New publication by Asian Development Bank, developed with WSBI-ESBG experts, folds in stakeholder feedback
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BRUSSELS, 20 April 2017 – The Asian Development Bank (ADB) recently published a new publication titled Handbook on Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) for Nonbank Financial Institutions (NBFI).
Written with the help of WSBI-ESBG experts and available on the the ADB website, the publication was created as part of a contract with a WSBI-ESBG contract with the ADB won after a competitive tender procedure. WSBI-ESBG experts since February 2015 have been implementing the ADB-funded project “Developing Anti-Money Laundering / Combating the Financing of Terrorism Approaches, Methodologies and Controls for Non-Bank Financial Institutions (NBFI)". The rationale for the project was to ensure that NBFIs improve their capacity to comply with AML/CFT requirements from the Financial Action Task Force, and the focus was on practitioners from countries in South and Southeast Asia.
Based on feedback received from some ADB clients on current AML/CFT practices at NBFIs and their needs in terms of training and assistance, a general handbook was drafted by three WSBI-ESBG experts and presented to practitioners during two one-week training sessions at ADB's headquarters in Manila during the first half of October 2015 (see photo above). Based on specific follow up feedback, a shortened version of the training course has been provided to NBFIs and their respective regulators and supervisors in Bhutan and Vietnam at the end of May.
Following workshop participant feedback, the handbook was subsequently adjusted and eventually finalized.
According to a brief description by the ADB, money laundering “is the process by which proceeds from a criminal activity are disguised to conceal their illicit origin. It has commonly been associated with drug trafficking where drug proceeds are laundered through the financial system or other means. It extends beyond drug trafficking – or drug money laundering – when proceeds of other criminal activities are laundered, such as from illegal arms sales and human trafficking.
“Terrorism financing…is the provision or collection of funds for the support, advancement or perpetration of acts of terrorism. Such funds can include legitimate funds."
Rough estimates from an United Nations Office on Drugs and Crime (UNODC) study on illicit funds from drug trafficking and organized crime points to money laundering activities valued at 3.6% of global GDP, with 2.7% (or US$1.6 trillion) being laundered. The much-referenced International Monetary Fund 1998 estimate of two and five percent of the world's gross domestic product, equivalent at the time to the value of the total economic output of Spain.
Financial institutions like savings and retail banks look at money laundering and terrorism financings as a risk on their reputation – a most precious asset. Unchecked money laundering at a financial institutions can hurt attitudes by customers, other financial intermediaries, regulatory authorities, governments and society as a whole. Inter-governmental body Financial Action Task Force (FATF) notes that this type of illicit behavior rewards corruption and crime, while successful money laundering damages the integrity of the entire society and undermines democracy and the rule of the law.
If money laundering and terrorist financing remain unchecked, it can entrench organized crime in an economy, dampening foreign direct investment, according to FATF. Sustainable economic development and a thriving business environment requires fighting money laundering and terrorist.
Parts of the training sessions and the Handbook are currently being converted into an interactive e-learning tool on ADB's website. Exercises and case studies are planned to be included in the tool – the first of its kind to be available on the ADB website. Testing of the various components is currently ongoing, and it is expected that the e-learning tool will be online in the course of June 2016.
>> Learn about WSBI training course on AML /CFT