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Money Laundering and Terrorist Finance
Introduction
Money laundering (ML) has a devastating impact on every society and it is a threat to every sovereign nation irrespective of their size or power. ML clubbed with terrorist activities, fuel the capacity, efficiency and power of terrorism. The outcome is the changing face of terrorist activities with the capability of shaking and demolishing the foundation of nations all over the world. Revolution in the information technology (IT) and globalisation bought boundaries closer to which ML and terrorist activity is not an exception. Fundamental religious face of terrorism more strengthened these activities and given the dedication of mass to support their activities which often make it difficult to differentiate the true nature of people and organisation working for them. Growth of Banks in this global village provided supplementary help facilitating the ML and made more convenient to transfer funds between boarders. The e-business, e-banking and internet provided instant finger touch application which transfer and re-transfer fund within seconds making enforcement of law totally difficult. “The criminal’s choice of money laundering is limited by their originality. Money is laundered through currency exchange agencies, stockbrokers, jewellers, casinos, expensive car dealers, insurance companies, trading companies, solicitor offices etc.”1

Definition:
A detailed definition was given in the Vienna convention for ‘Money Laundering’. It states that ML is • “The conversion or transfer of property, knowing that such property is derived from any [drug trafficking] offence or offences or from an act of participation in such offence or offences, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an offence or offences to evade the legal consequences of his actions; • The concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from an offence or offences or from an act of participation in such an offence or offences. • The acquisition, possession or use of property, knowing at the time of receipt that such property was derived from an offence or offences … or from an act of participation in such offence or offences2. The definition was not a broad one and limited to drug trafficking and related offences and related money laundering. The significance of this is that in the countries like Afghanistan, which produce major part of world’s cocaine, use
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http://www.flumalta.org/pdfs/bank_finace_sml_states.pdf United Nations Convention Against Illicit Trafficking Narcotic Drugs and Psychotropic Substances (1988) (Vienna Convention): Article 3 (b) and (c) (i).

much of its money to terrorist related activities. But ML and FT are multifaced. Other than drug trafficking, they includes fund from corrupt politics, criminal activities such as kidnapping, financial fraud, illegal arms sales, smuggling etc. Recognising the need, international community expanded the definition given by the Vienna Convention. E.g. “United Nations Convention against Transnational Organised Crime requires all participant countries to apply that convention’s money laundering offences to the widest range of predicate offences”3. In an effort to compact terrorism UN has made to explain the term of ‘financing of terrorism’ as Any person commits an offence within the meaning of this convention if that person by any means, directly or indirectly, unlawfully and willingly, provides or collects funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry our: a) An act which constitutes an offence within the scope of and as defined in one of the treaties listed in the annex; or b) Any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking any active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a government or an international organisation to do or to abstain from doing an act.4 ML is a process whereby criminals attempt to change the identity of money obtained from crime (‘dirty money’) to hide its true ownership so that the money appears to come from a legitimate source. This explains the simple concept that “it is a process by shich proceeds from criminal acticity is disguised to conceal their illicit origins. Financing Terrorism means and includes the financial support, in any form, of terrorism or of those who encourage, plan, or engage in it”5. Regardless of its simplicity, it has implications through out the world both politically and economically. ML is profit motive whereas terrorist financing is not. FT stands for achieving their goals including terrorist activities. Stages of Money laundering: - it is considered that the ML stages can basically classify into there. 1. Placement is the initially one whereby launders put illegal cash into the financial system. Money launderers often hide behind the façade of a business that has a large proportion of its ‘legitimate’ taking cash: casinos, bars, share trading etc. Dirty money can be added to or mixed with the legitimate income, and deposited in a bank account. Money launders send illicit funds through legal channels so as to conceal their criminal origins whereas financial terrorist use both legal and illegal channels like hawala transactions. 2. Secondly, layering is the process of separating the dirty cash from its illegal origins. This step is by using intermediaries to act as a respectable face of
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Article 2 (2) of the convention. Convention is known as Palermo Convention (2000). International Convention for the suppression of the Financing of Terrorism (1999), Article 2 Money Laundering and Terrorist Financing: Definitions and Explanations. http://www1.worldbank.org/finance/assets/images/01-chap01-f.qxd.pdf

