The International Monetary Fund, the World Bank and the United Nations

The IMF and the World Bank with the UN or the International Monetary Fund, the World Bank and the United Nations have a common goal of improving living conditions in their respective member countries.

Their approaches to achieving this common goal are complementary. The IMF focuses on macroeconomic and financial stability, while the World Bank focuses on long-term economic development and poverty reduction.

The IMF and the World Bank with UN goals

The World Bank focuses on long-term investment projects, institutional development, and social, environmental, and poverty issues. The IMF is concerned with the operation of the international monetary system and the promotion of sound macroeconomic policies as a prerequisite for long-term economic growth.

The World Bank, or World Bank Group, is an international organization affiliated with the United Nations (UN) that finances projects that help the economic development of member countries. The World Bank, headquartered in Washington, DC, is the largest source of financial aid to developing countries.

International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an intergovernmental organization consisting of 187 countries that aims to promote global monetary cooperation. Through its activities, the IMF also aims to facilitate international trade, ensure financial stability, increase employment, reduce poverty, and promote sustainable economic growth. Like the World Bank, the IMF was founded at Bretton Woods after the Great Depression, in an attempt to prevent a repeat of the financial calamity that had marked the previous decade. The founders envisioned the IMF as an institution that could manage national trade deficits to prevent devaluation, monitor the financial systems of participating states, and provide loans to stabilize exchange rates.

In response to increased international concern about criminal and terrorist groups using legitimate financial institutions to move and store assets, the IMF has expanded its work to include countering AML/CFT. The IMF defines terrorist financing as “the financial support, in whatever form, of terrorism or those who encourage, plan or participate in it.”

According to the IMF, the organization is particularly interested in addressing these issues because of the potential negative impact of terrorist financing and money laundering on the financial systems of member countries. These illicit activities can undermine the integrity and stability of financial institutions and systems, discourage foreign investment and disrupt international capital flows.

Before 2001, the IMF’s counterterrorism work focused primarily on anti-money laundering operations. In 2000, the Fund developed a module for the Anti-Money Laundering Report on Standards and Codes and expanded its work in the area of ​​countering money laundering.

IMF pointed out that there are difficulties and potential dangers in applying international standards to all domestic situations, without taking into account the circumstances and legal systems within the respective countries. In systems that do not have the supervisory capacity to monitor these regulations or in countries experiencing conflicts, it may be difficult to enforce these regulations.

Furthermore, the necessity of these informal systems must be taken into account, as they often provide financial services to the poor for whom the formal banking system can be prohibitively expensive. Therefore, the IMF has sought to work with national governments to be flexible in their compliance with unregulated banking systems to avoid depleting societies of an essential component of survival.

World Bank

In countries where a conventional banking system also exists alongside an unregulated banking system, called hawala, the World Bank is working to register traders and maintain records, in order to minimize abuse of these systems by terrorists and other actors.

The Financial Integrity Unit helps countries build capacity to pursue the ‘dirty money’ that flows through the global financial system, which represents a significant cost to national security, economic opportunity and the rule of law in developing countries. As criminals gain new opportunities to move money across borders without detection, we work to strengthen the capacity of societies to detect, prosecute and prevent such movements in the future, and to return official funds stolen through corruption to public coffers.

The Financial Integrity team provides client countries with tools to increase transparency, and to prevent and prosecute illicit financial flows (IFF) to strengthen the integrity of the financial system. Our technical assistance in anti-money laundering/countering the financing of terrorism (AML/CFT) provides innovative options to combat crime and address the intersections of IFF and development, including human security, corruption, financial inclusion, and ease of doing business.

The World Bank supports countries by:

• Supporting assessments of the risks and impacts of money laundering and terrorist financing in their jurisdictions
• Implement a risk-based approach to AML/CFT based on the above assessment and develop countermeasures
• Assessing the effectiveness of laws, regulations and institutional frameworks and recommending improvements
• Build capacity for systematic data collection on proceeds of crime and related financial flows
• Building the capacity of financial sector supervisors for risk-based and effective supervision of financial sector AML/CFT controls
• Building the investigative capacity of investigators, prosecutors and judges in money laundering and terrorism cases, including with regard to international information exchange
• Promoting financial inclusion by simplifying customer due diligence and AML/CFT requirements in low-risk financial products and services, where applicable

United Nations (UN)

The United Nations Global Programme against Money Laundering (GPML), part of the United Nations Office on Drugs and Crime (UNODC), was established in 1997 to assist Member States in complying with UN conventions and other instruments relating to money laundering and terrorist financing.

The GPML assists Member States to:

• introduce anti-money laundering legislation
• develop and maintain strategies to combat money laundering
• stimulate the development of AML policies
• raising public awareness of money laundering, and
• acting as coordinator of joint AML initiatives of the UN and other international organizations.

In collaboration with the Legal Advisory Division of the United Nations Drug Control Programme (UNDCP), the GPML has developed model laws for both common law and civil law legal systems. These laws assist countries in designing their anti-money laundering legislation in full compliance with international anti-money laundering legal instruments.

The UN Conventions

Several UN conventions and other instruments have been developed over the past two decades to address money laundering and terrorist financing. These now include:

• the United Nations Convention against Traffic in Narcotic Drugs and Psychotropic Substances (the Vienna Convention)
• the United Nations Convention against Transnational Organized Crime (the Palermo Convention)
• the United Nations Convention against Corruption (UNCAC)
  the United Nations Convention for the Suppression of the Financing of Terrorism

In the context of the UN’s efforts to prevent and combat terrorism, UNODC has an extensive programme of work on technical assistance in counter-terrorism. This is based on mandates recommended by the UN Commission on Crime Prevention and Criminal Justice and approved by the UN General Assembly. These mandates, implemented by the Terrorism Prevention Branch (TPB) of UNODC within the Division for Treaty Affairs (DTA), include the provision of technical assistance and advisory services to countries in their fight against terrorism.

As a result, UNODC’s operational activities focus on strengthening the legal regime against terrorism. This includes providing legislative assistance to enable countries to become parties to and implement the universal anti-terrorism conventions and protocols and Security Council Resolution 1373 (2001).

UNODC aims to assist Member States in their fight against illicit drugs, crime and terrorism. It is also determined to intensify efforts to combat transnational crime in all its manifestations, to increase efforts to implement the commitment to tackle the global drug problem and to take joint action against international terrorism.

The three main objectives of UNODC are:

• carrying out technical cooperation projects in the field to enhance the capacity of Member States to counter illicit drugs, crime and terrorism
• Conduct research and analysis to increase knowledge and understanding of drug and crime issues and expand the evidence base for policy and operational decisions.

Final thoughts

The primary purpose of the IMF is to maintain the stability of the international monetary system, which is the system of exchange rates and international payments that allows countries and their citizens to do business with each other. It does this by monitoring the global economy and the economies of its members, providing loans to countries experiencing balance-of-payments problems, and providing practical assistance to members.

The World Bank Group is a major source of financing and expertise for developing countries around the world. Its five institutions are all dedicated to reducing poverty, increasing shared prosperity, and promoting long-term development. Specialized agency of the United Nations established in 1944 at the Bretton Woods Conference to ensure international monetary cooperation, stabilize exchange rates, and enhance international liquidity.