Upon an invitation by Cairo University, Abu-Ghazaleh Discusses Money Laundering

CAIRO --- March 5, 2009 --- Mr. Talal Abu-Ghazaleh, president of the Arab Society for Certified Accountants (ASCA), tackled in details the dangerous phenomenon of Money Laundering that has been spreading widely in the last few years.

Moderated by Dr. Abed Al-Aziz Shadi, head of the Terrorism Studies and Research Program at Cairo University, Mr. Abu-Ghazaleh , , said that ?money laundering is an action that involves transmitting, transferring or depositing funds accumulated through criminal activities or actions aimed at concealing or falsifying the nature of these funds in an attempt to claim that such funds are generated from legitimate sources.?

?Money launderers, usually, possess fair knowledge of national laws, regulations and rules, and they carry out various means to accomplish their unlawful acts such as the illegal currency smuggling of funds outside of a country, currency exchanges through various business transactions or bank involvement or financial institutions which are owned or controlled by suspicious individuals,? he added.

Mr. Abu-Ghazaleh stressed that money laundering has been a primary concern to a number of international organizations and legal jurisdictions adding that ?even if there are no statutory requirements concerning this issue, professional ethics and proper accounting practice become a necessity for accounting and auditing firms to have in place anti-money laundering procedures.?

It is worth mentioning that during his membership at the International Federation of Accountants (IFAC), International Accounting Standards Board (IASB) and the International Auditing and Assurance Standards Board (IAASB), Mr. Abu-Ghazaleh proposed the amendment of the auditing evidence name to be the ?International Auditing Standards?.

According to Mr. Abu-Ghazaleh, professional accountants and auditors should be familiar with the legal definition of money laundering and its related suspicious activities. In this respect, he explained that there are many sophisticated schemes and techniques that enable accountants and auditors in exposing and reporting money laundering acts.

Moreover, the lecturer emphasized that business entities must establish written procedures with respect to ?Know Your Customer? in order to be able to protect themselves as well as their employees from inadvertently assisting in money laundering.

?A new client must not be accepted unless verification takes place regarding who he claims to be whether the client is an individual, company, consortium or any other body,? he explained.

Mr. Abu-Ghazaleh pointed out that ?In 1989, after the convention of the economic summit in Paris, a group of seven industrial countries created a global money-laundering watchdog organization called the Financial Action Task Force (FATF), which has become the leading force in setting standards for fighting money laundering.?In 1990, FATF issued forty recommendations known as FATF 40 Recommendations in respect of the prevention of money laundering,? he said.

Concerning the efforts of the European Union (EU) in fighting money laundering, the ASCA President mentioned that the EU has adopted two directives to combat money laundering.

?The first directive restricts the use of financial systems in money laundering, and the second expands the reporting requirements by the non-financial business sector including auditors, external accountants, tax advisors and estate agents, in addition to dealers in high value goods,? he explained.

In 2005, the final text of the directive was published in the European Journal which focused on the requirements of customer due diligence and procedures conducted on risk sensitive basis.

Mr. Abu-Ghazaleh also shed light on the Basel Committee on Banking Supervision saying that ?in 1974, central bank governors in ten different countries founded the Basel Committee that enacted many disciplines in fighting money laundering.?

?In 1988, and because of significant abuse of the financial sector by money launderers, the Basel Committee issued the Basel Principles to hinder the money laundering process,? he continued.

Mr. Abu-Ghazaleh also highlighted the role of the United Nations in fighting this phenomenon, stating ?the United Nations Office on Drugs and Crime (UNODC) was mandated to help countries in carrying out enactment of anti-money laundering legislation to ensure that there were no flaws in international law.?

?The UNODC has established the Global Program against Money Laundering (GPML), focusing on training and supporting financial investigations and improving practitioners? tools,? he added.

Among other efforts, Mr. Abu-Ghazaleh mentioned that the International Monetary Fund (IMF) issued an announcement asking all members to fully comply with the UN?s instructions in countering terrorism.

?In 2002, the IMF and the World Bank started a program to assess the international standards established by the FATF, and in the same year, the Paris Convention issued an announcement against money laundering to support and improve the strategy set out in the second European Union Directive.?

One of the latest efforts done in respect of money laundering, according to Mr. Abu-Ghazaleh, was the Wolfsburg Group consisting of 12 global banks to produce and release anti-money laundering principles for private and correspondent banking.

At the end of the lecture, copies of ASCA?s ?Anti-Money Laundering? guide were distributed.