Nuestra Empresa - ISA

Conceptualization

Money Laundering

  • Attempting to give the appearance of legality to illicit activities or transactions and funds related to these.
  • Acquire, safeguard, invest, transform, transport, keep or manage illicit assets. Legalize earnings obtained from illicit activities.

Financing of Terrorism

Provide, supply or collect funds deliberately and illegally, directly or indirectly, with the intent of using said funds, and knowing that they will be used totally or in part to commit any type of terrorist act or attempt.

Characteristics of Money Laundering

 
  • Money laundering is a crime committed through specific techniques. It is dynamic and there are always new ways evolving to commit this crime.
  • It is primarily practiced by organized criminal groups at the international and domestic levels.
  • Money laundering groups will try to assume profiles that avoid raising suspicion, attempting to show themselves as "ideal" third parties.
  • Accordingly, money launderers and terrorists seek other means to carry out their operations, such as using large, medium, and small enterprises from multiple sectors (the most vulnerable). They also look for new sectors and activities that are not regulated to carry out their operations.
  • This is a phenomenon of international dimensions.
  • There is a direct relationship between flaws in legal systems and engaging in money laundering and terrorism financing operations.

Stages of Money Laundering

 

To understand the money laundering problem and verify the way to detect, prevent, or avoid it, there needs to be clarity about the most common stages that can occur.

  • Placement: Money of illicit origin is inserted into the Financial System to hide its origin.
  • The riskiest phase for the criminal. In order to avoid suspicion, small amounts are handled (fractioning), creating currency exchange offices, gambling, front men, front companies (businesses), sale and purchase of goods, products and insurance, smurfing, etc.
  • Conversion or Diversification: Isolation cover to separate the source of the wealth by creating complex structures to hinder subsequent tracing. It is characterized by engagement in different operations: Stock exchange, trusts, and transfers.
  • Integration: The laundered resources (with apparent legitimacy) are placed in the formal economy. It is characterized by making different real estate, financial and industrial investments.

​Consequences

 

Money Laundering and Terrorism Financing could expose ISA and its companies to the following risks:

  • Reputational Risk: Disrepute, bad image, negative publicity (true or not) about the institution and its business practices, that can cause the loss of customers, a reduction in revenue, and legal proceedings.
  • Legal Risk: The possibility of loss incurred by an entity when it is sanctioned, fined, or obligated to compensate for damages resulting the from non-compliance or rules and regulations or contractual obligations.
  • Operating Risk: The possibility of losses incurred because of failures, flaws or inadequacies in the human resource, the processes, the technology or the infrastructure, or due to the occurrence of external events.
  • Risk of contagion: The possibility of loss suffered directly or indirectly by an entity because of the actions or experiences of an employee or associate. The employee or associate includes individuals or corporations that have the possibility of influencing the entity.