Question

Combating money laundering became a compelling priority for financial institutions on

Answer 1

Combating money laundering became a compelling priority for financial institutions due to its negative impact on global economies and banking systems.

Step-by-step explanation:

Combating money laundering became a compelling priority for financial institutions because of the negative impact it had on global economies and banking systems. Money laundering is the process of making illegally gained objects (dirty money) appear legal or legitimate (clean money).

Financial institutions play a crucial role in preventing money laundering by implementing measures to detect and report suspicious transactions. This includes conducting due diligence on customers, monitoring transactions for unusual patterns, and reporting suspicious activity to the authorities.

Failure to comply with anti-money laundering regulations can result in severe penalties and reputational damage for financial institutions. Therefore, it became essential for them to prioritize combating money laundering to maintain the integrity of the financial system.

Answer 2

Combating money laundering became crucial for financial institutions mainly from the late 1990s due to increased awareness of the damaging effects of financial crimes on economies and the banking sector, with major global banking systems often cited as examples of vulnerability to such issues.

Step-by-step explanation:

Combating money laundering became a compelling priority for financial institutions particularly from the late 1990s onward. During this period, there was a marked concern about the impact of corruption and financial crimes on the global economy. This concern was partly driven by the realization of the extent to which money laundering could undermine economic development and the successful operation of the financial sector.

Financial institutions around the world started to feel the pressure to address their vulnerability to financial crimes, including money laundering. Observations of major banking systems, such as those in Japan, showed deep financial trouble through the 1990s. However, comprehensive measures to tackle these issues, including tightening up anti-money laundering protocols, were slow to materialize until after the 2000s. It was a challenging balance for banks to achieve, ensuring stringent enough requirements to prevent financial crime, while also avoiding overly disruptive regulations that would hinder their operations or fail to meet client withdrawal demands.