An Overview on

Anti-Money Laundering
&
Combating Financing of Terrorism

Presented by
Md. Safiqul Islam
What is Money Laundering?
Money laundering is a process of economic
crime that refers to illegal acts committed by
an individual or a group of individuals to
obtain a financial or professional advantage.
In such cases the offender’s principal motive
is economic gain.
• In simple, Money Laundering may be described
as-
“turning of dirty or black money into clean or
white money”.
If the attempts can be undertaken successfully,
money laundering allows criminals to legitimize
“dirty” money by mingling it with “clean”
money, ultimately provides a legitimate cover
over the source of their income. Generally, the
act of conversion and concealment is
considered crucial to the laundering process.
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 Reasons for Vulnerability of NGO Sector

NGOs are vulnerable because they:

• Enjoy high levels of public trust and confidence;
• Often rely on goodwill and voluntary support;
• Are diverse in nature, providing a broad range of
activities and reaching all parts of society.
• Large numbers of people come into close contact
with charities, including those who may abuse
them, through their services, the use of their
property and through their trustees and
volunteers;
• Are relatively easy to set up;
 Reasons for Vulnerability of NGO Sector (Cont…)

• Often have complex financial operations including

multiple donors, investments and currencies;
• Often receiving and using cash, having to account for
high volumes of small scale transactions and using
informal money transfers;
• May have complex programs of operation and may
pass funds through intermediary partner organizations
to deliver their services;
• May have unpredictable and unusual income and
expenditure streams, so suspicious transactions may
be harder to identify;
 Ways of NGO Abuse: NGO fund

• Raised funds in the name of a NGO or charitable

purposes, used by the fundraisers for supporting
terrorist purposes
• International fund could be diverted before
reaching their intended recipients. A NGO might
be used to launder money, or
• Be used as a legitimate front for financial support
from one place to another if the NGO’s financial
controls are weak.
• The recipients themselves could misuse the funds
without proper due diligence checks.
 Ways of NGO Abuse: NGO assets

• NGO vehicles might be used to transport people,

cash, weapons or terrorist propaganda, or
• NGO premises used to store them or arrange
distribution.
• Individuals supporting terrorist activity may claim
to work for a NGO and trade on its good name
and legitimacy in order to gain access to a region
or community.
• The communications network of a NGO could be
exploited to allow terrorists to contact or meet
each other.
 Ways of NGO Abuse:
NGO name and status
• Terrorist activities may be hidden by or take
place alongside additional, and otherwise
legitimate, charitable activities.
• A NGO may give financial or other support to
an organization or partner that provides
legitimate aid and relief. If an alternative
purpose of an organization which distributes
food is to support terrorism, this is not a
legitimate charitable activity.
 Ways of NGO Abuse:
Abuse from within a NGO
• Those within a NGO may also abuse their position
within the NGO and the name of NGO itself for
terrorist purposes.
• People within a NGO may arrange for or allow NGO
premises to be used to promote terrorist activity.
• Trustees themselves may also be held accountable for
engaging in behavior or making inappropriate
comments for a similar purpose.
• Charities may invite speakers or use volunteers they
know to be likely to promote terrorism to influence the
NGO’s work.
 NGOs set up for illegal
or improper purposes
• In extreme cases, terrorists may try to set
up an organization as a sham, promoted
as charitable but whose sole purpose is
really to raise funds or use its facilities or
name to promote or coordinate
inappropriate and unlawful activities.
 Compliance requirements
under the Laws
NGOs/NPOs are reporting organizations
under-
-Money Laundering Prevention Act
(MLPA), 2012
&
-Anti-Terrorism Act (ATA), 2009
(Amended up to 2013)

14
 Compliance Requirements for NGOs
under Section 25 of MLPA, 2012

 Maintaining complete and correct

information of customers (i.e. KYC)
 Preservation of records of transactions for at
least 5(five) years after closure of the
relationship
 Providing information to BFIU on demand
 Submission of Suspicious Transaction Report
(STR) to BFIU
 Severe penalties for non-compliance
15
 Compliance Requirements
in Guidelines
Each NGO should:
1. have Policy/Guidelines for Prevention of ML/TF;
2. appoint a CAMLCO for AML/CFT related compliance;
3. preserve information and documents regarding
- goals, objectives and activities of the NGO
- key persons of the NGO and it’s partners
- audited financial statements
- employee screening in recruitment- identity, experience etc.
- identification information of beneficiaries
- detail information of partner NGO- goals, projects, income,
history etc.
- KYC for MFI’s customers.
 Compliance Requirements
in Guidelines
4. Transaction through Banking Channel:
- NGOs should conduct financial transactions through
banking channel,
- Only one bank account should maintain for receiving
donations/grants,
- Bank accounts operated only by joint signatories,
- Depositor/withdrawer from NGO bank A/C should be
ascertained.

5. Foreign Operations of NGOs:

- Should have bank account operations policy/rule for the
foreign branches of NGOs
Continued…
 Compliance Requirements
in Guidelines
- Aid send abroad must be restricted to NGOs that are
officially registered and well supervised,
- All cross border remittance through formal banking
channel complying all regulatory requirements,
- Preserve detail information of employees and activities of
foreign branches.
6. Fund Utilization
- NGOs should ensure utilization of fund as approved by
regulatory authority
- Conduct independent audit annually
- Follow generally accepted accounting principles
 Compliance Requirements
in Guidelines (Cont…)
7. Awareness on AML/CFT
- Arrange meeting on AML/CFT in every 3 months,
- Arrange training or send officers for training on
AML/CFT.
8. Restriction on Receiving Fund from Certain
Persons/Organizations/Country
- No fund received from person/organization listed
under specific UNSC Resolutions
- Enhanced Due Diligence (EDD) for receiving funds
from person/organization/country listed as High Risk
and Non-Cooperative Jurisdictions of FATF.
 Compliance Requirements
in Guidelines (Cont…)

9. Clearance for Foreign Donation

- Obtain clearance from appropriate authority for receiving
foreign aid/loan.
10. Reporting of STR/SAR
- Report suspicious ML/TF activity of NGO customers to BFIU
in Annexure-A form,
- Report suspicious ML/TF activity of NGOs to BFIU in
Annexure-B form.
11.Providing information & documents to BFIU on
request.
 Penalties for Non-compliance

• There are provisions of penalties for non-

compliance of relevant laws and instructions
of BFIU under MPLA, 2012 and ATA, 2009
?