criminal. E.g. often share brokers, accountants and solicitors are used for this process. 3. Final part is the integration process by which the illegally obtained cash seems as though it has been obtained legally. E.g. an amount of fund received form the client’s account of a solicitor firm are legitimate cash6. It is experienced by many countries that “the lesser the guard is against money laundering, the more the country attracts this type of business with all the consequences that will come later when the crimes are discovered”7. “Unconstrained money laundering can quickly wear away the honesty of a small nation’s financial institutions creating unjust competition between lawful and unlawful business, International Monitory Fund (IMF) studies propose that smaller countries are more vulnerable to large scale money laundering”8. “Owing to the tremendously close relationships of capital markets, money laundering could also unfavourably affect currencies and interest rates as launderers put into funds where their schemes are fewer likely to be detected, rather than where rates of come back are higher. In fact it is thought that money launders do not seek the best rate of come back but the easiest way to clean their dirty money”9. In my view ML is a problem that poses severe threat internationally and cannot be a local problem of an individual country any more. ML help the criminal to run a parallel economy which is technically and financially well organised which is capable of using every possible means, whether good and recognised or not, to derail the established financial systems of the world.

Link between Terrorist Financing and ML.
ML and Terrorist financing basically use the same techniques to hide the sources of and uses of terrorist funding. “The transaction feature in respect of concealment. Money launderers send illicit funds through legal channels so as to conceal their criminal origins, while those who finance terrorism transfer funds that may be legal (cash or kind from even a charity organisation) or illicit in origin in such a way as to conceal their source and ultimate use, which is the support of terrorism. But the result is the same reward. When money is laundered, criminals are rewarded with disguised and apparently legitimate proceeds. ML is the outcome of any crime which generates money. And the only aim is to legalise the fund receive illegally. Similarly, those who finance terrorism are rewarded by providing the financial support to carry out terrorist stratagems and attacks” 10. But the major difference is that the legitimate fund can also be contributed and donated to raise fund for the terrorist organisation. It is said that Osama Bin Laden had his personal wealth of $1200 million obtained from business of Oil and a big amount been contributed to the fund of Al-Qaeda, a terrorist organisation. The sources of the terrorist fund are quite often disguised irrespective of their legal status. The primary objective is to hide the source
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ibid page 8. http://www.flumalta.org/pdfs/bank_finace_sml_states.pdf 8 Brent L. Bartlett and Dewey Ballantine, The Negative Effects of Money Laundering on economic Development Platypus Magazine, No. 77, (December 2002), Australia 9 Samuel D. Porteous, The Economic Impact of Money Laundering, Pacific Rim Money Laundering Conference, October 2000, Vancouver, Canada. 10 Money Laundering and Terrorist Financing: Definitions and Explanations. http://www1.worldbank.org/finance/assets/images/01-chap01-f.qxd.pdf

so that the fund can be available at any time and place. The obstacle to trace terrorist fund is that the investigation for such fund often initiates after the terrorist strikes. The importance of hiding the usage of finance by the terrorist is that the financial activities as well as the terrorist activities go unobserved. According to the opinion of the Financial Action Task Force (FATF)11, the approach taken by almost every country towards the terrorism and related acts are similar and allocate terrorist financing offences as to that of money laundering offences, but more grievous in nature12. “The ‘Special Recommendation II of FATF confirmed that the eight Special Recommendations mutual with the Forty Recommendations on money laundering represent the basic framework for preventing, detecting and suppress both money laundering and terrorist financing”13. The task before every country is the issue of detection, prevention and to bring them before the law of ML and terrorist financing. They use techniques which are so sophisticated which are yet another complex issue. The financial institutions all around the world have different type of transactions which are different from each other.

