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State Bank of Pakistan National Seminar on Anti-Money Laundering and Counter Terrorist Financing

State Bank of Pakistan National Seminar on Anti-Money Laundering and Counter Terrorist Financing. Anti-Money Laundering and Terrorist Financing Activities in the Asia/Pacific Region. Rick McDonell Head, Asia/Pacific Group on Money Laundering (APG) Secretariat Islamabad 29 March 2005.

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State Bank of Pakistan National Seminar on Anti-Money Laundering and Counter Terrorist Financing

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  1. State Bank of Pakistan National Seminar on Anti-Money Laundering and Counter Terrorist Financing Anti-Money Laundering and Terrorist Financing Activities in the Asia/Pacific Region Rick McDonell Head, Asia/Pacific Group on Money Laundering (APG) Secretariat Islamabad 29 March 2005 The Asia/Pacific Group on Money Laundering (APG)

  2. Introduction • The APG • Regional challenges in combating money laundering and terrorism financing • Regional vulnerabilities – typologies • Risks of not responding • Meeting the challenges The Asia/Pacific Group on Money Laundering (APG)

  3. The APG • The APG is the FATF-style regional body for the Asia/Pacific region. • The APG does not set the standards against money laundering and terrorist financing. • Those standards are global and are set by the FATF in their 40 + 9 Recommendations. • The APG’s main roles are the implementation of the AML/CFT global standards and the regional assessment of compliance. The Asia/Pacific Group on Money Laundering (APG)

  4. The APG • As an essential part of its role, the APG coordinates AML/CFT technical assistance and training across the Asia/Pacific region. • The APG also works closely with other international and bodies involved in various legal, financial regulatory and law enforcement aspects of AML/CFT. • The APG undertakes typologies work to study methods and trends of money laundering. The Asia/Pacific Group on Money Laundering (APG)

  5. APG Members The APG presently consists of 28 members: Australia Marshall Islands, Republic of the Bangladesh Mongolia Brunei Darussalam Nepal Cambodia New Zealand Chinese Taipei Niue Cook Islands Pakistan Fiji Islands Palau Hong Kong,China Philippines India Samoa Indonesia Singapore Japan Sri Lanka Korea, Republic of Thailand Macau,China United States of America Malaysia Vanuatu The Asia/Pacific Group on Money Laundering (APG)

  6. New members expected in 2005: Canada Myanmar Lao PDR Vietnam The Asia/Pacific Group on Money Laundering (APG)

  7. APG RELATIONSHIPS WITH INTERNATIONAL AND REGIONAL ORGANISATIONS APEC Asia/Pacific Economic Cooperation ASEAN Association of South East Asian Nations ARF ASEAN Regional Forum ASEM Asia Europe Meetings ADB Asian Development Bank IMF International Monetary Fund APG Asia/Pacific Group on Money Laundering EGMONT GROUP OF FIU’s THE WORLD BANK WCO World Customs Organisation UNODC United Nations Office on Drugs & Crime OCO Oceania Customs Organisation Pacific Islands Forum UNCTC United Nations Counter Terrorism Committee APG Observers The Asia/Pacific Group on Money Laundering (APG) Key:

  8. Regional Challenges in AML/CFT Specific vulnerabilities include: • Relatively low institutional capacity • Corruption (particularly in developing countries) • Major drug producing centres in region • High use of alternative remittance systems • Extensive use of cash and high value items • Serious terrorist activity and on-going threats The Asia/Pacific Group on Money Laundering (APG)

  9. Low levels of institutional capacity • Large number of developing countries in the region • Diversity in the levels of institutional development across the region • Many countries are working hard to develop legal and governance structures The Asia/Pacific Group on Money Laundering (APG)

  10. Corruption • Corruption generates enormous profits to be laundered • Corruption is a key factor in both predicate criminal activities and money laundering • Systemic corruption undermines regulatory and legislative AML/CFT regimes • Systemic corruption undermines institutional development The Asia/Pacific Group on Money Laundering (APG)

