Submitted to                          Presented by

    Ms. Sabina Sudhan     Suraparaju Deepthi
                                                   Kartikay Bansal
                                                           Aditya sai 
                              
This Photo by Unknown author is licensed under CC BY.                         
 Content
• Defining Anti-Money Laundering
• Different stages in Money Laundering
• Introduction
• The money laundering scandal(standard chartered)
• Stakeholders
• Stakeholder mapping
• Impacts
• Strategies
• An ethical case study(Infosys)
•
Anti- money laundering
• Money laundering is the process of converting illegally earned money into legitimate money.

• In India, money laundering is popularly known as Hawala. It is an informal method of transferring

money without any physical money actually moving.
Drug trafficking

Human trafficking

Terrorist funding
Sources to
launder
Gambling money
Stages in Money laundering

Placement Layering Integration

• Illegal proceeds • Separates the • Creating a
from illicit proceeds from legitimate
activities are their criminal explanation for
placed into origin by moving their sources of
financial the money funds, which
systems. through a series allows them to
of financial acquire goods or
transactions. assets.
CONTD.,
Prevention of money laundering-
Global initiatives
Initiative Year
The Vienna Convention 1988
The Council of Europe Convention 1990
Basle committee’s statement of principles 1998

The Financial Action Task Force (FATF) 1989

United Nations Global Programmes against 1997
Money Laundering
The Financial Conduct Authority (FCA) 2013

The Bank Secrecy Act (BSA) 1970

Prevention of money laundering –
Indian initiatives 
Initiative Year

The Income Tax Act 1961

The Conservation of Foreign Exchange and Prevention of Smuggling Activities 1974

Act (COFEPOSA)

The Smugglers and Foreign Exchange Manipulators Act (SAFEMA) 1976

The Narcotic Drugs and Psychotropic Substances Act (NDPSA) 1985

The Benami Transactions (Prohibition) Act 1988

The Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988
Act 
The foreign Exchange Management Act (FEMA) 2000

Prevention of Money Laundering Act (PMLA) 2002

Prevention of Money laundering Act,
2002
• In 2002, the parliament of India passed this Act and its main objective is to prevent money-
laundering.

• As well as to provide confiscation of property either derived from or involved in, money-
laundering.

• The provisions of this act are frequently reviewed and has been amended in 2005, 2009 and
recently in 2012.
Key provisions and
punishments of PML Act
Banks must record all
transactions over 10 lakhs These has to be reported to
and must make cash the ED and IT department
Key Provisions of PML Act
transaction reports(CTR’s) within 7 days of the
and Suspicious Transactions transaction happened.
of over 10 lakhs.

Any person found guilty of

In extreme cases, the
Punishments for Money money-laundering shall be
imprisonment can be
Laundering punishable with rigorous
extended to ten years.
imprisonment from 3-7 years.
Introduction

• Standard Chartered plc is a British multinational banking and financial services  company

with headquarters  in London, England. 
• It is an universal bank  which offers operations in credit cards, investment banking, consumer
banking, corporate banking, mortgage loans, private banking ,wealth management.
•  90% of its profits come from Asia, Africa and the Middle East.
• Key financial data
• Revenue- 14.74 billion$
• Operating income-1.613 billion$
• Net income- 0.741 billion $
• Total assets -789.050 billion$
• Total equity- 45.886 billion$
The case
• Standard chartered bank(SCB) has been found  guilty of violating sanctions on ran and other us
sanctioned countries and also is found guilty on money laundering charges 
SCB Dubai processed U.S. currency transactions to or through the bank’s branch office in New York
and other U.S. financial institutions on behalf of customers physically located or based in Iran.
• The bank worked with three Iranian banks who are accused of funding terrorist activities in the
middle east
• It was asked to pay 1.1 billion dollars to us authorities and separate 102 million ponds fine to FCA
Key facts  