Complexity of ML and Terrorist financing.
These activities give priority to secrecy and at the same time neglect any amount of losses involved. This makes it hard to make an analytical study on the gravity of the offences and to produce an estimate on it. The transactions are never documented and publicised. Both activities work all over the world to conceal finance taking advantage of the differences in the ‘anti-money laundering’ measures in countries. Thus it is totally impossible to predict an annual transaction with these intentions. In the case of ML, a working paper suggest that by the statistics in the year 1996 reported that “the aggregate amount of funds laundered in the world could range between two and five per cent of the world’s gross domestic product”14.

Methods of ML and FT
There is no specific method (or typology as it is called in FATF Money Laundering report) to suggest these processes. They may vary from a cash deposit in a bank to multi-million investments. May be a small single transaction to a complex series of international transaction. Organised system all over the world and creativity with dedicated intelligent and crooked people to work with, the methods evolve to its need, time after time, which have no written rule but have the strength to adapt to any situation defined in this world. One of the main feature (which I believe and noticed) in their operations is that they (especially terrorist financing) never worry and go behind financial losses. The rule is so simple but has strength enough to provide enough secrecy to be undetected. The factors helping their systems are nature of economy, complex financial market, ant-money laundering regime, law enforcement in each country, and using them they constantly evolve according to their need
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established by G-7 in Paris aimed to develop co-ordinated effort against Money Laundering. FATF Special Recommendation II. Combating Money Laundering and Terrorist Financing: a Model of Best Practise, Commonwealth Secretariat (2006) second Edition page 3 Vito Tanzi, Money Laundering and the international Finance System, IMF Working paper No.96/55 (May 1996) page 3 & 4. That is around 590 billion to 1.5 trillion US dollars.

instantly. An overall analysis on FATF reports, Egmont group15 and other organisations working to compact terrorism shows that typologies are updated every instance. If one typology is detected criminals simple avoid it and find a new convenient typology. Criminals worry about the detection of money which results in ML. There are fundamental principles followed for ML. a) To be accurate in imitating the legitimate transaction to decrease threat of exposure. b) Illegal activities normally after inserted into legally established system hides the criminal face and activity to camouflage ML. c) Minimise the ratio of cash flow to legal financial institutions and keep always below the risk level of every country. d) Trace out countries where minimal risk for ML to better establishment. e) Economies where minor firms and self employed people have major control services and production of goods other that financial in nature, it is difficult for the local government to detect and freeze the transactions. f) Negotiable instruments and card systems increase the scope of ML. g) Weaker economy and threat to an economy is a scope to ML. h) Detection is difficult where national regulations differ from international standard practise of financial markets.

Scrutiny of the Hawala System
The Banks and IMF conducted a study on the operational characteristics of Informal Funds Transfer systems (IFTs), commonly referred to as Hawala16. The study examines the historical and socioeconomic background inside which Hawala has evolved. In this look upon, their enlargement is entrenched first and foremost in the facilitation of deal between far-away geographic locations at an occasion when conservative banking instruments were also weak or nonexistent. This learn also analyzes the prepared features of IFTs for both lawful and unlawful purposes. These operational facial appearances are mainly speed, lower deal costs, racial and cultural expediency and familiarity, versatility and possible secrecy. In addition, IFTs have prospered in countries where financial institutions are incompetent and financial policies are limiting. Finally, like any subversive economic activity, IFTs have implications for monetary be in charge of; influencing exchange rate operations; distorting economic data, (and, thus, arithmetical information available to policy makers); and dropping taxes on income and services. The study additional discusses the implications for authoritarian and supervisory responses to this kind of activity. Recommendation VI of FATF’s Special Recommendations recommends that countries extravagance Hawala and other IFTs as part of the regulated arrangement, subject to a lot of the same AML/CFT necessities as covered financial institutions17. More countries are subjecting these entities to licensing or registration in harmony with the FATF recommendation.

Alternative Remittances Systems Studies
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http://www1.fincen.gov/fiuinaction.pdf -Chapter III, The Egmont Group http://www1.worldbank.org/finance/html/amlcft/docs/IFTS_IMF/IFTS_Contents.pdf. http://www.fatf-gafi.org/pdf/SRecTF_en.pdf.

