Anti-money laundering

After the Russian invasion of Ukraine and the wide-reaching sanctions which ensued, many Western financial institutions began to de-risk Russian clients. Dealing with Russian clients, in many cases, has become expensive from a compliance point of view and toxic from the reputational side.

However, the de-risking of unsanctioned Russian individuals may have a significant impact on the fight against financial crime by potentially causing:

• an increase in the use of shadow/unregulated channels of moving money;
• a withdrawal of funds away from the European zone to sanctioned countries or non-cooperative jurisdictions;
• severe burdens on the investigation of financial crimes (especially in relation to Russian assets and investments) and on international cooperation in criminal matters;
• increased opportunities for enablers, such as unscrupulous lawyers and accountants, to take advantage of the situation.

This Policy Brief outlines the current situation and suggests how to better manage risk without having a negative impact on the fight against financial crime.

About this Policy Brief

The final recommendation of the Commission of Inquiry into Money Laundering in British Columbia (‘the Commission’) urged the government to legislate an unexplained wealth order (‘UWO’) as part of a wider approach to counter the prevalence of money laundering and proceeds of crime in the province.

This document analyses the feasibility of this recommendation. It:

• briefly explains the concept of unexplained wealth and how it can be targeted through legislative instruments;
• outlines the reasons for which the Commissioner proposed a UWO for British Columbia;
• explains how a UK-style UWO works and assess the probability that a mechanism of this kind would successfully recover unexplained wealth in British Columbia;
• addresses the constitutional issues that may arise if a UK-style UWO was introduced, as outlined by former Supreme Court Justice, the Honourable Thomas A. Cromwell C.C., in his annexed opinion to the report;
• explains other legislative options that target unexplained wealth (including those in Western Australia and Ireland) and assess their constitutional compatibility and potential effectiveness as compared to a UK-style UWO;
• explores the legal rights issues that may arise if either a UK-style UWO or a traditional UWO was introduced; and
• outlines the legislative safeguards that could be put in place to reduce the risk that any such mechanisms would negatively impact on established legal rights.

About and acknowledgements

This document has been prepared by experts working with the Basel Institute on Governance, an independent not-for-profit organisation dedicated to countering corruption and other financial crimes, and the Vancouver Anti-Corruption Institute, an organisation devoted to anti-corruption efforts and legislative change. The collaboration was facilitated by the International Academy of Financial Crime Litigators, an independent, non-partisan global centre that shapes and advances financial crime litigation practices for the future.

Open-access licence and citation

In February 2020, Uganda made a high-level political commitment to work with the Financial Action Task Force (FATF) and Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to strengthen the effectiveness of its anti-money laundering (AML) regime. Among other commitments, Uganda undertook to demonstrate that law enforcement agencies and judicial authorities apply the money laundering offence consistent with the identified risks.

Studies show that Uganda has high risks for cross-border movement of illegally obtained wildlife and wildlife products, both as a source and transit country. In addition, Uganda and the East African region in general have made some massive seizures of illegal wildlife products, which points to organised criminal activity. Notably, no money laundering prosecutions have to date arisen out of illegal wildlife trade (IWT) as a predicate offence in Uganda, Kenya and Tanzania.

This short Policy Brief provides an outline of how the AML framework (intelligence, investigations and prosecutions) can be utilised to help combat IWT and the corruption that facilitates it. The insights are drawn from the Ugandan context, but can be applied with appropriate adjustments to other jurisdictions seeking to strengthen efforts to combat IWT and related corruption/money laundering.

About this Policy Brief

This quick guide explains the role of national risk assessments in addressing money laundering and terrorist financing (ML/TF) risks.

It explains how national risk assessments are conducted, challenges in terms of methodology and data availability, and how well countries are doing at performing them.

NRAs are a critical element of the Financial Action Task Force (FATF) standards on ML/TF. They also provide data in special reports of the Basel AML Index.

About this Quick Guide