All You Need to Know About TFS, Assets, and Funds in AML Strategies
Have you ever heard about Targeted Financial Sanctions? Well, the process of TFS is one of the essentials laid down to ensure peace and international security. Everything fulfils one motive, from freezing funds to restricting access to assets.
Money laundering is skyrocketing in every business vertical and financial institution. The unsatiated greed and yearning for more money have driven many people to commit financial fraud by implementing intelligent strategies. The money launderers today are getting so good at what they do that they have the means and power to barge through the security layers.
The regularity of money laundering cases has forced the authorities to implement the right set of AML solutions and software. In response to the increasing money laundering cases and expanding financial hole in the economy, many companies have developed effective AML software. Also, the government authorities felt it was high time to implement strict rules and regulations to avoid escalating financial breaches. One of the AML solutions was financial transaction monitoring. And honestly, it plays a huge role in the protection of funds. Apart from the software and solutions, some measures have been established to protect the seamless transfer of money for illicit activities.
Let us start with TFS.
What is TFS and Its Purpose?
The Anti-Money Laundering Council or AMLC has issued TFS or Targeted Financial Sanctions. The sanctions are related to the proliferation of weapons and mass destruction and proliferation. The purpose of TFS is to combat money laundering and terrorism financing.
The purpose of TFS is to restrict the groups, certain individuals, and entities the means to interrupt international peace and security. These individuals and groups are denied access to support terrorism or finance weapons proliferation for mass destruction. To ensure international peace and prevent violence, these entities are kept from drawing in funds or assets that can be a means to all illegal activities.
The FIs, DNFBPs, and VASPs must understand that TFS restrictions are subject to change. So, all the FIs, DNFBPs, and VASPs should ensure that relevant controls and processes are applied in place to maintain the updated controls so that the TFS restrictions can be effectively implemented.
Where to Look for the Updated Sanctions List?
The sanctions list contains all the names and information of the individuals and groups that are highlighted as risk parties. These names and their level of risk keep on changing with time. The funds and assets are denied to all the parties that add to the sanctions lists. The money launderers are smart enough to transfer funds from businesses and financial institutions through clever means.
They transfer the laundered money into unsusceptible accounts, buy and transfer assets, and fund terrorist activities. The sanctions list helps the authorities to keep a close check on the suspects and try to obstruct their access to anything illegal.
What Do Funds or Other Assets Mean?
Funds and assets mean any type of asset including but not limited to economic resources, financial assets, tangible or intangible, property, movable or immovable, or legal documents and more. Funds can be explained as traveler's cheques, bank credits, dividends, securities or drafts, and more.
Some categories of funds are all types of funds and assets subject to freezing measures and regulations.
Funds and assets can be further classified into the following types. Let’s have a look at the classifications.
Funds and Other Financial Assets: Funds and financial assets included in the sanctions are-
- Cheques, claims on money, money orders, cash, drafts, internet-based and digital payment instruments, bearer instruments, and virtual currencies.
- Deposits with FIs and entities and balances on accounts, including fixed deposit accounts, brokerage firms, balances on share trading accounts, and other investment trading accounts.
- Debts, debt obligations, and trade debts.
- Accounts receivable, claims of money on others, notes receivable,
- Equity and financial interest in the partnership or sole trader.
- Insurance and reinsurance
- Interest, income on assets, or dividends.
- And much more.
Economic Resources: Economic resources that are subject to sanctions, including tangible or intangible assets, actual or potential, and movable or immovable assets. Some examples are-
- Land, real estate, or buildings
- Office furniture and fittings and fixtures
- Equipment like computer software, machinery, and tools
- Inventories of goods
- Vessels, motor vehicles, and aircraft
- Inventories of goods and services
- Commodities, including timber, minerals, and oils