In September of 2002, the Asia-Pacific Economic Cooperation (APEC) Finance Ministers recognized a working group on alternative remittance systems (ARS) to inspect the economic, structural and authoritarian factors with the intention of encourages the use of ARS in the APEC economies. In hold up of the project, the World Bank geared up a report that creates a structure for estimating the magnitude of remittances flows, analyzes incentives for formal against informal channels, and examines the function of formal financial sectors in the stipulation of transfer of funds services that are acquiescent with international AML/CFT standards18. As element of the APEC ARS proposal follow-up, and as part of an attempt to enlarge the World Bank’s participation in studying the significant topic of ARSs for all of its customers, relative case studies have been planned for exact economies. Investigate findings and conclusions of these case studies will be communal as part of the replace of ideas and experiences. This is a continuing project; the findings from diverse studies will be reported and available on the Bank’s AML/CFT website.

FATF
“Established by G-7 countries to develop a coordinated international response. Primary task was to make recommendations to national governments to initiate effective AML programs. Its members include major financial countries. FATF coordinates its member states and their effort in financial sector, judiciary and law enforcement divisions to combat ML. It monitors the AMT measures and makes its report which helps nations world wide to implement its recommendations. To act against the ML, FATF had drafted ‘forty recommendations’ which has widest range from law enforcement to financial regulations and international co-operation. FATF’s member states have shown full commitments to combat ML. 40 recommendations are international plan and standard for AMT program which are adopted by non-members also.”19 The FATF is also busy in a major proposal to recognize “non-cooperative countries and territories (NCCT) in the fight against money laundering. Specially, this has meant the expansion of a procedure to search for out critical weaknesses in antimoney laundering systems which serve up as obstacles to international co-operation in this area. The objective of this procedure is to decrease the susceptibility of the financial system to money laundering by ensuring that all financial centres adopt and implement measures for the avoidance, detection and punishment of money laundering according to internationally recognized principles. Subsequent the 11th September attacks on New York the FATF has issued eight Special Recommendations and guidance for detecting the financing of terrorism. The terrorist attacks on the United States on September 11, 2001, greater than before the significance of preventing, detecting and suppressing the financing of terrorism and terrorist acts on the element of the international community. In October of 2001, the Financial Action Task Force on Money Laundering (FATF) prolonged its
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http://www.amlcft.org, APEC Symposium on Remittances. http://www.oedg.org/fatf , official website of FATF

assignment further than anti-money laundering (AML) to take in the universal attempt of combating the financing of terrorism (CFT). To attain these goals, FATF adopted these original eight Special recommendations in Terrorist Financing (Special Recommendations) and at the same time, it amends its mission. In October 2004, FATF adopted new Special Recommendation IX regarding cash couriers. Like its previous efforts, The Forty Recommendations on Money Laundering (The Forty Recommendations), FATF’s Special Recommendations are not suggestions, other than rather mandates for exploit by every country, not just FATF members, if that country is to be viewed as complying through international standards for CFT. 20 Countries may also desire to discuss with the line of attack on AML/CFT for information on how the Special Recommendations are evaluated.21 Furthermore, FATF specifically invited all countries to take on the Special Recommendations and contribute in its self-assessment work out.22 Accomplishment of the Special Recommendations, jointly with The Forty Recommendations, sets out the fundamental framework to become aware of, prevent and hold back terrorist financing. The Special Recommendations are motionless comparatively new. Therefore, experience with interpreting and implementing them is to some extent limited. At first, FATF adopted universal Guidance Notes to help give details the Special Recommendations.23 Because it has gained experience in excess of time, FATF has issued formal and additional authoritative Interpretive Notes for more than a few of the Special Recommendations24. In addition, FATF has issued Best Practices direction for a number of the Special Recommendations.25 Finally, FATF has issued Guidance for Financial Institutions in Detecting Terrorist Financing as a wealth of helping financial institutions be taught about mechanisms used to finance terrorism.26

