What is money laundering and terrorist financing?
In this article, we want to explain to you what is money laundering and terrorist financing? And how does it work?
What is the purpose of money laundering?
Money laundering involves the reuse of proceeds (money) of criminal origin to disguise their illegal origin.
- A primary offense
- Creating a legal entity
- Hiding a criminal activity
What are the stages of money laundering?
The stages of money laundering:
- Placement or injection of an account at the bank
- Dishonestly introduce dirty money to hide the origin of the crime.
- Then make purchases of bank securities, investment in real estate or legitimate acquisitions.
Stages of terrorist financing:
- Placement of assets in the financial system.
- Filling, hiding or transferring funds to several institutions to hide the origin.
- Distribution of funds to finance criminal or terrorist activities.
What is a primary offence?
Primary offences are when we talk about drug trafficking, kidnapping, pimping, theft.
Knowingly facilitating, by any means, the misrepresentation of the nature and origin, location, disposition, movement or ownership of criminal funds e.g. drug dealer
- knowingly assisting in the placement, concealment, disguise, transfer or conversion of criminal funds
- Acquire, hold, use criminal funds knowing at the time of receipt that they are derived from one or more primary offences
All professionals (bank, real estate, notary, lawyer)
The penalties are : fine from 1250 to 1,250,000 € or 1 to 5 years in prison recidivism following the law of November 12, 2004 as amended on (February 12, 2018) payment in cash for a maximum moment of 10,000 € professional obligations in AML. Circular AED N°764 of April 29, 2013 for real estate agents
What are the professional obligations of a real estate agent?
To detect on the identity of the customer, and if we notice that it is a customer at risk, we must make a declaration of suspicious operations.
What are the vigilance measures to be taken?
- Identification and authentication of the customer (from the 1st contact)
- Identification of the beneficial owner
- Name filtering with watch lists.
- Constant vigilance in the business relationship.
- An obligation to keep documentation
It is necessary to have information on its activities, its purpose, planned business, the economic origin of funds.
for natural persons → passport, photo+ signature, proof of recent residence
for legal persons → we need to do more verification
the status of the company, recent extract of RCS
the beneficial owner
the legal status of the legal entity
What is a PEP person?
It is politicians like (head of state, head of government, minister, ambassadors, officers, armed forces...) and it also concerns direct family members.
And so there are certain procedures to be put in place.
What steps should we take when we have a PEP client?
- Obtain authorization from a higher level of the hierarchy before carrying out a business relationship.
- Establish the origin of the assets, and the origin of the funds involved in the transaction.
As a precautionary measure, it is necessary to regularly update the client's data. Note that the retention of documents against money laundering is limited to 5 years, and for commercial documents, it is 10 years.