During 2023, approximately $3.1 trillion in illegal funds were discovered in the global financial system. This money is associated with various forms of criminal activity: human trafficking worth $346.7 billion, illegal drug trafficking – $782.9 billion, and terrorist financing – $11.5 billion. Business analyst Roman Tereshchenko notes, that this flow of illegal funds has become the subject of stringent international efforts to combat money laundering and the financing of criminal activities. The expert offers to talk about them.
Global fight against money laundering: AML and KYC in action
To combat money laundering, countries around the world are enacting appropriate AML laws. Roman Tereshchenko says that AML (which includes a set of KYC – know your customer and AML – anti-money laundering tools) was created to detect and prevent financial crimes by analyzing suspicious transactions and the activities of their initiators.
The business analyst notes that KYC focuses on collecting customer information and verifying their identity. This allows companies to ensure that they know their customers and can identify them. AML covers a wider range of measures and procedures aimed at preventing financial crimes. This includes analyzing customers and their transactions, assessing risks, monitoring suspicious activity, and much more.
Clarifying the difference between the two concepts, Roman Tereshchenko emphasizes that KYC is one of the components of an AML compliance program, as it provides the basis for identifying clients and assessing their risks.
International AML standards and rules: combating money laundering in global business – Roman Tereshchenko
The expert argues that regulated companies must develop their anti-money laundering measures following AML rules in the country or region where they operate. Here Roman Tereshchenko gives several examples:
- Germany has an Anti-Money Laundering Act that regulates the activities of companies in this area.
- Singapore has the Payment Services Act (PSA), which also includes anti-money laundering measures.
In addition, national authorities issue guidelines to help companies understand their anti-money laundering obligations. In parallel, the Financial Action Task Force (FATF) sets global AML standards, which are then adopted by individual jurisdictions.
Roman Tereshchenko: on international cooperation in the fight against money laundering
Typically, AML systems in different countries include several key elements. Among them, the business analyst highlights customer due diligence (CDD) measures, financial transaction monitoring systems, and requirements for detailed recording of information about customers and their transactions. In addition, special organizations are created in each state responsible for analyzing and tracking suspicious activity. Roman Tereshchenko suggests looking at how this works in practice in the context of several specific countries.
Anti-Money Laundering in the USA. America has one of the largest and most stringent AML systems. The Financial Crimes Enforcement Network (FinCEN) is the primary agency responsible for cracking down on illegal activities throughout the United States.
According to the expert, following the Bank Secrecy Act (BSA) and the US PATRIOT Act, financial institutions are required to implement effective AML programs, conduct thorough due diligence on their customers, report suspicious activity, and maintain documentation of all financial transactions.
In recent years, attention in the US has also focused on developing stricter measures to prevent money laundering using cryptocurrency.
Singapore: Strict laws and effective controls. Singapore is renowned for its strict legal framework and determination in the fight against money laundering. Roman Tereshchenko reports that the Monetary Authority of Singapore (MAS) acts as the regulatory body on these issues in the country.
The business analyst highlights that Singapore’s AML system includes strict regulatory requirements for financial institutions, including customer verification, record keeping, and reporting. In addition, MAS advocates effective internal controls, maximum risk assessment, and financial crime improvement programs.
AML laws and regulations in the UK. The UK anti-money laundering system is based on the Proceeds of Crime Act (POCA) and regulations. These rules apply to various sectors, including financial institutions, auditors, lawyers, real estate agents, and casinos.
According to the specialist, the central body responsible for investigating and preventing money laundering in the country is the National Crime Agency (NCA).
– At the moment, it is becoming obvious that compliance with AML and KYC in global practice is not just a requirement, but also a fundamental aspect of trust in financial services,– states Roman Tereshchenko. – By implementing robust identification procedures, ongoing monitoring, and proactive compliance with changes in legislation, companies will ensure the protection of their business and create a brand that is worthy of customer trust.