FATF Terrorist Financing Special Recommendations
The nine special recommendations, intended to contest terrorist financing were first published by the FATF in 2001, in reply to the terrorist attack on September 11 2001. They at the start contained only eight recommendations surrounding the criminalization of terrorist financing and stipulation for combating the problem. They were then updated in 2004 to embrace cash couriers. Cash couriers are used by individuals who desire to transfer cash internationally. The reimbursement of the human courier system is comprehensible. There is no electronic move and, therefore, no permanent record of the transaction. It is also debatable that the courier carries all the danger in carrying the “dirty” money into the target country.
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Special Recommendations, http://www.fatf-gafi.org/pdf/SRecTF_en.pdf. http://www.fatf-gafi.org/pdf/Meth-2004_en.pdf. Self-Assessment Questionnaire on Terrorist Financing, http://www.fatf-gafi.org/SAQTF_en.htm. Guidance Notes for the Special Recommendations on Terrorist Financing. http://www.fatf-gafi.org/pdf/TF-SAGUIDE20020327_ en.pdf. http://www.fatf-gafi.org/TFInterpnotes_en.htm#Special%20Recommendation%20III. http://www.fatf-gafi.org/pdf/SR3-BPP_en.pdf; for Spec. Rec. VI http://www.fatf-gafi.org/pdf/GuidFITF01_en.pdf.

The modification reflected the rising apprehension that money resultant from criminal behaviour, such as drugs trafficking, is being more and more used to fund terrorist extremists, The Irish Republican Army (IRA) in Northern Ireland, the Revolutionary Armed Forces of Colombia (FARC), the Madrid bombings in 2004 and the September 11 attacks were debatably funded by money gained as a result of criminal activities). Accomplishment has been monitored from side to side a self-assessment questionnaire, intended to draw out details from different jurisdictions, as to their development with their execution. The nine special recommendations call for (summarized): a) The instant ratification and execution of UN anti-financing of terrorism instruments, such as the 1999 United Nations International conference for the Suppression of the Financing of Terrorism; b) The criminalization of the financing of terrorism, terrorist acts and terrorist group and the freezing and elimination of terrorist assets; c) A national technique of reporting suspected funds for terrorism, terrorist acts or terrorist organizations to be recognized; d) The international collaboration and communal legal assistance to ensure punctual and effectual criminal/civil investigations and prosecutions of suspected terrorist financing, acts and organizational breaches; e) Financial and non-financial entities providing a overhaul for the transmission of money or worth to be subject to all of the FATF Recommendations; f) Customer due attentiveness to be completed by all financial institutions and for improved security measures to be adopted in relation to clients who do not supply complete inventor information; and g) Improved regulation of non-profit organizations and other entities particularly vulnerable to abuse, jointly with enhanced measures intended to track the physical cross-boarder transportation of funds. h) The ninth recommendation called for countries to take up measures to detect and prevent the physical cross-border transportation of money connected to terrorist financing and money laundering. The objective in as long as these special recommendations is to make sure that financial institutions and other vulnerable entities do not without knowing hide or move terrorist funds. The FATF has also provided supervision on detecting terrorist financing actions for financial institutions and for the implementation of the special recommendations in general”27.

United Nations Office for Drug Control and Crime Prevention28
Organs of government and financial system of a country are equally affected when ML involves organised crimes, drug trafficking and corruption. It is a nightmare for the banks to be involved in ML and FT case because they act for the majority of every nations and their reputation will be irretrievably damaged by mere allegation of involvement in ML and FT. This will in long run affect the share value and financial
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http://www.fatf-gafi.org/pdf/Meth-2004_en.pdf. UNODCCP was renamed in 2002 as United Nations Office on Drugs and Crime (UNODC)

sanctions by governments can even threaten its mere existence. Combating involves finding, freezing and forfeiting of tease illegal wealth.

