Report On Money Laundering
Report On Money Laundering
Report On Money Laundering
Placement
Layering
Integration
1. Placement (Filtering)
This is a movement of cash from its source. This stage represents initial entry of proceeds of crime into
the financial system. In this stage criminal relieves himself from his cash hoards and place it into the
financial system. This is the most vulnerable stage for criminal because of high chances of being caught
as placing a large sum of money to legitimate source may raise suspicions to official.
Some source of placement:
Cash business: Adding the proceeds of crime to legitimate takings. This works best for businesses
with little variable cost and high cash income, such as car wash, restaurants, casinos etc.
False invoicing: Putting dummy invoices and showing proceed as money received against settlement
of these invoices.
Smurfing: Lodging small amount of money into the bank account below the threshold of AML
reporting
3. Integration (Extraction)
In this stage laundered money is reintegrated into legitimate economy. The prime objective of this stage
is to reunite the money to launderer in a manner that does not draw attention of official and appear to
result from a legitimate source.
Some examples of integration:
Purchase of property, jewellery, artwork, high end automobile
Placement Hide Conversion, transfer or filter
Layering Move Conceal or disguise
Integration Invest Acquisition, possession or use
Money launderer creates front travel agency one incorporated in Greece and other in Portugal
In following months launderer sent his drug money in student's bank account from travel agencies
Once money received student transferred money to 3 other students' bank account opened in other financial institutions
Using this money students wrote cheques, prepaid debit cards and mailed them to travel agencies
Students also overpaid for their tuition fees and books to university and received refunds from university
University fund mingled with other fund
This fund then utilised to pay for living expenses, buy luxury items, advertisement expenses and investment to look travel
agencies as legitimate business
1.
Master Circular on Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating
Financing of Terrorism (CFT)/Obligation of banks and financial institutions under Prevention of Money Laundering
Act, (PMLA), 2002.
KYC Policy:
Banks/FIs should frame their KYC policies incorporating the following four key elements:
3. Monitoring of Transactions
Banks should closely examine the transactions to ensure that they are consistent with the customer’s profile and
source of funds. It may be based on the following principles:
4. Risk Management
Banks should closely examine the transactions in order to ensure that they are consistent with their
knowledge about the clients, their business and risk profile and source of funds
An effective AML/CFT programme should be in place and it should cover proper management oversight,
systems and controls, segregation of duties, training of staff etc.
Independent evaluation of the compliance functions of bank should be conducted
Concurrent/internal audit should be conducted to verify the compliance
Maintenance of KYC documents and Preservation period under PML act 2002:
Banks should introduce a system of maintaining proper record of transactions as mentioned below:
Note: All such records shall be maintained for a minimum period of 5 years