Australia: The Continuing Fight against Money Laundering — Financial Institutions and FATF's Recommendation 19
| Published date | 01 March 2000 |
| DOI | https://doi.org/10.1108/eb027263 |
| Date | 01 March 2000 |
| Pages | 56-65 |
| Author | Jackie Johnson |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 4 No. 1
COUNTRY PROFILES
Australia: The Continuing Fight against
Money Laundering — Financial Institutions
and FATF's Recommendation 19
Jackie Johnson
Over the past decade concern has been raised by
much of the international community about the
integrity and stability of the financial system,
given the amount of money being laundered to
convert the profits of illegal activities into financial
assets which appear to have a legitimate origin. This
money includes not only the gains from the sale of
illegal drugs but also the profits from organised
crime and tax evasion. Annual estimates of laun-
dered funds range from US$300bn to as much as
US$1.000bn, which the International Monetary
Fund estimates is 2—5 per cent of global gross
domestic product. The bulk of these funds are
derived from the nearly US$400bn a year generated
from the illegal drugs trade.1 The magnitude and
seriousness of money laundering motivated the
General Assembly of the United Nations in 1988
to adopt a universal pledge to put a halt to this
activity.2
The integration of global financial systems, ever-
improving technology, faster communications and
easy movement of capital means that 'transnational'
money launderers are increasingly using banks to
wash and hide their criminal proceeds. While there
is some shift of laundering into non-traditional
areas such as bullion dealing, banks are still the
linchpin for most money-laundering operations and
fraudulent money transfers.3
Anecdotal evidence reveals the continuing
involvement of banks in laundering money. Three
recent examples include the involvement of Mexican
bank officials in laundering South American drug
money, brought to light in 'Operation Casablanca',4
Citibank's handling of its private accounts5 and the
Bank of New York's alleged involvement in launder-
ing money for the Russian mafia.6 These examples
portray an apparent intimate relationship between
banks and criminal activities leading directly to the
involvement of the banking sector in the laundering
of funds.
Banks provide the launderer with convenience,
accessibility and security. By utilising the banking
sector, criminals gain access to the international pay-
ments system and the convenience of being able to
transfer money electronically, rather than transport
physical currency across national borders. It is for
these reasons that a large number of anti-money-
laundering measures target the operations of banks
and bank-like financial institutions, and why the
US Federal Reserve Board (1998)7 describes banking
organisations and their employees as the strongest line
of defence against money laundering.
ANTI-MONEY-LAUNDERING
INITIATIVES
In 1989 the G7 group of nations established the
Financial Action Task Force (FATF) to examine
measures to combat money laundering, particularly
the laundering of profits from the sale of illegal
drugs.
In April 1990, the FATF issued 40 recommen-
dations designed to provide a comprehensive strategy
for action against money laundering. They cover:
— the criminal justice system and law enforcement;
— the financial system and its regulation; and
— matters relating to international cooperation.
The FATF currently has 26 member countries and
works closely with other international bodies
involved in combating money laundering. It
monitors members' progress in implementing anti-
money-laundering procedures through both annual
self-assessment and more detailed mutual evaluation,
reviews money-laundering trends, techniques and
countermeasures and their implications, and pro-
Journal of Money Laundering Control
Vol 4, No.
1,
2000, pp. 56-65
© Henry Stewart Publications
ISSN 1358-5201
Page 56
To continue reading
Request your trial