The practice of money laundering and politically exposed people

Type :

Research papers

Pages :

20 pages

Format :

.doc

Published date :

08/13/2009

Category :

Political science

Sub category :

Political science

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Summary :

Abstract
Introduction
1. Argument
PEP's: A brief overview
Methodology
Money laundering: The scope of the problem
1. Background
2. Financial details
3. How money is laundered
4. Estimates on the extent of money laundering
Modern day problems
1. Who is involved
2. Terrorists
3. Other organizations
4. Impact
Politically Exposed Persons (PEPs)
1. Defining PEP's
2. Basic considerations
3. Others associated with PEPs
4. Sleeper PEP's
5. When does one lose status as a PEP?
Risk
PEPs and illegal activity
Banks and awareness of the problem
PEPs: Historical examples
1. Pinochet
2. Abacha
National and regional responses to PEPs
1. European Union
2. The 3rd EU money laundering directive
3. The 3rd directive in practice
4. Canada
5. Bill C-25 in practice
6. Canadian law and risk assessment
7. Controversy
Conclusion
References

Abstract

The practice of money laundering has long since been regarded as a criminal offence though it is primarily during recent times that the practice has been undertaken on such a scale as to pose a genuine threat to the international political and financial orders. This is due to its association with crimes ranging from weapons dealing to embezzlement to terrorism. Of particular concern is the role of politically exposed Persons (PEPs) such as Augusto Pinochet in Chilli and Sani Abacha in Nigeria, a separate category of individual first identified by the Financial Task Force (FATF). Though definitions vary, PEPs generally include heads of state, other high ranking government officials, and those associated with them. For financial institutions, PEPs pose a high degree of risk because, if it is found that their assets were obtained by illegal means, this may result in financial ruin for the institution-like the now defunct Riggs Bank which had close dealings with Pinochet-due to the impact this has on their reputation as well as potentially millions of dollars in fines. As such, Canada, with the introduction of Bill C-25, the European Union, with the 3rd EU money laundering Directive, the United States, with the Patriot Act, and others have constructed policies which have set standards for defining PEPs as well as standards of due diligence which financial institutions must follow in order to ensure to the extent that is possible that PEPs with whom they do business have acquired their assets in a legal and legitimate manner. Though these conditions place a heavy burden on banks, credit unions, and other financial organizations, the extent of the threat is such that the benefits which can be derived from following these procedures likely out-weigh the not inconsiderable costs.