Wednesday, October 31, 2012
Tuesday, October 23, 2012
Whilst no one doubts that the work of Non Profit Organisations (NPOs) is important, it is worthwhile to pay attention to the Mutual Evaluation Report produced and published by the Asia Pacific Group of Anti-Money Laundering (APG) which is related to NPOs.
Wednesday, October 17, 2012
Ideally, an effective AML-CFT Compliance Programmes must be designed to address both the "costs" and "effectiveness" elements of the programmes. Cost effectiveness model may include evaluating the following: 1. the risks specifically posed by the products and services that one's business offers; 2. the type of customers that that business attracts; 3. the methods in which the products are delivered; 4. the geographies linked to the underlying transactions; 5. the vulnerabilities that the business poses to the risk of facilitating money laundering or terrorism financing; 6. the compliance programme to include details of the policies, systems and controls to manage and monitor the risks presented. 6. these controls to include the means for detecting suspicious transactions and frequency of customer due diligence. By applying a risk based approach, one can determine if a business is overcommitting resourcing to areas of low to medium risk.
Sunday, October 14, 2012
This is an excerpt from the ACFE Website: According to the recent ACFE's Report to the Nations on Occupational Fraud & Abuse, the typical organization loses 5% of its revenues to fraud each year. Applied to the estimated 2011 Gross World Product, this figure translates to a potential projected global fraud loss of more than $3.5 trillion. Other key findings include: (1) The median loss caused by the occupational fraud cases in our study was $140,000. More than one-fifth of these cases caused losses of at least $1 million. (2) The frauds reported will normally take a median of 18 months before being detected. (3) In 81% of cases, the fraudster displayed one or more behavioral red flags that are often associated with fraudulent conduct. Living beyond means (36% of cases), financial difficulties (27%), unusually close association with vendors or customers (19%) and excessive control issues (18%) were the most commonly observed behavioral warning signs. (4) Occupational fraud is more likely to be detected by a tip than by any other method. The majority of tips reporting fraud come from employees of the victim organization.
Saturday, October 13, 2012
The Cost of Compliance for AML-CFT regime may differ from one institution to another institution. There are nevertheless some common costs incurred by a country that are not directly "absorbed" by a reporting institution. Example of costs incurred to establish AML-CFT legislation include items such as administrative costs, fees paid to experts, exposure drafts and various parlimentary readings and discussions. For financial institutions, costs could further be classified as "Prompted responses" and "Unprompted responses". Costs under the category of prompted responses include Training/professional development; Staff recruitment; Staff salaries; Monitoring software establishment; Software recurrent and External consultancy. Meanwhile, unprompted responses include Record keeping; monitoring; reporting; purchase of equipment or hardware; admin costs and customer relations. It is worth noting that reporting institutions are institutions that have been identified by the "AML-CFT Competent Authority - in Malaysia, this is Bank Negara Malaysia or BNM" who are expected to facilitate BNM by submitting "suspicious transaction reports or STR". Beside financial institutions, other reporting institutions are legal firms; accounting & auditing firms; company secretaries; casino; gem or metal dealers; money changers.
Friday, October 12, 2012
The Financial Action Task Force (FATF) is an inter governmental body set up in 1989 by various countries' jurisdiction with the aim of setting up standards and to promote effective implementation of legal, regulatory and operational measures to combat money laundering, terrorism financing and other related threats to the integrity of international financial system. The FATF developed several recommendations that are recognized as the international standards to combat money laundering and terrorism financing.
Thursday, October 11, 2012
Gupta (2011) proposes a “competency framework” for human resources and professionals. Indeed, this framework is deemed suitable to be adapted when training AML-CFT professions - investigators, compliance officers, lawyers, accountants, auditors and company secretaries. According to Gupta, an effective competency framework for professionals should encompass at least eight dimensions. First, the competency training should focus on the real life requirements of the profession. Second, the competency training should integrate skills, attitudes, knowledge and experience to enable auditors to perform their tasks effectively.
Wednesday, October 10, 2012
Research interest in the area of Money Laundering is a fairly new phenomenon. Though money laundering activities have started many years ago, research in this kind of financial crime is very limited. Money laundering is the process or activity undertaken by money launderers (or fraudsters) to conceal the sources of "dirty money" that are obtained from illicit means. Just like the concept of a laundery machine that is used to clean dirty linens, the dirty money (which is illegal)is put through various mechanisms so as to the ligitimise its existence. Once ligitimized, the "clean money" can be used as normal instrument for business transactions. In Malaysia, money laundering crimes involved those classified as predicate offences under the Anti-Money Laundering and Counter Financing of Terrorism Act 2001 (AMLATFA 2001). Among the predicate offences include: illegal gambling, illegal deposit taking, sale of illegal drug, criminal breach of trust, fraud, drug trafficking, embezzlement, racketeering, tax evasion and human traficking. For research purposes, there remains a gap in the following areas: (1) Developing AML/CFT Training & Competency Framework for AML-CFT Investigators (2) AML-CFT Fraud Risk Indicators (3) Training & Competency Framework for AML-CFT Professionals (4) Cost of AML-CFT Compliance (5) Assessing Cost of AML-CFT Fraud (6) Cost Effectiveness Model for CFT Regime (7) AML-CFT in Non Profit Organizations (8) Tax Evasion (9) AML-CFT Awareness Among Designated Non Financial Business & Professionals (DNFBP) Upcoming entries will discuss each of the above proposed research topics