AMT29 and CFT30
To counter ML and FT the authority have three objectives to be aimed at. Firstly, make the countries financial system less favourable to them, secondly to detect the occurrence of ML and FT, and finally to bring criminal involved in it before the law. The will of the sovereign government can guarantee to achieve these aims. To guarantee that law has to be enacted which includes steps for AMT/CFT. Any government when detect such criminal activities, if can guarantee to prosecute them succeed in this combat. This demand and require the co-operation of both public and private sectors in compliance of AMT/CFT measures. Banks has to comply with these measures. Frequent update shall be done by the legislatures. Governments, industries most affected by ML and FT and Banks have to work together to implement AMT/CFT. To ensure a sound economy, AMT/CFT had to be supervised. Supervisors have to trace out cases falls in these categories and ensure prosecution. Legitimate authority has to be established to control and regulate financial system and impose restrictions over financial institutions. This Reference Guide on AML and CFT is a creation of the Bank’s and Fund’s efforts to fight money laundering and terrorist financing. When strategy makers looked at the AML/CFT substance available to a country, mainly a rising country with incomplete knowledge in the area, it rapidly became obvious that there was no solitary basis that could be used to speak to all the issues. Therefore, the Bank and Fund specially made this Reference Guide as a resource to make all appropriate information available from a single and complete basis. The World Bank operates a website specifically for AML/CFT purposes. This website contains advanced in sequence about the Bank’s programs and efforts to contest money laundering and terrorist financing. It also contains orientation resources and publications, such as this Reference Guide31.

European Council
The Council of Europe’s Select Committee of Experts on the assessment of Anti-Money Laundering Measures (MONEYVAL) was born in rejoinder to the FATF’s active endorsement of provincial bodies. Based on the FATF replica when it measured that it could not carry on to allow its association to enlarge but had to boundary new members to those states which FATF measured to be of principally planned significance to the accomplishment of its objectives. MONEYVAL has achieved noteworthy development since its creation in 1997. The Committee adopted a method of joint assessment whereby a member State was evaluated by a team of evaluators chosen from other member States. The
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Anti-money laundering Counter Terrorist Financing

31

www.amlcft.org.

assessment was based on an Examiner’s Guide compiled to incorporate in a useful quantity a step by step explanation of the assessment process, a checklist of issues to be covered throughout the evaluation, a course of action for the amendment of information during plenary deliberations and rules on the privacy of reports. The volume also included the essential orientation documents which were to comprise the basis of the assessment. Malta was a founder member of MONEYVAL and in fact Malta currently holds the presidency of this Committee. The second round of evaluations is in the process of being concluded.

The European Union
Directive 91/308/EEC of June 1991 introduced events for the prevention of the use of the financial system for the purpose of money laundering. Although the directive in its introduction made situation to proceeds of other criminal activities (such as organized crime and terrorism) it distinct criminal activity as sense a crime specified in Article 3 (1) (a) of the Vienna convention and any other criminal activity chosen by each Member State. As a result, the Directive was first and foremost targeting proceeds deriving from drug related crimes. In real fact most Member States introduced other criminal movement in their relative legislation. In an attempt to restrain money laundering activities the EU has now built-in in its amending directive, what are called "gatekeepers" Thus a broader series of professionals have to put up with by anti-money laundering rules which apply when professionals help in the preparation or execution of certain transactions or act on behalf of their customers in the ways of certain financial or commercial activities. This amend in directive was authorized by the European Parliament on 4th December 2001 and the 15 member states and the 10 candidate countries were required to carry their domestic laws into conventionality with the new supplies of the new Directive by 15 June 2003. The new Directive extends the range of the unique Directive on money laundering. In particular, it obliges Member States to contest laundering of the earnings of all serious crime (including fraud against the EU budget). The amendment also extends the reporting of the current Directive (limited to the financial sector) to a series of non-financial behaviour and professions that are susceptible to exploitation by money launderers. Necessities as regards client identification, record keeping and reporting of apprehensive transactions are therefore extended to external accountants and auditors, real estate agents, notaries, lawyers, dealers in high value goods such as precious stones and metals or works of art, auctioneers, transporters of funds and casinos.

Financial Intelligence Units and the Egmont Group
The fight against money laundering has been a necessary part of the in general move violently to contest unlawful narcotics trafficking and the behaviour of organized crime. The events governments have developed to oppose money laundering can also assist stem bribery, terrorist financing, and other serious crime.

