.wolfsberg-principles.com/privat-banking.html>.
(visited on 20 March 2004) <http://www.wolfsberg-principles.com/financing-terrorism.html>.
See, Wolfsberg Group, Press Release, 5 November 2002.
Ibid.
Schott PA, supra note 62, p. IV-5.
<http://www.wolfsberg-principles.com/monitoring.html>.
See, ibid., preamble.
See, ibid., article 2 (definitions). Real-time screening means the screening or filtering of payment instructions prior to their execution in order to prevent making funds available in breach of sanctions, embargoes and other measures. Retroactive searches are defined as the identification of specific past transactions, as well as existing and closed accounts. Transaction monitoring means the process of monitoring transaction after their execution in order to identify unusual transactions, including monitoring single transactions, as well as transaction flows.
(visited on 1 June 2005) <http://www.iaisweb.org>.
Ibid.
For an overview of these notes, see, Butterworth S (2003) “Regulators: IAIS Anti-Money Laundering Guidelines”. In: Clark A, Burrell P (eds) A Practitioner’s Guide to International Money Laundering Law and Regulation, 1st edn, pp.231–242.
Schott PA, supra note 62, p.III-16.
<http://www.iaisweb.org/041013_GP5_Guidance_paper_on_anti_money_laundering_and_combating_the_financing_of_terrorism_approved_040107.pdf>.
(visited on 23 March 2004) <http://www.iosco.org/about/>.
(visited on 1 June 2005) <http://www.iosco.org/lists/>.
(visited on 23 March 2004) <http://www.iosco.org/about/about.cfm?whereami=page5>.
Schott PA, supra note 62, p. III-17.
IOSOC, “Objectives and Principles of Securities Regulation”, May 2003, pp.5–6.
For the detailed text, see (visited on 23 March 2003) <http://www.iosco.org/resolutions/pdf/IOSCORES5.pdf>.
For the explanation on the delayed progress in securities sector, see, “The Initiatives by the BCBS, IAIS and IOSCO to combat money laundering and the financing of terrorism”, June 2003, pp.8–9.
IOSCO, “Principles on Client Identification and Beneficial Ownership for the Securities Industry”, p.2.
Egmont Group “Information Paper on Financial Intelligence Units and the Egmont Group”, p.3. Thus, the Egmont Group has no permanent Secretariat and administration functions are shared on a rotating basis.
Schott PA, supra note 62, p.III-19.
Egmont Group, “Statement of the Purpose”, p.2. Terrorist financing has been inserted through the revision in June 2004 Plenary meeting.
<http://www.egmontgroup.org>.
Ibid.
<http://www.egmontgroup.org/bestpractices.pdf>.
FATF, “Annual Report: 2003–2004”, 2 July 2004, p.18.
BCBS, “Customer due diligence for banks”, October 2001, p.2. The italicised phrased is replaced by the author.
See, FATF, “Interpretative Note to Special Recommendation III: Freezing and Confiscating Terrorist Assets”, 3 October 2003; FATF, “Freezing of Terrorist Assets: International Best Practices”, 3 October 2003.
FATF, “Freezing of Terrorist Assets: International Best Practices”, 3 October 2003.
For details, see, supra note 103.
For details, see, supra note 106.
Hinterseer K (2002) Criminal Finance: The Political Economy of Money Laundering in a Comparative Legal Context, p.264.
BCBS, “Customer due diligence for banks”, October 2001, p.5.
Ibid., p.5.
Hinterseer K, supra note 195, p.282.
Indeed, the FATF aids the Security Council in a practical sense. However, other specialist bodies openly express their will to assist the FATF. See, e.g., BCBS, “Customer due diligence for banks”, October 2001, p.2; Pieth M, Aiofi G, “The Private Sector becomes active: The Wolfsberg Process”, p.7; IAIS, “Insurance Core Principles and Methodology”, October 2003, p.45; The Joint Forum, “The Initiatives by the BCBS, IAIS and IOSCO to combat money laundering and the financing of terrorism”, June 2003, pp.9–10. For details on the monitoring and enforcement mechanisms of specialist bodies, see, Chapter Five of this study.
Hillgenberg H, supra note 26, pp.506–507.
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(2006). Standards set by Specialist Bodies since 9/11. In: Suppressing Terrorist Financing and Money Laundering. Springer, Berlin, Heidelberg. https://doi.org/10.1007/3-540-32519-0_4
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