State%20Bank%20of%20Pakistan%20National%20Seminar%20on%20Anti-Money%20Laundering%20and%20Counter%20Terrorist%20Financing

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State Bank of Pakistan National Seminar on
Anti-Money Laundering and Counter Terrorist
Financing
Anti-Money Laundering and Terrorist Financing
Activities in the Asia/Pacific Region

• Rick McDonell
• Head, Asia/Pacific Group on Money Laundering
  (APG) Secretariat
• Islamabad
• 29 March 2005

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Introduction

• The APG
• Regional challenges in combating money laundering
  and terrorism financing
• Regional vulnerabilities typologies
• Risks of not responding
• Meeting the challenges

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The APG

• The APG is the FATF-style regional body for the
  Asia/Pacific region.
• The APG does not set the standards against money
  laundering and terrorist financing.
• Those standards are global and are set by the
  FATF in their 40 9 Recommendations.
• The APGs main roles are the implementation of
  the AML/CFT global standards and the regional
  assessment of compliance.

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The APG

• As an essential part of its role, the APG
  coordinates AML/CFT technical assistance and
  training across the Asia/Pacific region.
• The APG also works closely with other
  international and bodies involved in various
  legal, financial regulatory and law enforcement
  aspects of AML/CFT.
• The APG undertakes typologies work to study
  methods and trends of money laundering.

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APG Members

• The APG presently consists of 28 members
• Australia Marshall Islands, Republic of the
• Bangladesh Mongolia
• Brunei Darussalam Nepal
• Cambodia New Zealand
• Chinese Taipei Niue
• Cook Islands Pakistan
• Fiji Islands Palau
• Hong Kong,China Philippines
• India Samoa
• Indonesia Singapore
• Japan Sri Lanka
• Korea, Republic of Thailand
• Macau,China United States of America
• Malaysia Vanuatu

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New members expected in 2005 Canada Myanmar La
o PDR Vietnam
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APG RELATIONSHIPS WITH INTERNATIONAL AND REGIONAL
ORGANISATIONS
APEC Asia/Pacific Economic Cooperation
ASEAN Association of South East Asian Nations
ARF ASEAN Regional Forum
ASEM Asia Europe Meetings
ADB Asian Development Bank
IMF International Monetary Fund
APG Asia/Pacific Group on Money Laundering
EGMONT GROUP OF FIUs
THE WORLD BANK
WCO World Customs Organisation
UNODC United Nations Office on Drugs Crime
OCO Oceania Customs Organisation
Pacific Islands Forum
UNCTC United Nations Counter Terrorism Committee
APG Observers
Key
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Regional Challenges in AML/CFT

• Specific vulnerabilities include
• Relatively low institutional capacity
• Corruption (particularly in developing countries)
• Major drug producing centres in region
• High use of alternative remittance systems
• Extensive use of cash and high value items
• Serious terrorist activity and on-going threats

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• Low levels of institutional capacity
• Large number of developing countries in the
  region
• Diversity in the levels of institutional
  development across the region
• Many countries are working hard to develop legal
  and governance structures

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• Corruption
• Corruption generates enormous profits to be
  laundered
• Corruption is a key factor in both predicate
  criminal activities and money laundering
• Systemic corruption undermines regulatory and
  legislative AML/CFT regimes
• Systemic corruption undermines institutional
  development

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• Major drug production centres
• and trafficking points in the region
• Heroin, opium, amphetamine type substances
  (including precursor chemicals), ecstasy,
  cannabis
• Increasing domestic drug consumption within Asia,
  particularly heroin amphetamine type
  stimulants.
• Major drug transport hubs and drug distribution
  points

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• Significant levels of other
• profit-driven crime
• People smuggling and human trafficking
• Arms trafficking
• Fraud
• Smuggling
• Other profit driven crimes eg Illegal logging

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• High use of cash and alternative
• remittance systems (ARS)
• ARS has a legitimate role in many countries to
  remit monies to/from developing countries
• Cash economies and large ARS sectors are highly
  vulnerable to exploitation for money laundering
  and terrorist financing
• Cash couriers seen as a particular vulnerability
• Cash economies and ARS reflects relatively low
  levels of trust in regulated financial sector

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• Cash and alternative remittance
• systems typologies
• Use of informal channels (ARS and cash / gold
  smuggling) is a common typology to remit money -
  often mingling legitimate remittances and black
  monies
• ARS and cash couriering linked to other
  trade-based money laundering typologies

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• Serious terrorist activity
• on-going terrorists threats
• Terrorist acts occurring across the region
• High use of informal channels for terrorist
  financing (especially ARS cash couriers)
• Terrorists using non-profit organisations for
  raising and moving terrorist funds
• Terrorists identifying and exploiting weak
  link economies

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Risks of non-compliance

• Increased criminal and terrorist
• activity
• Stability of the banking system
• reputation damage
• Negative economic effects
• Sanctions / threat of actions by the
  international community
• Weak links attract money launderers and
  terrorists
• National security issues

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APG Regional Progress

• AML Laws
• In 1995, 5 jurisdictions
• In 2005, over 30 jurisdictions
• FIUs
• In 2005, 17 APG member or observer jurisdictions
  have an established FIU

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Meeting the Challenges

• APG Mutual Evaluations
• Provide peer reviews of compliance with the
  global standards by relevant experts from member
  countries legal, financial and law enforcement
  systems
• Includes suggesting areas for improvement and
  technical assistance through mutual feedback

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Meeting the ChallengesCapacity Building

• Technical Assistance and Training
• Regional coordination role for AML/CFT through
  the APG Donor Provider Group
• Resources such as model laws, training programs,
  mentoring etc
• Country projects via multilateral bilateral
  cooperation
• Regional projects involving e.g. ADB, IMF, World
  Bank, UNODC, Commonwealth Secretariat

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Meeting the Challenges

• Regional linkages to global initiatives
• Maintaining close links with the international
  community
• Keeping members up to date with international
  standards
• Participating in global standard setting
• Engaging in typologies research of methods and
  emerging trends eg APG has an ongoing
  Typologies Working Group and an Annual Typologies
  Workshops of money laundering experts
• Proposed Regional Workshop

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Useful websites

• For more information on AML/CFT visit
• APG - www.apgml.org
• FATF - www.fatf-gafi.org
• UNODC Global Programme Against Money Laundering
• - www.unodc.org/money_laundering.html
• The Egmont Group of FIUs
• - www.egmontgroup.org

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Useful sources for typologies information

• APG typologies reports
• http//www.apgml.org/content/typologies_repor
  ts.jsp
• FATF typologies reports
• http//www.fatf-gafi.org/
• Egmont Group of FIUs 100 Case Studies
• http//www.ncis.co.uk/fiu.asp
• International Narcotics Control Strategy Report
  (INCSR) 2005
• http//www.state.gov/g/inl/rls/nrcrpt/2005/

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• For more information contact the APG Secretariat
  via
• mail_at_apgml.org