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Money Laundering, Corruption and Terrorism Issues

Unresolved issues

One of ESAAMLG’s main plans entails the integration of anti-money laundering and combating financial terrorism attempts with the attempts of its member countries with regard to fighting corruption. This is intended to go along with the possibility of establishing a devoted anti-money laundering and combating of financial terrorism and corruption training center intended to cater to the member states (Fatf np).

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This development was prompted by the prevailing misconception within the region; the misunderstanding which concerned money laundering which is considered in some quarters as a problem that is detached from those of financing terrorism as well as the rampant corruption that characterizes this region. This is lent credibility by the fact that some of the member states have gone ahead and implemented strategies with regard to reforms in the financial sector reform as well as those to deal with anti-corruption. Unfortunately, these strategies are not consistent with the financial action task force recommendations (Madinger 142).

The policymakers of the member states need to be cognizant of the fact that anti-money laundering and combating of financial terrorism measures are extremely vital to the economic development of the member states and that money laundering is the evil twin of corruption as well other criminal activities. More often than not, corruption and money laundering go hand in hand. Severing the means to access as well as the use of the earnings of illegal activities can serve as a key disincentive to the aforementioned illicit activities. If mechanisms can be put in place to enhance the process of investigating these insidious activities and illegal proceeds can be returned to the country of origin, member countries will be able to get a colossal amount of money in returned revenue (Stessens 14).

Consequently, the significance of integrating anti-money laundering and combating financial terrorism programs among other initiatives in national development plans along with anti-corruption programs cannot be overemphasized (The IT Law Community 167).

Corruption is cited as the major cause of impediments to anti-money laundering and combating financial terrorism in the ESAAMLG Region. The analysis which was carried out up to date has shed light on the challenges faced by ESAAMLG members –most of whom are third-world countries with meager budgets- in executing the anti-money laundering and combating of financial terrorism standards to the letter. Generating and maintaining political will among ESAAMLG members is largely responsible for the glitches experienced in the bid of these countries implementing the anti-money laundering and combating of financial terrorism legal and institutional framework. Some of the ESAAMLG members are yet to ratify anti-money laundering and combat financial terrorism legislation (Rosner 59).

Further analysis has indicated that limited resources in terms of finance and labor have hamstrung the effective implementation of anti-money laundering and combating of financial terrorism standards. Not only are these limited the implementation of the anti-money laundering and combating of financial terrorism standards but also technological support, as well as a scarcity of materials, are among the obstacles for setting up key institutions. Case in point, the majority of members are yet to establish Financial Intelligence Units for getting, examining and circulating financial information. Not only this but also, the conducting of habitual onsite inspection programs of reporting entities with the aim of making sure that members comply with anti-money laundering and combating terrorism financing requirements is proving to be a daunting task to some members since this exercise needs a lot of resources. Considering the challenges that these countries encounter, the Financial Action Task Force gave Guidance on Capacity Building for Mutual valuations and Implementation of the Financial Action Task Force Standards within Low Capacity Countries. They are aimed to point out principles as well as certain means and procedures that may be deployed to ensure effective prioritization and implementation of the Financial Action Task Force (Commonwealth Secretariat np).

The relevance of the topic to the relevant field

Money laundering, corruption and terrorism are rife in East and Southern Africa. This unfortunate phenomenon is largely attributed to the abject poverty that at times seems to be endemic in this region of the world. The aforementioned problems only aggravate an already awry situation hence they further consign the region and its inhabitants into unspeakable squalor. This dissertation proposal seeks authority to undertake research into ways and means of combating money laundering, terrorism and corruption in this region so for its wellbeing as well as that of the international community. Terrorist activities have been on the increase in the recent past the world over hence surveys have to be carried out in order to combat financial money laundering (D’ Agostino 162).

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Nations all over the world are striving to implement policies and legislations that are aimed to discourage money laundering, terrorism and corruption. In the United States, for instance, there is the US Patriot Act that is intended to boost the nation’s guard against terrorism. They also have money laundering provisions that aim at the financial make-up of terrorist groups and those of criminals (Bartlett 46).

