What’s New?

SEBI has introduced the Legal Entity Identifier (LEI) systemWhat is the purpose of an LEI in India?Why it’s important to renew LEIs in India?Why it’s important to fill in multiple contact details on your LEI application?Why transfer existing LEI to LEI Register India?GLEIF’s verifiable LEI issuer qualification programWhat are Child Entities and How do They Relate to Other Entities?Do I need an LEI when selling shares?Business Transparency: How to create an environment of trustAnti Money Laundering (AML) in Banking: Everything You Need to KnowKYC in Banking: Why it’s important and how to complyCorporate Structures Demystified: What you need to knowNews from RBI for BorrowersWhat is a parent company and how does it work?How long does it take to get an LEI?RBI demands borrowers with total exposure of ₹5 crore and above to obtain LEIWhat is beneficiary LEI? ISO 5009 – Identifying organizational rolesISO 17442 – Standard for LEI code structureESRB discusses the future of LEILegal Entity Identifier for Cross-border TransactionsLegal Entity Identifier (LEI) vs Permanent Account Number (PAN)Is LEI and CIN the same?Who is an LOU in the LEI dimension?LEIL vs LEI RegisterGMEI Utility vs LEI RegisterLapsed LEI – Why should you keep your LEI active?Who is an LEI Registration Agent?Are LEIs public?What is LEI transfer?Can an individual have an LEI?Who needs an LEI number?Do LEI numbers need to be renewed?Why is an LEI number required?How much does an LEI number cost?LEI Lookup – Fully dedicated LEI search websiteLEI RBIISIN to LEI mappingGLEIS | Global LEI SystemMiFID regulation | MiFID II LEIvLEIGLEIF | Global Legal Entity Identifier FoundationCompany Autocomplete by LEI RegisterOpen LEIEuropean Market Infrastructure Regulation | EMIRWhat is an LEI database?India LEI regulationsDocuments required for LEI registration – LEI requirement explainedLEI Full Form in BankingNo LEI Login Required with LEI RegisterHow to Download LEI CertificateNew Legal Entity Identifier (LEI) Regulations for Insurers and LoanersLegal Entity Identifier India: Extension of March 31 2020 deadlineLegal Entity Identifiers in CryptocurrencyLEI Entity Search for IndiaLegal Entity Identifiers in KYCDigital Identity Predictions for 2020The Future of Cybersecurity – DeloitteHow To Buy Shares in India for Beginners?Legal Entity Identifiers in Digital CertificatesBroad Adoption of LEIs Could Save The Global Banking Sector US $2-4 BillionLegal Entity Identifiers for Government EntitiesThe European Market Infrastructure Regulation (EMIR) and Legal Entity Identifiers (LEIs)The FCA Will Take Pragmatic Approach to Supervising Reporting on Brexit DayAdoption of LEI in Payment Messages by the Payments Market Practice Group (PMPG)RegTech London – Event SummaryRBI regulations for mandating Legal Entity Identifier in India (2019 extensions update)Cybersecurity in a NutshellWhat is LEI-Search?How to get an LEI in India?LEI Register and RapidLEI Announce Official Partnership

Anti Money Laundering (AML) in Banking: Everything You Need to Know

Money laundering is the process of disguising the origins of money that has been obtained illegally. Anti Money Laundering (AML) regulations are put in place to prevent banks and other financial institutions from being used to launder money. In this article, we will discuss AML in banking and how it affects financial institutions. We will also provide a detailed overview of the AML process and discuss some common AML compliance issues.

Introduction to Anti Money Laundering

Money laundering is the process of taking money that has been illegally obtained and hiding its origins so it will seem like a legitimate source. Anti-money laundering refers to when banks do their part in monitoring for suspicious activities, reporting them promptly with legal requirements intact – this helps fight against criminal activity.

An estimated 800 billion to 2 trillion dollars is laundered every year. That’s what prompted the establishment of Anti Money Laundering laws, making hiding money, corruption, and crime organizing more difficult. It’s a battle fought by regulators, compliance teams, and honest businesses worldwide.

