TACC609: Measures to Inhibit Money Laundering in Financial Systems

This report examines measures to inhibit money laundering, a significant threat to the global economy. It begins by defining money laundering and its adverse impacts, highlighting a recent case involving the Commonwealth Bank of Australia (CBA) and the "cuckoo smurfing syndicate." The report details the bank's shortcomings, including relaxed KYC systems and the proliferation of money collection machines, which facilitated money laundering activities. It outlines various preventative measures taken by banks, such as mandatory staff training on anti-money laundering and counter-terrorism financing, strict adherence to legal and ethical obligations, reporting of large transactions to AUSTRAC, the formation of a cash management team, the implementation of a robust Know Your Customer (KYC) system, and regular independent reviews of internal control systems. The conclusion emphasizes the ongoing challenges of money laundering for financial institutions and the necessity of stringent compliance to protect against financial crimes and terrorism. The report references relevant academic sources to support its findings.

Running head: MEASURES TO INHIBIT MONEY LAUNDERING
Measures to Inhibit Money Laundering
Name of the Student
Name of the University
Author’s note

1MEASURES TO INHIBIT MONEY LAUNDERING
Introduction
Money laundering has become a real threat for the entire world. The term money
laundering means hiding of the source of money through various complex methods of the
banking transfers or commercial transactions. Money laundering is an act, which hampers the
economic growth and promote illegal activities. Various criminal activities in the world use
the method of money laundering and there by generate fund for their criminal activities. In
order to prevent the negative affect of money laundering the banks are taking various
initiatives (Nazri Zolkaflil & Omar 2016).
Recently a huge money laundering activity has been detected in Australia. The
Commonwealth bank of Australia found that the money laundering has been done in the
“cuckoo smurfing syndicate” system. The money launderers use multiple people to deposit
small amount of money in various branches and thereby try to hide the source of the money
and as the value of the money is small so it become difficult to detect the amount also by a
technique (Rose-Ackerman & Palifka 2018).
In order to prevent the occurrence of the money laundering activities the CBA now
decided to take some new initiatives. The basic mistake in this case that the bank has done is
that it give more relaxation to the customers when they open an account with the bank. The
bank’s KYC system have some loopholes, which become a major concern for the bank.
The opening of too many money collection machine has also given the scope to the
money launderers to take the advantage of depositing small amounts from various sources
and for that, it become impossible for the banks to determine the actual source of the money
(Vasquez 2017).
In order to prevent money laundering the banks has taken major steps some of these are
narrated below:

2MEASURES TO INHIBIT MONEY LAUNDERING
 Compulsory training to the staffs of the banks on the anti-money laundering and
counter terrorism financing act.
 Strict compliances related to all the legal regulatory and ethical obligations regarding
all the deposits and withdrawals made by customers.
 The staffs of the bank has to report over million transactions to AUSTRAC each year.
 A special cash management team has been formed by the bank to monitor all the
transactions that are done by the machines.
 A strong method of know your customer system has been developed to identify and
detect every customer of the bank properly. The transactions of very customers are
monitored on monthly basis (Gilmour 2016).
 The bank will made regular independent reviews to examine the design and the
operational effectiveness of the internal control system.
Conclusion
Therefore, based on the above discussion it can be concluded that money laundering
is going to be a real challenge for the financial institutions in the future. The money
laundering is required to be prevented to stop terrorism activities that causes harm to the
entire world. The banks are required to impose strict compliances in there system in order to
protect the entire world from the negative affect of money laundering.

3MEASURES TO INHIBIT MONEY LAUNDERING
Reference
Gilmour, N. (2016). Understanding the practices behind money laundering–A rational choice
interpretation. International Journal of Law, Crime and Justice, 44, 1-13.
Nazri, S. N. F. S. M., Zolkaflil, S., & Omar, N. (2016). The Effectiveness of the Law
Enforcement Agencies in Investigating Money Laundering Cases: An Evaluation of
Mutual Evaluation Report of Malaysia and Australia.
Rose-Ackerman, S., & Palifka, B. J. (2018). Corruption, Organized Crime, and Money
Laundering. In Institutions, Governance and the Control of Corruption (pp. 75-111).
Palgrave Macmillan, Cham.
Vasquez, D. R. (2017). THE GLOBAL ANTI-MONEY LAUNDERING REGIME: AN
ASSESSMENT OF EFFECTIVENESS.