News

Money Laundering

Date: October 16,2019

The international community has made the fight against money laundering and the financing of terrorism a priority. Among the goals of this effort are: protecting the integrity and stability of the international financial system, cutting off the resources available to terrorists, and making it more difficult for those engaged in crime to profit from their criminal activities.

What is Money Laundering?

Criminal activities, such as drug trafficking, smuggling, human trafficking, corruption and others, tend to generate large amounts of profits for the individuals or groups carrying out the criminal act. However, by using funds from such illicit sources, criminals risk drawing the authorities' attention to the underlying criminal activity and exposing themselves to criminal prosecution. In order to benefit freely from the proceeds of their crime, they must therefore conceal the illicit origin of these funds.

Briefly described, "money laundering" is the process by which proceeds from a criminal activity are disguised to conceal their illicit origin. More precisely, according to the Vienna Convention and the Palermo Convention provisions on money laundering, it may encompass three distinct, alternative actus reas: (i) the conversion or transfer, knowing that such property is the proceeds of crime (ii) the concealment or disguise of the true nature, source, location, disposition, movement or ownership of or rights with respect to property, knowing that such property is the proceeds of crime; and (iii) the acquisition, posession or use of property, knowing, at the time of the receipt, that such property is the proceeds of crime.

The international standard for the fight against money laundering and the financing of terrorism has been established by the Financial Action Task Force (FATF), which is a 33-member organization with primary responsibility for developing a world-wide standard for anti-money laundering and combating the financing of terrorism. The FATF was established by the G-7 Summit in Paris in 1989 and works in close cooperation with other key international organizations, including the IMF, the World Bank, the United Nations and FATF-Style regional bodies.

What is Financing of Terrorism?

Terrorist financing involves the solicitation, collection or provision of funds with the intention that they may be used to support terrorist acts or organizations. Funds may stem from both legal and illicit sources. More precisely, according to the International Convention for the Suppression of the Financing of Terrorism, a person commits the crime of financing of terrorism "if that person by any means, directly or indirectly, unlawfully and willfully, provides or collects funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out" an offense within the scope of the Convention.

The primary goal of individuals or entities involved in the financing of terrorism is therefore not necessarily to conceal the sources of the money but to conceal both the financing and the nature of the financed activity.

Law No 44 of November 24, 2015 - Fighting Money Laundering and Terrorist Financing

Date: October 16,2019

In November 24, 2015, the lebanese authorities issued Law No.44 which consists on fighting Money Laundering and Terrorist Financing in compliance with FATF universal standards in regard to AML/CFT.

Here is the link for the Law N.44 of November 24, 2015: 

https://sic.gov.lb/sites/default/files/laws-regulations/Law%2044%20En.pdf

Conceptual Framework for Financial Reporting 2018

Date: September 12,2018

The Framework's purpose is to assist the IASB in developing and revising IFRSs that are based on consistent concepts, to help preparers to develop consistent accounting policies for areas that are not covered by a standard or where there is choice of accounting policy, and to assist all parties to understand and interpret IFRS.

In the absence of a Standard or an Interpretation that specifically applies to a transaction, management must use its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. In making that judgement, IAS 8.11 requires management to consider the definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework. This elevation of the importance of the Framework was added in the 2003 revisions to IAS 8.

The Framework is not a Standard and does not override any specific IFRS.

If the IASB decides to issue a new or revised pronouncement that is in conflict with the Framework, the IASB must highlight the fact and explain the reasons for the departure in the basis for conclusions.

Scope

The Framework addresses:

  • the objective of general purpose financial reporting
  • qualitative characteristics of useful financial information
  • financial statements and the reporting entity
  • the elements of financial statements
  • recognition and derecognition
  • measurement
  • presentation and disclosure
  • concepts of capital and capital maintenance

The Framework's purpose is to assist the IASB in developing and revising IFRSs that are based on consistent concepts, to help preparers to develop consistent accounting policies for areas that are not covered by a standard or where there is choice of accounting policy, and to assist all parties to understand and interpret IFRS. [SP1.1]

In the absence of a Standard or an Interpretation that specifically applies to a transaction, management must use its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. In making that judgement, IAS 8.11 requires management to consider the definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework. This elevation of the importance of the Framework was added in the 2003 revisions to IAS 8.

The Framework is not a Standard and does not override any specific IFRS. [SP1.2]

If the IASB decides to issue a new or revised pronouncement that is in conflict with the Framework, the IASB must highlight the fact and explain the reasons for the departure in the basis for conclusions.

Pursuing transparency, Vatican orders the audit of assets.

Date: March 22,2016

‘The Vatican said on Saturday it had ordered the first external audit of its assets as part of a drive by Pope Francis to bring transparency to its finances where millions of euros have gone unrecorded without any central oversight.

Papal spokesman Federico Lombardi said auditors PricewaterhouseCoopers [PWC.UL] would start work immediately.

The pope has promised to overhaul the Vatican's murky financial management, which have been hit by repeated scandals in recent years, however he has met resistance from Church officials who want to maintain tight control over operations.

Lombardi told reporters that the Vatican's Secretariat for the Economy had called on PwC, the world's second-largest audit firm by revenue, to review the Vatican's consolidated financial statements, which includes assets, income and expenses.

The decision to work with one of the world's top four auditors continued "the implementation of new financial management policies and practices in line with international standards," he said.

A Vatican financial statement this year revealed that Vatican departments had stashed away 1.1 billion euros ($1.2 billion) of assets that were not declared on any balance sheet.

The head of the economy secretariat, Cardinal George Pell, said last year that departments had "tucked away" millions of euros and followed "long-established patterns" in jealously managing their affairs without reporting to any central accounting office.

Pope Francis picked Pell, an outsider from the English-speaking world, to oversee the Vatican's often muddled finances after decades of control by Italian clergy.

Since the pope's election in March, 2013, the Vatican has enacted major reforms to adhere to international financial standards and prevent money laundering.’

www.reuters.com

Extended auditor reporting

Date: January 09,2015

EXTENDED AUDITOR REPORTING has allowed investors to glean far greater information and understanding of the state of their businesses, the FRC has found in its latest report.
Auditors continued to develop high quality, accessible reports in the second year of extended auditor reporting according to an FRC survey


In particular, reports which have earned the greatest praise from investors tend to be well structured, signpost key information and often make innovative use of graphics, diagrams and colour. Auditors, the review found, have continued to move away from generic language and descriptions of risk, making their reports more relevant and insightful, while descriptions of the scope of audit work and the approach to materiality continue to improve.


Areas where auditor's reports could be further enhanced include more frequent inclusion of commentary about what the auditor found as a result of the work done on risks of misstatement; explanations of changes to the audit approach, materiality or risk assessment over time; more auditors to include information about ‘performance materiality' - how it is derived and how it impacts on the audit.


The FRC introduced new reporting requirements for financial years beginning on or after 1 October 2012 at the same time as enhancements to the UK Corporate Governance Code, including more detailed annual reporting by audit committees.


Executive director for codes and standards Melanie McLaren said: "Confidence in UK audits underpins investor confidence in UK capital markets and we are pleased that we have led the way internationally in extended auditor reporting, which is being adopted more widely following changes to international standards on auditing.