Money launderers hide proceeds from illicit activities everywhere, from real estate, businesses, and casinos, to shell companies.

Anti Money Laundering (AML) compliance is important for banks because it helps to prevent them from being used to launder money. AML compliance requires banks to take measures to identify and report suspicious activity. Failure to comply with AML regulations can result in hefty fines, suspension of operations, or even jail time.

The process of money laundering

There are three stages of money laundering:

1. Placement – when dirty money enters a legitimate  financial system

2. Layering – using multiple complex transactions, in order to hide the source of the money

3. Integration – once the clean money returns to the criminal via legitimate sources

Whilst all the steps are required to be taken when the criminal is trying to clean their money, placement is the one that gives a great opportunity to stop the process. Since that stage has the closest connection to the crime, there’s a smaller chance that the true source of the funds has been diluted.

What are AML requirements for banks?

While each jurisdiction and industry will have different requirements, the Anti Money Laundering process typically includes the following steps:

Customer Identification and Due Diligence – Financial institutions must identify their customers and gather information about them. This process is known as customer due diligence.

Transaction Monitoring – Financial institutions must monitor their customers’ transactions for signs of suspicious activity.

Reporting Suspicious Activity – If a financial institution suspects that its customer is engaged in money laundering, it must file a suspicious activity report with the Financial Crimes Enforcement Network (FinCEN).

What are some common AML compliance issues?

AML compliance is often complex and ever-changing. Approaching AML compliance as a core requirement helps to deliver a program that protects the organization’s community and its own reputation. Ensuring that your organization helps to prevent the facilitation of crime and corruption is absolutely fundamental to modern financial institutions. 

Common AML compliance issues include:

– Failure to complete customer due diligence

– Failure to identify and report suspicious activity

– Lack of policies and procedures

– Inadequate training of the staff

-Weaknesses in transaction monitoring

Banks and other financial institutions must take AML compliance seriously. If you have any questions about AML compliance, we encourage you to speak with a qualified attorney.

Anti Money Laundering regulations

With the rise of money laundering, lawmakers are closing loopholes and demanding higher standards. The process has become so prevalent that papers like The Panama Papers drive awareness of its pervasiveness even more than before.

The European Union is making it easier to hold employees and officials accountable for financial crimes. The 6AMLD has empowered citizens by giving them more authority when reporting possible wrongdoing, while also increasing penalties against those who break the law—including criminal liability! This new legislation will create a Pan-EU AML agency that strengthens requirements, closes loopholes in order to strengthen coordination between regulatory agencies throughout Europe as well provide better communication amongst each individual country’s own corresponding authorities.

In the U.S., regulations have evolved significantly from the first Bank Secrecy Act to the latest Corporate Transparency Act. An unveiling focus is on beneficial ownership, as complex layers of global shell companies and other legal structures make it difficult to determine who really owns a business.

Beneficial Owners

Beneficial owners are the individuals who directly or indirectly own/ control 25% or more of a corporation or an entity other than a corporation. In the case of a trust, they are the trustees, the known beneficiaries, and the settlors of the trust.

Legal Entity Identifier and AML

A Legal Entity Identifier (LEI) is a 20-character, alpha-numerical code based on ISO 17442 that links to reference information that identifies legal entities participating in financial transactions. It is a universal identifier that provides answers about the entity’s ownership structure, “who is who” and “who owns whom”.

The Global Legal Entity Identifier Foundation (GLEIF) also proposed the idea of ISO 5009 with the aim to bring clarity and structure to the information held in the two LEI-based digital tools.

The standard, ISO 5009, is used to verify the identity and position of individuals who represent an organization (like a business or company) and is intended for inclusion in current and future digital assets. This will be achieved through global uniformity of two kinds of digital assets under the Legal Entity Identifier (LEI) digital ID umbrella: verified LEI (vLEI) and digital certificates embedded with LEIs.

ISO says the 5009 standard can be used as an effective and universal way to authenticate people who act on behalf of organizations. This includes signing documents that need verification with absolute certainties, such as sensitive business deals, agreements between companies, etc.