At least since the Financial Action Task Force (FATF) first published its Forty Recommendations, financial institutions in FATF-compliant jurisdictions have been required to implement preventive measures that require FIs to identify customers, establish client profiles, monitor for unusual transactions, review those transactions to see if there was suspicion that they involved the proceeds of crime and, if so, report the transaction to the authorities in the form of a suspicious transaction report (STR). When these requirements were first established, neither financial institutions nor their supervisors/regulators had much experience as to what in a client's profile and the client's patterns of transactions might indicate money laundering. However, based on an expanding knowledge of how criminals tend to launder their money, over time financial institutions have developed increasingly effective detection and reporting systems. By studying known examples of laundering, the FATF, FATF-Style Regional Bodies, and national competent authorities (especially financial intelligence units) have identified patterns or indicators of possible money laundering, and made them available to financial institutions as money laundering typologies. In addition, there has been some feedback from financial intelligence units and other competent authorities to financial institutions with respect to their anti-money laundering programs. Using these sources, financial institutions have been able to develop systems to help them determine which transactions carry a materially greater risk that laundering is involved.
Business Law, Banking Law, Terrorism
Place of Original Publication
Case Western Reserve Journal of International Law
Terrorism Financing Indicators
Gordon, Richard K., "Terrorism Financing Indicators for Financial Institutions in the United States" (2012). Faculty Publications. 577.