ANTI MONEY LAUNDERING

Money Laundering is defined as “the process by which the proceeds of crime are converted into asset
including bank or other deposits so that they may be retained permanently or use the fund for further crime.
Money Laundering generally refers to ‘washing’ of the proceeds or profit generated from:
• Drug Trafficking
• People Smuggling
• Arms, antique, gold smuggling
• Prostitution rings
• Financial frauds
• Corruption, or
• Illegal sale of wild life products and other specified predicate offences.
International Anti-money Laundering Initiatives
• The United Nations
• G-7 (Presently G-8) Summit in Paris in 1989 established the Financial Action Task Force (FATF)
• The Basel Committee on Banking Supervision
• The International Organization of Securities Commissions
• The International Association of Insurance Supervisors
• G-7 (Presently G-8) Summit in Paris in 1989 established the Financial Action Task Force (FATF)
• 40 (forty) Recommendations on Money Laundering.
• 9 (nine) Special Recommendations on Terrorist Financing.
• Now 40 (forty) Recommendation for both ML & CF merging (40+9) recommendations since 2012.
• Monitoring Members Progress.
• Methodology for AML/CFT Assessments.
• List of Non-cooperative Countries and Territories (NCCT).
• The Basel Committee on Banking Supervision
– Prevention of Criminal use of Banking system for the purpose of Money Laundering (December,
1988)
– Core Principles for effective Banking Supervision (September, 1997)
– Core Principles Methodology (October, 1999)
– Customer Due Diligence (October, 2001)
Stages.

Landing Page:

Tweet

Factoring and Forfaiting

Factoring and Forfaiting:

1. Factoring is both domestic and foreign trade finance. Whereas forfaiting is only financing of foreign trade.

2. Factoring provides only 80% of the invoice. But 100% finance is provided in forfaiting.

3. In factoring, invoice is purchased belonging to the client. Whereas the export bill is purchased in forfaiting.

4. There is no letter of credit involved in factoring. But there is letter of credit involved in forfaiting.

5. Factoring may have recourse to seller in case of default by buyer. But there is no recourse to exporter in forfaiting.

6. Factoring does not provide scope for discounting in the market as only 80% is financed. But forfaiting provides scope for discounting the bill in the market due to 100% finance.

7. Factoring may be financing a series of sales involving bulk trading. Only a single shipment is financed under forfaiting.

Tweet

Deferred Payment and Acceptance

Deferred Payment

 In this situation, payment is made to a buyer at a specified or determinable future date stipulated in the letter of credit or documentary collection, providing that the documents are found to be in order. An example is 60 days after date of transport document or invoice date. No draft is called for under this type of payment. It is important to remember that a buyer will have credit/collateral/cash tied up until payment is made; and if a deferred payment is made through a letter of credit, it is guaranteed to a seller just as if it were made immediately. The risk increases for a seller if the remitting bank is located in a risky country.

Acceptance

The payment type known as an acceptance is similar to a deferred payment. In this case, however, a "term" or "usance" draft is presented together to a stipulated bank along with the other required documents. Once the documents and draft are accepted, then the draft will be drawn on and payable at a future date as stipulated in the letter of credit. For example 30 days' sight would mean payment will be made to the seller 30 days after "sight" (the remitting bank has looked at, reviewed and accepted) of the documents.

Tweet