Anti-Money Laundering AML Laws in India & Global Framework
Money laundering refers to the process of taking illegally obtained money and making it appear to have come from a legitimate source. It involves putting the money through a series of commercial transactions in order to “clean” the money. In 2024, the European Union established the Anti-Money Laundering Authority, an EU-level agency intended to centralize aspects of AML enforcement in the EU and foster better coordination among national financial intelligence units.
- The United Nations Convention Against Transnational Organized Crime has set forth guidelines that help governments to prosecute individuals involved in money laundering schemes.
- For example, by using KYC norms and customer due diligence, banks can identify high-risk customers and prevent misuse of accounts.
- The Enforcement Directorate (ED), Financial Intelligence Unit (FIU), and Reserve Bank of India (RBI) primarily control and regulate money laundering under the Prevention of Money Laundering Act 2022 (PMLA) in India.
- This process involves identifying potential risks that could stem from various sources such as customers, products, services, and delivery channels.
- Compliance roles are predominantly found in regulated industries, such as financial services.
- Money laundering is a growing threat in the Philippines, putting the integrity of the financial system at risk.
Anti-Money Laundering (AML): Meaning, Key Components, Regulations, and Future Trends
The beneficial owner is usually the person who’s behind the customer and who owns or controls the customer, or it’s the person on whose behalf a transaction or activity is carried out. Other sources of customer information include the electoral register and information held by credit reference agencies such as Experian and Equifax. The fight against money laundering remains an ongoing battle that requires continual adaptation and collaboration. Regtech solutions are becoming increasingly important for automating compliance processes and ensuring adherence to AML regulations. Failure to comply with Anti-Money Laundering (AML) regulations can bring harsh penalties for businesses and individuals. The AMLA establishes a national registry to reveal the true owners of companies (beneficial ownership), making it harder to hide money laundering through complex ownership structures.
KYC vs. AML What’s The Main Difference?
The Bank Secrecy Act, introduced in the United States in 1970, was one of the first laws to tackle money laundering and is now administered by FinCEN. On a global level, the Financial Action Task Force (FATF) was set up in 1989 to create international standards for anti-money laundering and later expanded its scope to include counter-terrorism financing. The following are overviews of some of the most noteworthy US acts that protect against money laundering.
Our anti-money laundering course content has been created by global subject matter experts, pulling examples from many countries and contexts. Lessons and examples are relevant to any industry, but the primary focus of study is financial institutions, including banks, credit unions, asset managers, and money services businesses (MSBs). From being a khelo24 tool to curb drug trafficking-related laundering, PMLA has evolved into a comprehensive weapon against economic offenders, shell companies, and financial crimes. Anti-money laundering is closely related to counter-financing of terrorism (CFT), which financial institutions use to combat terrorist financing.
In addition, the 2000 UNTOC Convention contains provisions related to combatting money laundering in Articles 6 and 7, while Articles 12, 13 and 14 relate to confiscation of procced of crime. RegTech can automate KYC processes by verifying customer identities against government databases and sanctions lists. This can be done using facial recognition, document verification, and other biometric technologies.