The concept of money laundering is very important to be understood for those working in the financial sector. It is a process by which dirty money is converted into clean money. The sources of the money in actual are criminal and the money is invested in a way that makes it look like clean money and hide the identity of the criminal part of the money earned.
While executing the financial transactions and establishing relationship with the new customers or maintaining existing customers the duty of adopting adequate measures lie on every one who is a part of the organization. The identification of such element in the beginning is easy to deal with instead realizing and encountering such situations later on in the transaction stage. The central bank in any country provides complete guides to AML and CFT to combat such activities. These polices when adopted and exercised by banks religiously provide enough security to the banks to deter such situations.
However if a bank encounters any such situation it encounters the following types of consequences:
Reputational risk
The major risk a bank faces when it finds itself caught in any sort of money laundering is reputational risk. The reputation of the bank goes negative and in turn it might face huge withdrawals. There might me loss of profitable business and many other liquidity issues. The quantum of this risk might cause a bank to confront various investigations costs and penalties. The biggest hurdle a bank has to undergo is the situation of mistrust by the customers which is devastating.
Operational risk
It is another one of the major consequences of money laundering which a financial institution faces. It is a kind of risk which lies in the internal procedures, people and system after they breakdown. It is a risk which is included in the operations of the business. Thus it creates disturbance in the smooth functioning of the organization.
Legal risk
Legal risks are also posed to the organizations due to the uncertainties in the legal actions which might come up for the organization to deal with them. These might include certain charges on the bank, the dealing between the money launderer and the bank etc.
Concentration Risk
This type of risks is majorly pertains to the banking industry and defines the probability to which any bank has lent money to a particular group. The increased lending without proper identification or the realization after encountering money laundering act may cause a bank to suffer loan losses which in turns deteriorate banks standing in the industry.
Opportunity Cost
One of the major consequences a bank faces is the increase in opportunity cost. It is increased in a way that the management finds itself spending its time in managing the damage control which the act of money laundering has caused instead of utilizing that time for other better perspective.
A money laundering case has been register against dollar girl and has been sent to Adiala Jail on judicial remand for fourteen days. The local court rejected her appeal of bailment and kept her in the custody for further investigation. However, in two days, Ayyan Ali annoyed the jail authorities through her attitude.
The dollar girl has the support of powerful politicians who are trying to safe her. The money which she was carrying with her did not belong to her. A renowned politician of renowned political party is behind this scandal and he is trying hard to get her out from this trouble, media reports.
Dollar girl Ayyan Ali has settled to Europe thinking to build career in music. She was leaving Islamabad to Dubai when she was arrested by the Airport Security Force on intelligence reports. Five million dollars carried by her is under the custody of custom authorities and will be given back to model if she is not found guilty.
Pakistani Dollar girl Ayyan Ali Jail Story 16... by arraja73 Article Source: http://EzineArticles.com/8952590
While executing the financial transactions and establishing relationship with the new customers or maintaining existing customers the duty of adopting adequate measures lie on every one who is a part of the organization. The identification of such element in the beginning is easy to deal with instead realizing and encountering such situations later on in the transaction stage. The central bank in any country provides complete guides to AML and CFT to combat such activities. These polices when adopted and exercised by banks religiously provide enough security to the banks to deter such situations.
However if a bank encounters any such situation it encounters the following types of consequences:
Reputational risk
The major risk a bank faces when it finds itself caught in any sort of money laundering is reputational risk. The reputation of the bank goes negative and in turn it might face huge withdrawals. There might me loss of profitable business and many other liquidity issues. The quantum of this risk might cause a bank to confront various investigations costs and penalties. The biggest hurdle a bank has to undergo is the situation of mistrust by the customers which is devastating.
Operational risk
It is another one of the major consequences of money laundering which a financial institution faces. It is a kind of risk which lies in the internal procedures, people and system after they breakdown. It is a risk which is included in the operations of the business. Thus it creates disturbance in the smooth functioning of the organization.
Legal risk
Legal risks are also posed to the organizations due to the uncertainties in the legal actions which might come up for the organization to deal with them. These might include certain charges on the bank, the dealing between the money launderer and the bank etc.
Concentration Risk
This type of risks is majorly pertains to the banking industry and defines the probability to which any bank has lent money to a particular group. The increased lending without proper identification or the realization after encountering money laundering act may cause a bank to suffer loan losses which in turns deteriorate banks standing in the industry.
Opportunity Cost
One of the major consequences a bank faces is the increase in opportunity cost. It is increased in a way that the management finds itself spending its time in managing the damage control which the act of money laundering has caused instead of utilizing that time for other better perspective.
A money laundering case has been register against dollar girl and has been sent to Adiala Jail on judicial remand for fourteen days. The local court rejected her appeal of bailment and kept her in the custody for further investigation. However, in two days, Ayyan Ali annoyed the jail authorities through her attitude.
The dollar girl has the support of powerful politicians who are trying to safe her. The money which she was carrying with her did not belong to her. A renowned politician of renowned political party is behind this scandal and he is trying hard to get her out from this trouble, media reports.
Dollar girl Ayyan Ali has settled to Europe thinking to build career in music. She was leaving Islamabad to Dubai when she was arrested by the Airport Security Force on intelligence reports. Five million dollars carried by her is under the custody of custom authorities and will be given back to model if she is not found guilty.
Pakistani Dollar girl Ayyan Ali Jail Story 16... by arraja73 Article Source: http://EzineArticles.com/8952590