Banks and other financial institutions are a significant basis for information about money laundering and other financial crimes, as can be probable. In the 1990s, governments around the world began to work mutually to alleviate the sarcastic dangers that unimpeded financial crimes posed to their economic and political systems32. To speak to this threat, many governments shaped specialized agencies to contract with the difficulty of money laundering. In the commencement, there was no unifying perception of what functions these agencies should execute, and it was exactly by accident that they had in widespread the function of in receipt of and processing financial disclosures. At concerning this time, the heads of these organizations began to become able to be seen on nationwide delegations at various international meetings and conferences. Through these familiar contacts, they communal common experiences and strong-minded that it might be useful to meet and talk about these commonalties. These first contacts led to a meeting on June 1995 at the Egmont-Arenberg Palace in Brussels, Belgium to discuss financial Intelligence units or FIUs. Chaired jointly by FinCEN and the Cellule de Traitement des Informations Financieres (CTIF) of Belgium, the meeting in Brussels enabled participants to become acquainted with the already existing FIUs (14 nations) and to open communication channels. Now known as the Egmont Group, these FIUs meet yearly to find ways to cooperate, especially in the areas of information exchange, training, and the sharing of expertise. Although FIUs operate in a different way, FIUs exchange information with their counterpart under certain specific conditions. This information could be doubtful or consists of strange transaction reports from the financial sector as well as government managerial data and public record in sequence. Many FIUs can be of support in providing financial intelligence speedily to other FIUs. One of the most important accomplishments of the group’s efforts has been the creation of a secure Internet website. Egmont’s International Secure Web System (ESW) permits members of the group to converse with one another via secure e-mail, posting and assessing information regarding trends, analytical tools, and technological developments. In other words, this system provides the ability to facilitate practical, rapid exchanges of information that could improve the efforts of the fight alongside money laundering. FinCEN, on behalf of the Egmont Group, maintains the Egmont protected Web. The continuing development and organization of FIUs demonstrate how countries around the world carry on intensifying their efforts to focus on investigate, scrutiny and information exchange in order to contest money laundering and other financial crimes. FIU Handbook In 2004, the IMF and the Bank jointly published a handbook on almost all aspects of the organization and operation of financial intelligence units (FIUs). The handbook is allowed Financial Intelligence Unit, An Overview33. The handbook
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Brett F. Woods, The Art and Science of Money Laundering: Inside the Commerce of International Narcotics Traffickers, Boulder: Paladin Press, 1998, pp. 10-19 33 The handbook is available for purchase from the IMF. It is also available for viewing (readonly) on the Bank’s AML/CFT website, http://www.amlcft.org.

covers a broad collection of topics connecting to FIU, including key in steps for establishing an FIU, fundamental models of operation, central part functions, supplementary functions, and International assessments.

Conclusion:
It is a truth that even after the enormous effort from international community and organisation, ML and FT activities continue to succeed. Compacting against the ML and FT in result act as fighting against the crime and terrorism. By cutting the financial source in effect damages the route of these activities. Nations shall put more effort to co-ordinate their agencies in sharing Informations, ensure the enforcement of law, and develop or updated AMT measures. This also include sharing information to other nations and prevent laundering in is own economy with strong and effective measures. Private organisations like financial institutions can help be strict requirement for identifications, sound reporting procedure to the agencies according to their standards, and verification of information including identity of individual where there is high risk or doubt of ML and FT. There is no shortage of law, regulations and international conventions in this area. What is required is international cooperation of every one dedicated to combat ML and FT. criminal are vigilant, intelligent and well organised than law enforcement forces of any nation. Update of law and ensuring enforcement is the only way in succeeding over ML and FT. Only effective way to combat ML and FT are ‘finding, freezing and forfeiting’ them. For it, enforcement is the only way and strengthen the enforcement agency is the only solution. Enforcement agencies whole over the world shall unite together will to an extend reduce the threat. Financial Services Authority (FSA) of UK have a good system for taking precaution against tracing these funds which involves “customer due diligence”. It is a requirement of FSA that if higher the chance of threat of these funds, higher the due diligence shall be. This means that whoever dealing with such a situation shall make thorough check on the identity of the person and source of these funds, and if ML or FT is doubted, it is the responsibility of them to inform the authority. Moreover Proceed to Crime Act also made an obligation on the individual to inform ML and FT, otherwise face prosecution.

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