Banking: The Key Role Of The Banking System In The Banking System

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In the majority of developing countries, banking is the most important part of the financial system, facilitating domestic and international payments, functioning as the intermediary for depositors and borrowers, and providing financially related services. For this reason, the banking system is considered the main target of the majority of laundering operations. The key role of the banking system for the money laundering is undoubtful, given that banks provide services functioning as vehicle for the introduction of illicit money into the financial system. Money derived from illegal activities can be entered into the global financial structure by the use of bank bearer instrument, for example bank drafts, telegraphic transfers or the fragmentation of the entire amount of illicit…show more content…
However, the use banking system is remaining a technique chosen for the procedure of money laundering trying to exploit the vulnerabilities of the banking system structure and the “intelligence gaps”. As it is pointed out by FCA, systematic failings in banks’ anti-money laundering, and more specific, inadequate governance structures and oversight of anti-money laundering, inadequate risk assessment processes, inadequate or poorly calibrated IT systems, poor management of alerts from sanctions screening and transaction monitoring, poor identification of source of wealth and source of funds, inadequate risk management of foreign PEPs, inadequate due diligence on correspondent banks, questionable judgements leading to some firms accepting higher levels of money laundering risk, facilitate the money laundering

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