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Digest Finance
 

Techniques for implementing anti-money laundering procedures

Vol. 21, Iss. 1, MARCH 2016

Received: 5 July 2015

Accepted: 15 July 2015

Available online: 18 March 2016

Subject Heading: MONETARY SYSTEM AND CURRENCY CIRCULATION

JEL Classification: 

Pages: 39-46

Berezansky V.V. Ernst & Young, Moscow, Russian Federation
Vladimir.Berezansky@ru.ey.com

Chaldaeva L.A. Financial University under Government of Russian Federation, Moscow, Russian Federation
Chaldaeva45@mail.ru

Kilyachkov A.A. Ernst & Young, Moscow, Russian Federation
Anatoly.Kilyachkov@ru.ey.com

Manipulating the banking system for purposes of money laundering is a relatively new phenomenon. This problem was first identified in 1986 in the United States, when it was classified as a criminal offense. In Russia, anti-money laundering measures are regulated with Federal Law No.115-FZ On Counteracting Money Laundering and the Financing of Terrorism (7August2001, asamended). Given the high-speed, digitized nature of banking transactions, the technology for countering money laundering should be no less sophisticated; and the speed of detecting suspicious transactions should be commensurate with that of the underlying bank transactions. The Central Bank of Russia is now highly experienced in identifying mechanisms and schemes for money laundering. Reviewing the typology of the Central Bank of Russia for suspicious transactions, we have categorized them as follows: multi-parameter, complex, dynamic and multivariate. In order to construct an algorithm for detecting suspicious transactions, it is important to adhere to a correct sequencing (hierarchy) of operations. We also propose to supplement the principle of algorithmic hierarchy with a taxonomical approach. Adapting our proposed taxonomic approach to formulating a typology of parameters characterizing suspicious transactions, in combination with the principle of hierarchical analysis, will create an effective and efficient algorithm for identifying suspicious money laundering transactions.

Keywords: anti-money laundering, banking transactions, suspicious transactions, principle of algorithmic hierarchy, taxonomical approach

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