Presentation by

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Presentation by Rick McDonell, Head, APG
Secretariat Asian Development Bank 34th Annual
Meeting 7 May 2001, Honolulu
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(No Transcript)
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Summary of Presentation

• Money Laundering An Overview
• The International and Regional Response
• The Link Between Financial Crime, Governance and
  Financial Sector Abuse
• The Importance of Financial Intelligence Units
• Progress in the Asia/Pacific Region

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Money Laundering An Overview

• The process of converting cash or other property
  that is derived from criminal activity, to give
  it the appearance of having been obtained from a
  legitimate source.

The Size of the Problem

• Money laundering is .one of the most serious
  issues facing the international financial
  community. IMF
• 2 to 5 percent of global GDP
• An estimated US1 Trillion, (at least)
• Twice the size of Australias GDP
• Over 50 of Laundered Money is from activities
  other
• than the drug trade

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The Risks in not Responding

• Deficient regulatory and law enforcement systems
• Weak link / attractiveness to money launderers
  and financial fraudsters
• Reputational damage and ostracism from the
  international financial system
• Stability of the banking system
• National security / governance and economic issues

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Political Response

• Group of 7 Industrial Nations
• UN Political Declaration and Action Plan Against
• Money Laundering
• UN Convention on Transnational Organised Crime
• Commonwealth Heads of Government(CHOGM)
• Asia-Europe Meeting (ASEM)
• ASEAN Declaration on Transnational Crime
• APEC Finance Ministers
• Pacific Forum Honiara Declaration on Regional Law
• Enforcement Co-operation

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Anti-Money Laundering Groups
1. Financial Action Task Force (FATF) est
1989 2. Caribbean Financial Action Task Force
(CFATF) est 1994 3. Asia/Pacific Group on
Money Laundering (APG) est 1997 4. Council of
Europe Group (PC-R-EV) est 1997 5. The
Eastern and Southern African Anti-Money Launderin
g Group (ESAAMLG) est 1999 6. South American
Anti-Money Laundering Group (GAFISUD) est
2001 7. West African Anti-Money Laundering
Group to be est
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The Financial Action Task Force on Money
Laundering (FATF)
The FATF consists of 29 members. These
are Argentina Australia Austria Belgium Bra
zil Canada Denmark Finland France Germany G
reece Hong Kong, China Iceland Ireland Italy J
apan Luxembourg Mexico Netherlands New
Zealand Norway Portugal Singapore Spain Sweden
Switzerland Turkey United Kingdom United
States
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What does the FATF do?

• Ensure the adoption of the FATF 40
  Recommendations in its member countries and
  encourage their implementation in other
  countries.
• Evaluate the implementation of anti-money
  laundering measures
• Monitor developments in international money
  laundering techniques and develop countermeasures
• Determine the size and nature of the problem of
  money laundering on a global scale.

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The FATF 40 Recommendations

• The 40 Recommendations are a series of policy
  principles formulated to ensure an economy is not
  vulnerable to money laundering
• The 40 Recommendations cover three areas
• Legal
• Financial and Regulatory
• Law Enforcement

F A T F
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Legal and Law Enforcement
1. Criminalise the laundering of monies derived
from all serious offences 2. Enact legislation
to enable competent authorities to confiscate
proceeds of crime
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Legal and Law Enforcement
3. Assist in international co-operation
by (a) Affording the widest range possible of
assistance to other countries in money
laundering investigations and
prosecutions (b) Providing mutual assistance in
criminal matters 4. Permit extradition of
individuals charged with a money laundering
offence or related offence
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Financial and Regulatory
1. Financial institutions not to keep anonymous
accounts, and to record the identity of their
clients and maintain records thereof 2. Financial
institutions to pay special attention to all
complex, unusual and large transactions, and all
unusual patterns of transactions. Institutions
to report all such transactions to competent
authorities
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Financial and Regulatory

• 3. Financial institutions to develop programs
  against money laundering including
• internal policies, procedures and controls
• employee training programs
• audit functions to test the system
• 4. Countries to consider implementing measures to
  detect or monitor cash at national borders
• 5. Competent authorities to ensure that
  supervised institutions have adequate programs
  to guard against money laundering and the
  acquisition of financial institutions by
  criminal elements.

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The Asia/Pacific Group on Money Laundering
The APG consists of 21 members. These
are Australia Bangladesh Taipei,Chi
na Cook Islands Fiji Islands Hong
Kong,China India Japan Macau SAR,
PCR Malaysia Pakistan New ZealandRepublic
of Indonesia Republic of Korea Republic of the
Philippines Samoa Singapore Sri
LankaThailand United States Vanuatu Joinin
g May 2001
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APG Goals

• Better understanding of the nature, extent and
  impact of money laundering in the region

• Agreement on comprehensive measures to address
  the problem of money laundering

Implementation of anti-money laundering measures
across the region
Systematic evaluation of implementation
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The Importance of Financial Intelligence Units
Central to countering financial crime (including
money laundering) Exchange of Information Regula
tory Role for Financial Supervision Egmont Group
and International Cooperation
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Progress in the Asia/Pacific Region

• Substantial progress has been made including
• Enactment of legislation
• Agreement by APG members to participate in mutual
  evaluations
• Better understanding of and action against money
• laundering methods
• Direct benefit to regulators and law enforcement
  by increased information exchange

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Capacity Building

• The need for technical assistance
• and training
• Expertise and Funding
• The ADB Regional Technical
• Assistance Project (RETA)

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Presentation by Rick McDonell, Head, APG
Secretariat Asian Development Bank 34th Annual
Meeting 7 May 2001, Honolulu