Anti-Money Laundering & Terrorist Financing
Trust, integrity, and transparency are the most important pillars on which the bank builds its reputation with its clients and the parties it deals with. Therefore, Al Baraka Bank is working to implement the principles of combating money laundering and financing of terrorism, in accordance with local and international laws and standards, which are translated into our Bank’s policy that works on adapting all procedures for implementing banking services and products in line with the requirements of combating money laundering and terrorist financing. In addition to spreading awareness among the bank’s employees, and working according to the risk-based approach, starting with classification, and monitoring, and ending with evaluation.
What is Meant by Money Laundering?
The term money laundering means the operations of transferring money resulting from illegal operations or operations related to them to appear in their external form legally and legitimately. According to the definition of money laundering in the Anti-Money Laundering Law No. 80 of 2002 and its amendments, money laundering is defined as: “Every behavior that involves acquiring money, possessing, disposing of, managing, keeping, exchanging, depositing, guaranteeing, investing, transferring, or manipulating its value if it is obtained from one of the crimes stipulated in “Article 2” of this law with full knowledge of that. (Its amendments contained in Law No. 181 of 2008 issued on 06/22/2008). And when the intention of this behavior is to conceal the money, disguise its nature, source, location, owner or the right holder, or change its truth, or prevent the discovery of that or obstruct the identification of a person who committed the crime from which the money was obtained.”
Stages of the Money Laundering Process
Although the money laundering process is not limited to one form or method, the money laundering process in general and in most cases passes through three stages:
First stage: Placement
- At this stage, money launderers enter their illegal money into the financial system or banks. This may be done through the introduction of large quantities of this cash in smaller and multiple cash payments and its source is illegal activities and deposited in bank accounts or through the purchase of cash tools, Such as buying tourist or bank checks, foreign currencies, purchasing policies, insurance documents, gold, antiques, or any other high-value goods, reselling them and depositing the collected value. After the entry of these funds into the financial system, the second stage of laundering those funds begins.
Second stage: Layering
- At this stage, money launderers disguise the source of their money through many transfers, whether internal or external, in order to hide the original origin of these funds, and therefore the process of camouflaging illegal funds is carried out to be difficult or far from detection by those in charge of law enforcement. Funds through buying and selling investment tools or this may be done by transferring from accounts to other accounts in different banks locally and abroad. In other cases, money launderers carry out camouflaging operations by making transfers in the form of payment for goods or services, and this may be done under the guise of documentary credits, advance payments or documents for collections, and money launderers succeed in this especially in countries that do not have good systems, legislation, or laws. It is strict in the field of combating money laundering and does not cooperate with the international community in this field. If the money launderers succeeded in implementing the previous two stages, they would move to the third stage.
Third stage: Integration
- Where the money that has been laundered is reinjected again - as normal - sound money that acquires a legal appearance by investing or sharing these funds in a commercial, real estate or investment project whose legitimacy and legitimacy is known as the source of its funds so that it is difficult to separate the money obtained from an illegal source from the money obtained from a source project, and accordingly the illegal funds that have been laundered, mixed and integrated into the legitimate financial or economic system, appear to have arisen and are generated from the activities of a legal project.
What is Meant by Financing Terrorism?
Terrorist financing is the provision of financial support in any form, to terrorism or to those who encourage, plan, or involved in terrorism. Those involved in terrorist financing transfer funds that may or may not be illegal in origin in a way that conceals its source and eventual use, and this constitutes direct support for terrorism.
The techniques used in money laundering are essentially the same as those used in financing terrorism, and if the source can be hidden, it remains available for financing terrorist activity in the future. Similarly, it is important for terrorists to conceal the use of funds so that the financing activity is not discovered.