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The money laundering prevention system. A system based on trust

"The System for the prevention of money laundering and financing of terrorism is based on the collaboration of the entities obliged to prevent with the competent public bodies."

On September 1, 2020, the United States Intelligence Unit, -Financial Crimes Enforcement Network (FinCEN-) issued a statement in which it alerted that several media outlets had the intention of publishing the information, obtained illegally, contained in suspicious communications sent to this body by entities obliged to prevent money laundering. This body recalled that the dissemination of this information constituted a crime and that it seriously endangered national security.

Publication began on September 20. In these communications, as described in the first article, information is collected that could be related to money laundering, terrorist financing or other crimes, and that is used by the competent public bodies to initiate or enrich investigations and that by themselves they do not contain probative force of any crime.

The System for the prevention of money laundering and financing of terrorism is based on the collaboration of the entities obliged to prevent it with the competent public bodies. This System has been in place around the world since the FATF 40 Recommendations were published in 1990 and have been endorsed by more than 200 countries. Today they constitute international standards in the fight against money laundering and terrorist financing. In this System it is essential to protect the identity of the person communicating.

Without the intention of being exhaustive, and with the intention of outlining the structure of the system for the prevention of money laundering and financing of terrorism, its essential elements are set out below.

The preventive system implies the commitment of financial entities and many other non-financial entities: real estate agencies, jewelers, lawyers, notaries, registrars, casinos, art establishments ... not to put their activity at the service of those who try to hide the illicit origin of its funds or of financing terrorism.

Its objective is to reject clients with funds from criminal activities and transmit the information to public bodies, which will initiate, considering the relevant information, the corresponding investigation.

The money laundering prevention system. A system based on trust.

To achieve this, it is necessary for all entities to implement adequate control procedures. Only after the referral made by the Financial Intelligence Unit to the competent bodies, once they have analyzed and enriched the information received from private entities, could it be considered that said file contains indications or suspicions of a relationship with money laundering or financing of terrorism, indications that must be finally confirmed by the competent judicial body. That is, the information sent by the entities, by legal imperative, is only the raw material that must be filtered and processed to distill a suspicious operation.
In this information transmission system, the protection of the original source is essential: banks, real estate companies, securities companies, lawyers ... The information transmitted by these entities has the nature of intelligence information; it cannot, not even, be directly contributed to a judicial proceeding, as the first published article well describes.

If the source is not protected, the flow of information is cut off. If there is a violation of the protection of the information transmitted, the trust that sustains communication between the private sector and the public bodies in charge of the repression of criminal organizations would deteriorate.

The information contained in suspicious communications allows us to know information in which there is some risk variable such as the use of several accounts, the amount or nature of the operation; data not analyzed by the competent body.

In some cases, they will have, at the time, constituted the basis for judicialized operations and in other cases it will not be possible to deduce their relationship with any crime. That is, we will find already known information, unmanaged information or non-relevant information. of breaking withfideInitially, some companies and individuals would be identified as possible criminals as their transactions have been reported by the credit institution through which they operate. Entity that, would have transmitted the information to the competent body in compliance with its obligations, in case it could be deduced from the elements of risk that concurred in the operation, sufficient indications of being a crime.

The fight against criminal groups must be structured and coordinated: States cannot destroy “organized” groups of criminals without a common strategy. This "organization" is one of its strengths that we must emulate; We must trust in a System that, despite its weaknesses and aspects to be improved, is bearing fruit.

We must work to strengthen this System by correcting its weaknesses from within; otherwise, our efforts will not achieve the result that we all want.

Eduardo Muela Rodriguez

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The money laundering prevention system. A system based on trust

About the Blog

Blog Tribute Antonio Moreno

Blog Tribute Antonio Moreno

Blog tribute to Antonio Moreno Espejo, who was Director of Authorizations and Registrations, National Securities Market Commission (CNMV), co-director of the Financial Markets Forum of Fide and Member of the Academic Council of FIDE. This collective blog contains articles and reflections generated by people who regularly participate in the Financial Markets Forum of Fide.

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