Presently the ability of the anti-money laundering and combating of terrorism financing system to fight corruption is woefully not fully exploited. Currently, failure to take advantage of this chance is the failure to optimally deploy anti-money laundering and combat financial terrorism systems to be used for countering anti-corruption. In this regard, noteworthy achievements can be gained with minimal effort and resources, particularly with regard to third-world countries. By way of legislation, the institution of financial intelligence systems, as well as the development of expert anti-money laundering entities, states will have also afforded powerful anti-corruption tools. Currently, these tools oftentimes are not utilized. This missed chance is largely a part of the result of an extremely narrow notion of the appropriate purpose of the anti-money laundering and combating of terrorism financing system, whereby financial intelligence units by and large have slight dealings with anticorruption entities, and vice versa (Diane Publishing company 29).

Potential conclusions and recommendations

The devastating effects of money laundering on any nation cannot be over-emphasized. They can even lead to the collapse of a country if not taken care of at the initial stages.

This is why countries the world over go to great lengths to alleviate this insidious activity from not only their country but also assist other countries to do the same as well because of the spillover effect that this vice has.

It is evident that in order to succeed in eliminating or controlling this vice, there has to be a concerted effort from all fronts of the nation. Where the effort is fragmented like its being witnessed in Eastern and Southern Africa, the efforts that will have been used in trying to combat the crime will count for nothing. This is so because of the organized nature of the money launderers. If there is any slackness in the system they will not hesitate to exploit it (Reuter 90).

This research has embarked to give insight on the responsibility that a variety of international and regional and sub-regional entities are obligated in implementing the UN Strategy in eastern and southern Africa and the problems that the region has to contend with in its quest to proceed with implementation. Regional as well as sub-regional organizations can assist in considering cultural and other issues; can undertake initiatives suited to this particular region; more often than not have exclusive know-how concerning this region, and can be very instrumental in establishing local ownership (Lawrence 98).

ESAAMLG countries need to criminalize money laundering according to United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. Member states need to make money laundering a serious offense that attracts severe punitive measures in a bid to deter the perpetrators of the offense.

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Member states need to approve steps akin to those established in the Vienna and Palermo Conventions, including legislative measures, in order to allow their relevant authorities to seize property laundered, earnings from money laundering, without infringing on the rights of third parties (Financial Action Task Force 63).

Financial institutions need to guard against keeping anonymous accounts or accounts fabricated names. They need to carry out customer due diligence measures, including identifying and verifying the identity of their customers when establishing business relations and when executing occasional transactions.

Financial institutions are supposed to always confirm the identity of their clients either before or when establishing a business relationship or carrying out transactions for occasional customers. Member states may allow financial institutions to finalize the confirmation as soon as reasonably practicable following the establishment of the relationship, where the money laundering risks are effectively managed and where this is essential not to interrupt the normal conduct of business (Baker 149).

Financial institutions need to accord special attention to business relations and transactions with individuals, organizations as well as financial institutions, from states which do not or inadequately affect the aforementioned recommendations. When the aforementioned transactions have no evident economic legit rationale, they should be rigorously scrutinized, and the findings should be documented, and be promptly forwarded to supervisors, auditors and law enforcement agencies (Financial Action Task Force 91).

Each member state needs to promptly endorse and fully implement the 1999 United Nations International Convention for the Suppression of the Financing of Terrorism. Countries need to do the same with regard to the United Nations resolutions concerning the deterrence and repression of the financing of terrorist acts, mostly United Nations Security Council Resolution 1373 (Financial Action Task Force 50).

All member states need to criminalize the financing of terrorism, terrorist acts and terrorist organizations. Member states need to make sure that such crimes are considered as money laundering fostering crimes (Roth 55).

All member states need to put into practice steps to promptly freeze funds or assets of terrorists, those who finance terrorism and terrorist organizations consistent with the United Nations resolutions concerning the deterrence and inhibition of the financing of terrorist acts. Countries need to take up and put into practice measures, including legislative ones, which allow relevant authorities to get hold of and take possession of property that is the earnings of, or used in, or planned or due for use in, the financing of terrorism, terrorist acts or terrorist organizations (Financial Action Task Force b. 101).