  11. Major drug production centres and trafficking points in the region • Heroin, opium, amphetamine type substances (including precursor chemicals), ecstasy, cannabis • Increasing domestic drug consumption within Asia, particularly heroin & amphetamine type stimulants. • Major drug transport ‘hubs’ and drug distribution points The Asia/Pacific Group on Money Laundering (APG)

  12. Significant levels of other profit-driven crime • People smuggling and human trafficking • Arms trafficking • Fraud • Smuggling • Other profit driven crimes – eg Illegal logging The Asia/Pacific Group on Money Laundering (APG)

  13. High use of cash and alternative remittance systems (ARS) • ARS has a legitimate role in many countries to remit monies to/from developing countries • Cash economies and large ARS sectors are highly vulnerable to exploitation for money laundering and terrorist financing • Cash couriers seen as a particular vulnerability • Cash economies and ARS reflects relatively low levels of trust in regulated financial sector The Asia/Pacific Group on Money Laundering (APG)

  14. Cash and alternative remittance systems typologies • Use of informal channels (ARS and cash / gold smuggling) is a common typology to remit money - often mingling legitimate remittances and ‘black’ monies • ARS and cash couriering linked to other trade-based money laundering typologies The Asia/Pacific Group on Money Laundering (APG)

  15. Serious terrorist activity & on-going terrorists threats • Terrorist acts occurring across the region • High use of informal channels for terrorist financing (especially ARS & cash couriers) • Terrorists using non-profit organisations for raising and moving terrorist funds • Terrorists identifying and exploiting ‘weak link’ economies The Asia/Pacific Group on Money Laundering (APG)

  16. Risks of non-compliance • Increased criminal and terrorist activity • Stability of the banking system & reputation damage • Negative economic effects • Sanctions / threat of actions by the international community • Weak links attract money launderers and terrorists • National security issues The Asia/Pacific Group on Money Laundering (APG)

  17. APG Regional Progress • AML Laws In 1995, 5 jurisdictions In 2005, over 30 jurisdictions • FIUs In 2005, 17 APG member or observer jurisdictions have an established FIU The Asia/Pacific Group on Money Laundering (APG)

  18. Meeting the Challenges APG Mutual Evaluations • Provide peer reviews of compliance with the global standards by relevant experts from member countries’ legal, financial and law enforcement systems • Includes suggesting areas for improvement and technical assistance through mutual feedback The Asia/Pacific Group on Money Laundering (APG)

  19. Meeting the ChallengesCapacity Building Technical Assistance and Training • Regional coordination role for AML/CFT through the APG Donor & Provider Group • Resources such as model laws, training programs, mentoring etc • Country projects via multilateral & bilateral cooperation • Regional projects involving e.g. ADB, IMF, World Bank, UNODC, Commonwealth Secretariat The Asia/Pacific Group on Money Laundering (APG)

  20. Meeting the Challenges Regional linkages to global initiatives • Maintaining close links with the international community • Keeping members up to date with international standards • Participating in global standard setting • Engaging in typologies research of methods and emerging trends – eg APG has an ongoing Typologies Working Group and an Annual Typologies Workshops of money laundering experts • Proposed Regional Workshop The Asia/Pacific Group on Money Laundering (APG)

  21. Useful websites For more information on AML/CFT visit: APG - www.apgml.org FATF - www.fatf-gafi.org UNODC Global Programme Against Money Laundering - www.unodc.org/money_laundering.html The Egmont Group of FIUs - www.egmontgroup.org The Asia/Pacific Group on Money Laundering (APG)

  22. Useful sources for typologies information • APG typologies reports http://www.apgml.org/content/typologies_reports.jsp • FATF typologies reports http://www.fatf-gafi.org/ • Egmont Group of FIUs – 100 Case Studies http://www.ncis.co.uk/fiu.asp • International Narcotics Control Strategy Report (INCSR) 2005 http://www.state.gov/g/inl/rls/nrcrpt/2005/ The Asia/Pacific Group on Money Laundering (APG)

  23. For more information contact the APG Secretariat via mail@apgml.org The Asia/Pacific Group on Money Laundering (APG)

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