Emergence of international anti-money laundering and counter-terrorist financing regulations

The rise of international anti-money laundering and counter-terrorism financing regulations. The last 50 years and the rise of international AML and CTF regulations are essentially the story of transitional crime. In the early 1980s, when Colombian drug cartels, including Pablo Escobar, began their massive cocaine distribution, no one could have imagined the amount of money they would receive from their operations.

In the early days of the cocaine trade, some of the money was flown back to Colombia on the same planes that transported the cocaine. This money was converted into pesos at willing Colombian banks or kept on hand to cover operational costs. Beginning of the emergence of international regulations against money laundering and terrorist financing.

The rise of international anti-money laundering and counter-terrorist financing regulations

Soon, these criminals began to prefer bank accounts to keeping their criminal proceeds in cash. The advent of international regulations against money laundering and terrorist financing. In the early 1980s, they began moving huge amounts of cash into U.S. financial institutions. At the time, it was reportedly not only possible to deposit cash boxes into a bank, but banks also had rooms set up with counting machines. Some banks reportedly even assigned employees to help the drug dealers set up and fund their accounts.

In 1986, the Money Laundering Control Act was passed in the United States. This act declared money laundering a crime in itself. It made structuring to avoid reporting currency a criminal offense. So banks took it more seriously and became stricter with regard to money laundering laws.

In 1988, the United Nations signed a treaty in response to political and sociological developments in the 1970s and 1980s. The growing international demand for cannabis, cocaine and heroin led to an increase in illicit production in geographic areas worldwide.

With the increasing size of the illegal drug trade, the international drug trade became a multi-billion dollar business dominated by criminal groups, which formed the basis for the creation of a Convention and the significant escalation of the war on drugs. This 1988 United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances is one of the three most important drug control treaties currently in force. It was also the birth date of everything that came in the field of international AML/CTF regulation.

The pace of international anti-money laundering activity accelerated in 1989 when the Group of Seven countries established the Financial Action Task Force, or FATF, at its annual economic summit in Paris. FATF was intended to serve as a vanguard in communicating AML guidelines to government agencies around the world.

The task force was initially charged with studying money laundering trends, monitoring activities at the national and international levels, reporting on compliance, and issuing recommendations and standards to combat money laundering. Combating terrorist financing has been a priority for the FATF since 2001, following the catastrophic events in New York City known as 9/11.

Finally, it is important to recognize that the International Monetary Fund (IMF) and the World Bank also offer important perspectives for anti-money laundering and terrorist financing. Anything beyond that is usually based on a national level or a larger jurisdiction such as the European Union.

Can money laundering be stopped?

With estimated annual flows approaching 3% of global economic output, increasingly aggressive AML enforcement may only be aimed at curbing money laundering rather than eradicating it entirely. Money launderers never seem to run out of money or accomplices, despite the fact that AML regulations make their lives more difficult.

Final thoughts

The rise of international anti-money laundering and counter-terrorist financing regulations. AML regulations in the United States have evolved from the Bank Secrecy Act of 1970, which required banks to report cash deposits of more than $10,000, to a complex regulatory framework requiring financial institutions to conduct due diligence on customers and detect and report suspicious transactions. The European Union and other jurisdictions have taken similar steps.