The Asia/Pacific Group on Money Laundering (APG) is the anti-money laundering/combating the financing of terrorism (AML/CFT) regional body for the Asia/Pacific.
The APG produces regional typologies reports on money laundering (ML) and terrorist financing (TF) techniques and trends to assist governments and other stakeholders, including companies, to better understand, prevent and mitigate these threats.
In its 2018 Yearly Typologies Report, the APG provides some insight into how it identifies ML/TF typologies, and highlights key trends in money laundering and terrorism financing throughout Asia-Pacific countries.
How does the APG identify typologies?
When a series of ML or TF arrangements are conducted in a similar manner or using the same methods, they are generally classified as a typology.
The APG undertakes typologies work in coordination with the Financial Action Task Force (FATF) and other partners in the global AML/CFT network, including joint projects on global priority areas.
Each year APG members and observers provide information on ML and TF cases, trends, research, regulatory action and international cooperation, which helps in identifying typologies. An example of this is the annual Joint Typologies and Capacity Building Workshop, which brings together AML/CFT practitioners from investigation and prosecution agencies, financial intelligence units (FIUs), regulators, customs authorities and other agencies.
Trends in Money Laundering and Terrorism Financing
A number of key trends in money laundering and terrorism financing have been identified through research on ML/TF methods conducted by APG members and observers.
Brunei Darussalam’s Financial Intelligence Unit (FIU) notes some trends in suspicious transaction reports (STRs):
- Involves personal, as opposed to company accounts.
- Account turnover is more than the expected income of the individual.
- Multiple inward/outward fund transfers with no clear purpose.
- Transactions of similar amounts.
- Involvement of online purchases or wire transfers.
The Japan Financial Intelligence Centre (JAFIC) Annual Report includes the following AML/CFT trends:
- Criminal proceeds largely linked to fraud crimes – e.g. fraudulent cash withdrawal, fraudulent receipt of welfare benefits, and fraud in relation to sale of concert tickets.
- Use of unregistered money lending businesses and loan-sharking.
- Illicit drug transactions facilitated through internet delivery services.
- Trade in share certificates which illegally manipulate the stock price on the market.
Macao, China’s Financial Intelligence Office (GIF) received the vast majority of STRs from the gaming sector. Common ML indicators in this sector were identified as casino chips conversion with no/minimal gambling activity, or on behalf of third parties.
New Zealand’s Financial Intelligence Unit has conducted several typologies reports, indicating the following trends:
- Facilitation of crime through virtual currencies.
- Misuse of stored value cards.
- Use of alternative money remittance methods to transfer funds offshore.
- Offshore online gambling websites being used by local drug distributors to launder funds.
The APG report particularly highlights the area of ‘cyber-laundering’ – the use of the internet to launder proceeds of crime or fund terrorist acts.
Internet-facilitated ML/TF poses a number of challenges for jurisdictions, including:
- Poor domestic coordination between authorities responsible for investigating cybercrime and ML/TF.
- Lack of legislation to combat cybercrime or elements of related technology changes.
- The need for increasing international law enforcement cooperation, as well as private sector cooperation, to ensure successful investigations.
ML/TF association with predicate offences
ML/TF has been associated with various predicate activities, based on case studies from a number of countries including Afghanistan, Bangladesh, China, Japan, Malaysia, Pakistan and Thailand.
Key predicate offences include:
- Supporting terrorist organisations.
- Smuggling of drugs.
- Smuggling of goods or cash.
- Terrorism financing and anti-government activities.
- Fraud – e.g. investment scams.
Other key Asia-Pacific money laundering trends
In addition to the trends identified by the APG, other key money laundering trends have been identified by various other groups and bodies.
Money Laundering through real estate
In Transparency International’s recent Doors Wide Open report, it highlights the increasing problem of money being laundered through real estate, especially in attractive markets such as Australia where there are insufficient rules and enforcement practices in place.
Criminals may be drawn to money laundering through real estate due to the fact that it is relatively uncomplicated and requires little expertise. Furthermore, real estate can be bought using cash, true ownership can be disguised, and property is a secure investment with good potential to increase in value.
AUSTRAC also produces an annual typologies and case studies report, and has identified a number of common methods of laundering money through real estate, including: use of third parties; use of loans and mortgages; manipulation of property values; structuring of cash deposits to buy real estate; rental income to legitimise illicit funds; purchase of real estate to facilitate other criminal activity; renovations and improvements to property; use of front companies, shell companies, trust and company structures; and the use of professional facilitators such as lawyers, accountants, real estate agents and financial advisers.
The Financial Action Task Force also recently highlighted some red flags to assist in identifying suspicious real estate transactions, as well as identifying the specific money laundering risk behind the real estate transaction to help perform a risk-based assessment and address the matter.
Money Laundering through foreign bribery
Foreign officials can be seen to present a ‘golden opportunity’ for money launderers. Not only does their prominent public position deflect suspicion about their financial dealings, but one also assumes that their dealings are legitimate. Their unique position of influence, trust and responsibility also places them in a position of singular corruptibility.
There are five main methods of laundering money through foreign officials: funnelling funds though a shell company or trust; through third parties; through professional facilitators; through international fund transfers; and through companies linked to the foreign official.
Cases of money laundering through foreign bribery by companies or individuals in the Asia-Pacific region mean that not only will the specific country´s laws apply, but international criminal law will come into play, for example crimes such as those found in the OECD Anti Bribery Convention will very likely be applicable.
Challenges that arise in such cases include the use of the mutual legal assistance to conduct international criminal investigations; the exchange of data across borders that poses a risk to an accused’s privacy; the use of Interpol Red Notices to immobilise a person under investigation; and an accused’s exposure to multiple investigations. In these kinds of cases it is essential that a comprehensive multipolar legal strategy is in place that ensures that a person’s human rights and legal interests are properly recognised across each of the jurisdictions where they may be exposed to severe penalties including prison and asset forfeiture.