Money laundering indicates the criminal and illegal processes by which the black money or funds from illegal activities enter into the financial system. Banks play the most critical role in avoiding the money laundering as laundered money is integrated into the economy corrupting the existing financial institutions.
Banks have been used as a means for laundering money since a long time as the customers often hide their source of income properly before investing the money in different banking products. Banks also fail to identify the money laundering cases. Banks can also prosecute their employees if they are involved in money laundering activities. Employees are also provided with adequate training in order to train them about different money laundering cases.
In order to stop money laundering, Central banks from different countries have introduced norms for record keeping, reporting, account opening and transaction monitoring to check the incidence of money laundering.
Anti Money Laundering (AML) is the range of regulations and procedures that have been designed to prevent money laundering. The key points are
All these steps are taken in order to reduce money laundering activities across the global in order to protect the financial system.