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Money Laundering

At the international level, the starting point for the development of anti-money laundering principles was the 'war on drugs', which culminated in the UN treaty criminalizing money laundering and establishing the range of topics for all further legal developments. The position changed dramatically in the 1990s with the expansion of money laundering with all serious crimes as predicate offences, including the abuse of power so that it has now become a tool in the repatriation of assets.

Soft law, that is, non-binding recommendations that are primarily addressed to governments and regulators rather than the industry itself, has developed in tandem with international law. The focus here has been on customer due diligence standards and detailed work has been produced by the Basel Committee on Banking Supervision, and the Financial Action Task Force. The original 'Forty Recommendations' of this latter body were revised to cover money laundering in relation to all serious crime and were revised further in 2003.

The Recommendations comprise the international standards for countries and require the implementation of: criminal laws, rules to prevent money laundering, supervisory rules on the financial and non-financial sectors and provisions for international co-operation. Following the terrorist attacks in the USA, this body extended its remit by addressing the problems of the financing of terrorism and developing recommendations specific to this problem.

The Financial Action Task Force has also exerted pressure on non-members through its work on non-co-operative countries and territories which defined criteria consistent with its Recommendations for jurisdictions defined as 'offshore centres'.

Recent international initiatives have shifted towards a risk based approach which takes greater account of the practical application of standards by the industry itself. The approach also distinguishes between obligations in the client acceptance procedure and ongoing monitoring.

Wolfsberg Principles