Without the proper AML compliance procedures, banks and other financial institutions are in danger of inadvertently facilitating drug trafficking, terrorism financing, and other crimes. Financial institutions can be prosecuted for failing to have effective anti-money laundering policies in place. This document provides an example of guidelines that can be used to create a due diligence program that detects potential money launderers within your customer base. In addition, the sample policy in this section is compliant with the U.S. Patriot Act and other similar legislation.
Money Laundering – Defined
- It is the introduction of illegally obtained currency into the banking system.
- It is using the banking system to illegally hide currency that was lawfully obtained. It is not hard for criminals to obtain currency. However, until the currency is deposited into the financial system, their ability to utilize it is restricted. When financial institutions knowingly accept the cash deposits of criminals, they legitimize (or launder) the proceeds. Accordingly, criminals must do business with banks. Those that offer Business Internet Banking services must be diligent in detecting and reporting suspicious activity.
Suspicious Activity – Defined
It is impossible for management to define all activity that would qualify as suspicious. However, the following guidelines quantify the types of suspicious activities that the institution will monitor for.
- Commercial accounts
- Consumer accounts