Tracking Dirty Money


The economic turmoil and financial crises of 2008 fueled a surge in financial fraud. The International Monetary Fund (IMF) estimates that money laundering amounts to somewhere between hundreds of billions of dollars to more than a trillion dollars per year, or two to five percent of the world’s Gross Domestic Product (GDP). And with the emergence of new payments types and growth of electronic payments, there are many new opportunities for fraud.

Indeed, the “suspicious activity reports” (SAR) filed by financial institutions in the U.S. and elsewhere are higher than ever. These numbers underscore the importance of fraud control measures to mitigate risk and reduce exposure from emerging assaults to financial transactions.

Catalysts for Change 

Governments and regulatory bodies are tightening regulations related to anti-money laundering (AML), including the new rules under Dodd-Frank, along with the requirements for international automated clearing house (IAT) transactions. Since the Patriot Act was signed into law, companies are under increased pressure to meet enhanced anti-money laundering regulations. The Patriot Act amended previous banking and money-laundering laws such as the Bank Secrecy Act (BSA) of 1970. While the Bank Secrecy Act requires financial institutions to report transactions that exceed $10,000, a common money-laundering practice is “restructuring” – an effort to break up large, suspicious transactions into smaller ones that fly under the radar.

more…By John Farrell and Nasreen Quibria Published: 2011-10-26
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