Money Laundering & Anti Money Laundering
a financial transaction scheme that aims to conceal the identity, source, and
destination of illicitly-obtained money.
There are three stages of money laundering
Anti Money Laundering:
Refers to the activities financial institutions perform to achieve compliance
with legal requirements to actively monitor for and report suspicious activities.
Anti Money laundering Controls
1 KYC (Know your customer)
2 Customer Due Diligence
3 FATF Guidelines
The HSBC Case 2012
British multinational universal bank and financial services.
8000+ offices in over 80 countries and territories in Europe, the Asia-Pacific
region, the Americas, the Middle East and Africa.
HSBC Case summary
• HSBC provided money-laundering services of more than $881 million to various drug
cartels including Mexico’s Sinaloa cartel and Colombia’s Norte del Valle cartel.
• HSBC provided correspondent banking services, such as fund transfers and currency
exchanges, which were the source of illicit flows in the face of weak AML controls.
HSBC Bank USA failed to conduct due diligence
HSBC Bank USA failed to monitor wire transfers
HSBC Bank USA failed to monitor bank notes transactions
HSBC Bank USA failed to provide adequate staffing to maintain AML program
In December 2012, HSBC Holdings pay’s fine of $1.9 billion and sign agreement
with the US Department of Justice after it was found to have violated US sanctions
and admitted its accounts were used to launder money for criminal networks.
Financial Authorities Relating to AML Regulations in the US
Financial Crimes Enforcement Network(FinCEN)
Office of Foreign Assets Control (OFAC)
Financial Action Task Force