• SCB comprises a network of more than 1,700 branches and outlets in 68 markets.
• UK firms are required by the ML Regulations to establish and maintain appropriate and risk sensitive
policies and procedures in order to minimize the risk of their being used by those seeking to launder
the proceeds of crime, evade financial sanctions, or finance terrorism.
• These financial crime controls were particularly important for SCB as: 
• a. SCB operates extensively in major financial hubs which, from the scale, volume and values of the
business conducted, and/or the geographical location of those hubs, might present a higher risk of
financial crime;
•  b. SCB broad offering of products and services includes those which could present a higher risk of
financial crime, such as Correspondent Banking; 
•  c. it operates on a global basis.
•  a. SCB’s UK AML controls form the basis for the controls to be applied in its nonEEA branches
and subsidiaries; and also  responsible  for its  fairness 
AML  regulatory obligations
• Customer due diligence(CDD), enhanced due diligence(EDD) and ongoing monitoring
are measures designed to reduce the risk that a firm should be used by those seeking to launder
the proceeds of crime, finance terrorism or evade financial sanctions.
• If a firm has assessed that the business relationship with the customer presents, by its nature, a
higher risk of money laundering or terrorist financing, it must conduct EDD and increase its 
monitoring
• Firms also have an obligation to require their subsidiaries to apply CDD,EDD and ongoing
monitoring to follow ML regulations set out
•  Proper AML controls of the Respondent to prevent the underlying parties from gaining access to
the UK financial system for the purposes of money laundering or terrorist financing as there is a
high risk present due to correspondent banking
Deficiencies in SCB’s AML controls
• Deficiencies in ongoing monitoring
• Ongoing monitoring in UAE was complete failure especially as the trigger mechanisms in place was
repeatedly ignored , which can be particularly noted in the case of Iran addendum
• Weaknesses in the escalation of AML risks in SCB's UAE branches
• Failure of various lines of defense
• the KCSA check i focused on administrative checks and was inadequate to test the quality of the
Due Diligence.
• Financial Crime Risk played a key role in SCB’s second line of defense. However, particularly in the
early part of the Relevant Period, the quality and quantity of resource in this area was inadequate.
• Inadequate response to warnings about small and medium enterprise CDD
• Inadequate response to Rejected Transactions
Deficiencies in SCB’s AML controls
• Deficiencies in  due diligence
• SCB failed to ensure the AML controls which it required its UAE branches to apply were at least equivalent to
those required of a UK firm and also the quality and effectiveness of the due diligence conducted was varied
•  Despite SCB’s internal compliance and monitoring functions warned about this lack of quality especially in its
UAE branch where  they warned about inadequate nature of customer information
• Failure to establish and assess source of funds especially fund possessed huge risks  especially in case of a
politically exposed person, scb's own internal study  indicated that in over 33 % of cases  sources of funds
could not be traced  just due to bad quality due diligence
• EDD implementation failures in relation to Iranian nationals SCB dealt with Iranian nationals, as long as those
customers were resident outside Iran and did not carry out business with/from Iran on their SCB account.
• To manage this, they developed the the Iran Addendum. This was a major failure as bank was overwhelmed
and could not obtain proof of residency
• Improper implementation of Group Introduction Certificates(gic)
 impacts 
• Financial impacts
• 1.1 billion dollars in penalties to us authorities
• 102 million pounds in penalties to fca
• Reputation impacts
• Loss of customer trust
• PR damage
• Ethical impacts
• The money laundered through its system is suspected to  be use for terror financing
• money laundered is also suspected to be tunneled into  Iran's nuclear program
• This has further disrupted the peace in the middle east
Strategies to avoid further failures
• SCB is continuously working with the Authority as well as other regulators in various jurisdictions in
which it operates to improve its AML controls. 
•  SCB is instituting a range of measures designed to improve its governance structure and oversight
of its non-EEA branches and subsidiaries.
• Constant update of due diligence and  investing heavily to improve the quality of due diligence
• SCB has significantly increased the resource dedicated to managing financial crime risk and
employee numbers have quadrupled , along with major upper management changes
• SCB has introduced new quality assurance checks to replace and/or supplement KCSAs; 
•  Scb has introduced new committees to improve oversight of SCB’s Correspondent Banking
business, including a Correspondent Banking Working Committee and Correspondent Banking
Oversight Committee;
Ethical Company - Infosys
• Infosys, has been recognized as one of the best ethical company by the
Ethisphere institute  on the basis of major criteria like the Ethics and
Compliance Program of the company and Culture of Ethics in the
workplace. It also considers the leadership and reputation of the
company worldwide.
• Know your customer (KYC) and Anti-Money Laundering have emerged as
a leading concerns for financial institutions. 
• In recent times banks have faced huge penalties due to lenient customer
on-boarding norms.
• Key challenges in AML process include high handling time to conduct
investigations, multiple downstream systems, data quality, high false
positives and lack of skilled resources to conduct investigations.
 Anti-Money Laundering services by
Infosys BPM
• Infosys BPM, the business process management subsidiary of Infosys
which was set up in April 2002, provides AML services which
includes integrated outsourcing and transformation services.

•  Their AML practice has domain experts delivering 24 x 7 global

coverage for multiple clients by bringing industry best practices, by
applying proprietary Process Progression ModelTM (PPM) framework
and help organizations to transform operating models, improve business
performance, and standardize processes with reduced costs.

•  Rated as Leader in IDC Marketscape in Business Process Outsourcing -

KYC/AML.
 Contd.,
AML Services offered by Infosys BPM -
Ø Transaction Monitoring
Ø Watch list filtering of a politically exposed person(PEP), adverse news
and sanctions.
Ø Sanctions screening of payment investigation in real time
Ø Remediation support

AML Alert Workbench and Risk Profiling Agent for Screening Disposition. It consists
of -
 A dedicated compliance CoE focusing on best practices, monitoring regulations,
metrics/benchmarks, knowledge management, training, and partnerships.
 An on-demand e-Learning modules with certification accessible anytime from
anywhere.

      
Strategies adopted by Infosys BPM to
tackle Money Laundering
• Reduction of false positives in the AML process
• Detecting the change in customer behavior
• Analysis of unstructured data and external data

In addition, AML practices delivers benefits to banks by:

 Reducing the handling time and improving the throughput per agent by
30–40% with improved controls.
 Reducing the total cost of ownership with an assurance to bring down
overall AML operations cost by 50–70%.
 Reducing false positives by up to 40% through operational and
technological initiatives.
 References
• Introduction-and-Overview-of-PMLA.pdf
• 4.1. Paper- Money Laundering_1_ Paridhi Saxena.pdf
• https://sanctionscanner.com/blog/what-are-the-aml-regulations-10
• Anti-Money Laundering – BPM in Financial Services | Infosys BPM
• Infosys, Tata Steel, and Wipro India's Most Ethical Companies: Ethisph
ere Study - Next Big Brand