Transnational organised crime generates around US$ 870 billion each year, according to the United Nations – a figure topping the GDP of a country like Turkey. This has a direct impact on many people’s lives, their security and their countries’ economic, social and political development. To counter this threat, the international community has established a set of legal measures and other requirements, along with a regime of international sanctions to enforce them.
Money is the main reason for almost any criminal activity and it is the fuel that keeps organised criminal and terrorist groups running. That’s why detecting and preventing money laundering and the financing of terrorism – in short, cutting criminals’ access to money – has been a main goal of the international effort to fight serious and organised crime.
Combating money laundering and terrorism financing
To support these efforts, the EBRD organised workshops on this theme in Tbilisi, Georgia on 4 to 6 June and in Dushanbe, Tajikistan on 10 to 12 June. More than 50 legal and compliance officers working for various financial institutions attended the event.
“Given its transition mandate and that the EBRD is a major investor in these countries, the Bank has an important role to play in ensuring proper standards to counter money laundering and terrorist financing,” explained John Mair, Senior Integrity and Compliance Manager.
To maximise the effect of its measures, the international community has turned its attention from regulation and setting policies towards seeking to ensure effectiveness of outcomes. Banks and companies therefore do not merely have to comply with legislation, but they need to deliver effective and proportionate results, in cooperation with the public sector.
Not only financial institutions, but also companies need to understand their legal obligations and the risks of potential sanctions and penalties, Mr Mair said. “No country has all these matters fully under control, and as such the EBRD seeks to help banks in its countries of operations, most especially those with smaller GDPs, with a tailored training programme. This is designed to enhance their ability to detect and prevent illegal flows, with a view to enhancing the possibilities for inward investment, and resulting broader benefits.”
Real scenarios and international sanctions
In Tbilisi and Dushanbe, local and overseas experts discussed, reviewed and promoted solutions to the challenges both relevant to those countries, and within a wider international context. A key benefit of the seminars is also the building of partnerships and trust between both private and public sector ‘players’.
Who are the customers – people and organisations – that are most likely to be involved in these financial crimes? How does one detect suspicious activities and transactions? And what steps does a financial institution have to take once they are detected?
These were only some of the important questions for which the workshops provided an answer. Participants learned about the importance of really “knowing your customer” (versus simply filling in checklists), and how to apply a risk-based approach as promoted by the Financial Action Task Force (FATF), an intergovernmental organisation that sets out major policies to fight financial crime globally and on which the EBRD is an observer member.
The seminar also explained the evolving sanctions regime and the relevant regulations by the UN, FATF, EU and the US and their international and extraterritorial effects. International sanctions have become increasingly complex over time and are not only imposed on specific people and organisations, but can be imposed on an entire economic activity in a geographical region or specific country, such as the Iranian oil, steel and shipping sectors.
“Train the trainer” to maximise impact
The event aimed at assisting business, risk and compliance officers in Georgia and Tajikistan in establishing and upgrading their organisations’ procedures and measures, Mr Mair explained.
“It also included ‘train-the-trainer’ sessions to maximise the workshop’s impact and to equip participants with the knowledge and skills necessary to implement the required international standards within their own institutions,” he added. “Of course what really matters is that this topic does not sit merely with risk managers, but that front line, customer-facing and operational staff really understand and deploy the most effective attitudes and approaches. This is not a laboratory exercise, it is a day-to-day requirement. ”
“This training was very important for commercial banks and other financial institutions operating in Tajikistan,” said Saidjon Urokov from Agroinvestbank. “Thanks to the workshop, we have acquired the necessary skills and knowledge to reduce risk and preserve the reputation of banks and protect the economy of our country.”
The current series of seminars is part of an EBRD initiative consisting of six workshops in Central Asia, the Western Balkans, the Caucasus, Ukraine, Romania and Bulgaria, for which the government of Luxembourg provided funding amounting to €450,000.
Since the early 2000s, the EBRD has organised more than 25 anti-money laundering seminars and trained over 600 participants from across its countries of operations.