• Global Frameworks: Financial Action Task Force (FATF) Recommendations, US Foreign Corrupt Practices Act (FCPA), UK Bribery Act 2010.

1. The Three Stages of Money Laundering
Money laundering hides the origins of illegally obtained funds so they can blend into the legitimate financial system. The process consists of three distinct stages:
  1. Placement: Introducing illicit cash into financial institutions (e.g., dividing large sums into small cash deposits to evade reporting thresholds, known as smurfing).
  2. Layering: Moving funds through complex webs of financial transactions, international transfers, and shell corporations to obscure the audit trail.
  3. Integration: Re-introducing the laundered funds into the clean economy through legitimate investments, such as purchasing commercial real estate or luxury assets.

2. Operational Compliance: KYC and CDD Protocols
Financial institutions must maintain robust compliance architectures to prevent financial crime:
  • Know Your Customer (KYC): Mandatory verification of a client’s identity, legal status, and beneficial ownership before opening an account.
  • Customer Due Diligence (CDD): Ongoing monitoring of account transactions to ensure they match the client’s expected risk profile and source of wealth. Suspicious or anomalous transactions must be reported to national regulatory authorities via formal Suspicious Activity Reports (SARs) without tipping off the client.

3. Transnational Anti-Corruption Frameworks
  • US Foreign Corrupt Practices Act (FCPA): Prohibits US individuals and firms from paying bribes to foreign government officials to secure or retain business. It also mandates that issuers maintain accurate accounting books and a system of internal controls.
  • UK Bribery Act: Broader than the FCPA; it criminalizes both public and private commercial bribery. Crucially, it introduces a strict corporate offense for organizations that fail to prevent bribery by their associates, though firms can defend themselves by proving they had “adequate procedures” in place to block corruption.

 
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