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Money Laundering and Corruption - Essay Example

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In the paper “Money Laundering and Corruption” the author focuses on money laundering, which is the techniques by which criminals conceal sources of money through illegal means in order to avoid any suspicion from law enforcers. Billions of money is laundered across the globe…
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Money Laundering and Corruption
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Download file to see previous pages The government and various financial institutions have made significant efforts of preventing and detecting and fraud issues. This is when making transactions issues that involve dirty money. Corruption is a moral impunity that involves embezzlement of funds and bribery issues. The government employs operational issues such as use of the FATF for investing corruption and conducting money laundering as well as asset tracing investigations. The Risks Posed By Money Laundering and Corruption to the Global Financial System and International Business Money laundry and corruption pose varied risks towards global financial system and international business. Laundering of money and corruption are interrelated because they both pose risks to customers and their products or transaction made and also impose risk to geographical risk factors in varied ways. There are many highlighted cases that have posed risks to many economies across the globe. Therefore, FATF has made considerable efforts of preventing money laundering and corruption. Therefore, their independent organization have implemented anti monetary laundry and combating terrorist financing activities in order to reduce the risks that may arise from these threats. Understanding risk posed by these threats is significant. This is because it enables the government to provide recommendation for a reporting entity to implement the risk management systems and assess the level of enhanced due diligence (EDD) in order to reduce risks. Customer Risk Factors Money laundry and corruption issues expose political people and other public official to risks. The measures employed in money laundry are intended to encourage entities to report risk sensitive issues existing in the entity or exposing politically persons to high-risk to customers. The politically exposed persons (PEPs) status does not reveal that a person is corrupt or incriminated for being corrupt, but it reveals the potential risks money laundering contribute to customers and their transaction process. The risk that corrupt PEP poses to the financial system is seen as one way of putting customers under risk especially when they are making transactions (Karsten 2003, p.15). Business relationships with PEPs contribute to increased customer risks because of increased possibility that an individual is holding. For instance, politicians may misuse authority by influencing their personal gain with an aim of achieving their own advantage. Moreover, the nature of the position may lead to customer risk factors. Someone holding a position in a certain office may have a substantial opportunity and authority of assessing the funds or assets of the state. He or she can take control over the government resources including setting money for combating terrorism issues and other activities; thus exposing customers to greater risks. For instance, the court case of Nicolau Dos Santos Neto, the ex-president of Brazil is one of the incidences that reveal the corruption nature of PEPs (FATF Report 2012, p.14). The actual corruption vulnerability may vary depending upon the extent to which they exercise authority in the hierarchy. It is significant to recognize that not all PEPs cause risks to customers. ...Download file to see next pagesRead More
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