Prevention of money Laundering and international cooperation mechanism

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Lets Connect on the issue of money laundering and how to counter it .

PREVENTION OF MONEY LAUNDERING : INTERNATIONAL COOPERATION MECHANISM

Detection & confiscation of money laundered by the economic offenders has always been a sensitive issue. It has always invited a lot of interest & attention of general public especially the middle & low income group.

Bringing back the money laundered and stocked at foreign jurisdiction is a big priority of the Government as it directly affects the growth of the economy. However, this task is not so easy as it has to pass through various International Treaties and cooperations among the Countries. The FATF recommendations on cooperation between member countries lists out International aspects of Money laundering and terror financing, are  best practices and a basic  framework for establishing,  maintaining effective AML /CFT programme worldwide and International co-operation. Some methods for international cooperation on AML /CFT issues are detailed below

International Money laundering Information Network(IMoLIN)-

For National & International agencies, the International Money laundering Information Network serves as a  Clearing  House of Money Laundering information . Global program of United Nations Office on Drugs and Crimes (UNODC) against Money laundering on behalf of the UN and other International Organisations including Interpol has developed the network and ensure its’ administration. IMoLIN has five salient features:

a) Anti Money laundering international database (AMLID)

b) Reference data

c) Country page

d)Calender of events

e)Current events

Last 4 are accessible to the public.

Mutual Legal Assistance Treaties

Treaties  for mutual legal assistance (MLAT) provides a legal basis for transmitting evidence that can be used for prosecution and judicial proceedings in ML/TF areas. In case evidence is required from other country, a request can be made for mutual legal assistance, generally in the following manner:

The Central authority of the requesting country sends a letter of request to the Central authority of other Country. Request may contain the information sought ,criminal charges in the requsting country and legal provisions under which the request is made. This is called commission rogatoire or letter rogatory .

The Central authority , after receiving the request is required to send it to a local financial investigator to find out if the information is available. Thereafter, the evidence ,if any, collected is sent to requesting authority thereby satisfying the request for mutual legal assistance. Local witness may need to attend court hearings in the requesting Country.

Financial Intelligence Unit

For combating Money Laundering / financing of terrorism, the  Financial Intelligence Unit (FIU) has been established as another official institution which exchange informations on ML/TF matters with similar agencies established in other Countries. The Ffinancial Intelligence Unit (FIU) are established as a Central Agency  in  Sovereign States for receiving and analyzing suspicious transaction reports and disseminating such information to appropriate National and International authorities to support efforts for combating Money laundering and financing of terrorism.

The Egmont Group is an informal International Association of FIUs of different countries. In 2003, the FATF has explicitly  recommended for establishing and functioning of FIU in member countries. The Egmont has been started on the principle of free exchange of information between FIUs which should be on the basis of reciprocity & spontaneous action. The sharing of information with national LEAs and foreign FIUs is usually done on the basis of an MOU unlike the mutual legal assistance treaties .This channel  is not usually followed for obtaining evidence but for receiving intelligence inputs leading to concrete evidence.

The Supervisory channel

The Basel Committee on banking Supervision speaks about “The Supervisory channel as the third official gateway for co-operation among countries in respect of soundness of financial system”. The Basel Committee, in respect of banking, says that information from supervisory agencies is normally of a general character ,  and is designed to monitor the financial soundness of a banking group. However, enquiries relate more to specific assets or accounts because of concerns about reputational and legal risks. The scope of sharing the information is often carried under the legal framework provided for operating of supervising agencies and it may need to be backed by an MOU which is not binding on Government but an agreement among  supervising authorities.Information communicated through this gateway usually is provided for supervisory purposes only, and may not ordinarily be used as evidence or shared widely among governmental entities.The Committee also indicated that the Enforcement Agents should reach out through proper channels to FIUs, Central banks and Banking Regulators / Superintendants to determine the filing, reporting and licencing requirements applicable to the subjects of their investigations.

Summary

Unless there is an effective and seamless system of exchange of information between the countries regarding financial crimes, the efforts for curbing the menace of Money laundering will not achieve the desired goals. The time has come not only to strengthen the existing Institutions established to handle the task  but also to develope an environment to improve their efficiency.

Sneh  Deep  Agnihotri