Every country needs to give another country, based on a treaty, understanding or another method for joint legal support or information exchange, the utmost measure possible of help in connection with criminal, civil enforcement, and administrative investigations, inquiries and proceedings concerning the financing of terrorism, terrorist acts and terrorist organizations (Ball 61).

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Countries need to also adopt all measures to make sure that their countries are not safe havens for persons responsible for the financing of terrorism, terrorist acts or terrorist organizations, and need to have mechanisms in place to extradite such characters.

Every state needs to adopt measures that make sure that individuals or legal entities, including agents, that offer a service for the transfer of money or value, including transfer by way of an unofficial money or value transfer system, need to be licensed or registered and subject to all the FATF Recommendations that pertain to banks and non-bank financial institutions. Every state needs to make sure that individuals or legal entities that offer such services unlawfully are subject to administrative, civil or criminal sanctions (The Economist 43).

States need to adopt measures that need financial institutions, including money remitters, to include precise and valid information on funds transmissions and related messages that are sent. The information should remain with the transferor-related message through the payment chain. Member states need to adopt measures that make sure that financial institutions, including money remitters, behavior enhanced examination of and survey for wary activity funds transfers which do not contain complete originator information (Levi and William 378).

Member states need to assess the sufficiency of laws and regulations that pertain to bodies that can be abused for the financing of terrorism. Non-profit organizations are most susceptible, and member states need to make sure that they are not abused by:

  1. Terrorist organizations pretending to be legal bodies;
  2. To make use of lawful bodies as passages for terrorist financing, including for the aim of evading asset freezing measures;
  3. To hide the covert diversion of monies purposed for lawful aims to terrorist organizations (Levi 654).

Works Cited

Baker, Raymond. Capitalism’s Achilles Heel. New York, NY: Wiley. 2005. Print.

Ball, Deborah, et al., U.S. Banks Oppose Tighter Money Rules. Wall Street Journal. 2011. Web.

Bartlett, Brent. The Negative Effects of Money Laundering on Economic Development. Asian Development Bank. 2004. Web.

Commonwealth Secretariat. Money laundering: key issues and possible action London: Commonwealth Secretariat, 1997. Print.

D’ Agostino, Davi. Money Laundering: Extent of Money Laundering Through Credit Cards Is Unknown. New Jersey: DIANE Publishing, 2003. Print.

Diane Publishing company. Money Laundering: A Framework for Understanding U. S. Efforts Overseas. New York, NY: IANE Publishing, 1996. Print.

Fatf. Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). FATF-GAFI. 2009. Web.

Financial Action Task Force. Money Laundering FAQ. 2011. Web.

Financial Action Task Force. About the FATF. 2011. Web.

Financial Action Task Force. About the Non-Cooperative Countries and Territories (NCCT) Initiative. 2011. Web.

Financial Action Task Force. Global Money Laundering and Terrorist Financing Threat Assessment. 2003. Web.

Lawrence M. Salinger. Encyclopedia of white-collar & corporate crime: A – I, Volume 1, page 78, 2005. Print.

Levi, Michael and William Gilmore. Terrorist Finance, Money Laundering and the Ris of Mutual Evaluation: A New Paradigm for Crime Control. European Journal of Law Reform 4 (2): 337–364.

Levi, Michael. Combating the Financing of Terrorism: A History and Assessment of the Control of ‘Threat Finance. British Journal of Criminology 50 (4): 650–669.

Madinger, John. Money laundering: a guide for criminal investigators. New York, NY: CRC/Taylor & Francis. 2006. Print

Reuter, Peter. Chasing Dirty Money. New York, NY: Peterson, 2004. Print.

Rosner, Susanne. Money Laundering: Effects and Measures. London, UK: GRIN Verlag, 2010. Print.

Roth, John, et al. Monograph on Terrorist Financing. National Commission on Terrorist Attacks Upon the United States. pp. 54–56. 2004. Web.

Stessens, Guy. Money laundering: a new international law enforcement model New York, NY: Cambridge University Press, 2000. Print.

The Economist. The Lost Trail. The Economist. 2004. Web.

The IT Law Community. Data Protection, Money Laundering and Terrorism. 2006. Web.

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