The IMF and World Bank with UN or the International Monetary Fund, World Bank and the United Nations share the goal of improving living conditions in their respective member countries.
Their approaches to achieving this common goal are complementary, with the IMF focusing on macroeconomic and financial stability and the World Bank on long-term economic development and poverty reduction.
The IMF and World Bank with UN Goals
The World Bank focuses on long-term investment projects, institutional development, as well as social, environmental, and poverty issues. The IMF is concerned with the operation of the international monetary system and the promotion of sound macroeconomic policies as a prerequisite for long-term economic growth.
The World Bank, or World Bank Group, is an international organization affiliated with the United Nations (UN) that finances projects that help member countries’ economic development. The World Bank, headquartered in Washington, D.C., is the largest source of financial assistance to developing countries.
International Monetary Fund (IMF)
The International Monetary Fund (IMF) is an intergovernmental organization consisting of 187 countries that focuses on promoting global monetary cooperation. Through its activities, the IMF also aims to facilitate international trade, secure financial stability, increase employment, reduce poverty, and promote sustainable economic growth. Like the World Bank, the IMF was created at Bretton Woods following the Great Depression, in an effort to avoid a repeat of the financial calamity that had characterized the preceding decade. Its founders envisioned the IMF as an institution that could manage national trade deficits to avoid devaluation, monitor participating states’ financial systems, and provide loans to stabilize exchange rates.
In response to increased international concern over criminal and terrorist groups using legitimate financial institutions to move and store assets, the IMF has broadened its work to include countering the AML/CFT. The IMF defines the financing of terrorism as “the financial support, in any form, of terrorism or those who encourage, plan or engage in it.
According to the IMF, the potential negative impact of terrorist financing and money laundering on member states’ financial systems gives the organization a particular interest in addressing these issues. These illegal activities, they say, can undermine the integrity and stability of financial institutions and systems, discourage foreign investment, and distort international capital flows.
Prior to 2001, the IMF’s counter-terrorism work focused predominantly on anti-money laundering operations. In 2000, the fund was developing a module for the Anti-Money Laundering Report on Standards and Codes as well as expanding its work on countering money laundering.
IMF pointed out that, there are difficulties and potential dangers to applying international standards to all domestic situations, without due regard for the circumstances and legal systems within respective countries. In systems that lack a supervisory capacity to monitor these regulations or in countries experiencing conflict, enforcing these regulations can be difficult.
Moreover, the necessity of these informal systems must be taken into account, since they are often providing financial services to the poor for whom the formal banking system can be prohibitively expensive. Therefore, the IMF has tried to work with national governments to be flexible in dealing with compliance of the unregulated banking systems to avoid depleting societies of a vital component of survival.
In countries where an unregulated banking system known as hawala exists alongside a conventional banking system, the World Bank has been making efforts to register dealers and keep records in order to minimize abuse of these systems by terrorists and other actors.
The Financial Integrity unit helps countries build capacity to pursue the ‘dirty money’ that flows through the global financial system, imposing a significant cost on national security, economic opportunity, and the rule of law in developing countries. As criminals gain new abilities to move funds across borders without detection, we are working to bolster the capacity of societies to uncover, prosecute, and prevent such movements in the future, as well as to restitute official funds stolen in corruption back to public coffers.
The Financial Integrity team provides client countries with tools for increasing transparency and for preventing and pursuing illicit financial flows (IFF) to reinforce the integrity of the financial system. Our technical assistance in anti-money laundering/countering the financing of terrorism (AML/CFT) offers innovative avenues for fighting crime and addressing the intersections of IFF and development including as it pertains to human security, corruption, financial inclusion, and the ease of doing business.
World bank support countries by:
- Supporting assessments around the risks and impacts of money laundering and terrorist financing in their jurisdictions
- Implementing a risk based-approach to AML/CFT on the basis of the above assessment, and developing counter-measures
- Reviewing the effectiveness of laws, regulations and institutional frameworks and recommending improvements
- Building capacity for systematic data collection on proceeds of crimes and associated financial flows
- Building the capacity of financial-sector supervisors for risk-based and effective supervision of the financial sector’s AML/CFT controls
- Building the investigative capacity of investigators, prosecutors and judges for ML and FT cases, including with regards to international information exchange
- Promoting financial inclusion by simplifying the customer due diligence and AML/CFT requirements in low-risk financial products and services, as appropriate
United Nations (UN)
The United Nations Global Program against Money Laundering (GPML), part of the United Nations Office on Drugs and Crime (UNODC), was established in 1997 to assist member states to comply with the UN Conventions and other instruments that deal with money laundering and terrorist financing.
The GPML helps member states to:
- introduce legislation against money laundering
- develop and maintain strategies to combat money laundering
- encourage AML policy development
- raise public awareness about money laundering, and
- act as a coordinator of joint AML initiatives by the UN with other international organizations.
In collaboration with the United Nations Drug Control Program (UNDCP) Legal Advisory Section, the GPML has developed model laws for both common law and civil law legal systems to assist countries in setting up their AML legislation in full compliance with international legal instruments against money laundering.
The UN conventions
Several UN conventions and other instruments have been developed over the past two decades to deal with money laundering and terrorist financing. These now include:
- the United Nations Convention against Trafficking in Narcotics and Psychotropic Substances (the Vienna Convention)
- the United Nations Convention against Transnational Organized Crime (the Palermo Convention)
- the United Nations Convention against Corruption (UNCAC)
the United Nations Convention for the Suppression of the Financing of Terrorism
In the context of the UN’s efforts to prevent and combat terrorism, the UNODC has an expanded program of work for technical assistance to counter-terrorism. This is based on mandates recommended by the UN Commission on Crime Prevention and Criminal Justice and approved by the UN General Assembly. These mandates, carried out by UNODC’s Terrorism Prevention Branch (TPB) within the Division for Treaty Affairs (DTA), include the provision of technical assistance and advisory services to countries in their fight against terrorism.
As a consequence, UNODC’s operational activities focus on strengthening the legal regime against terrorism. This involves providing legislative assistance that enables countries to become parties to, and implement, the universal anti-terrorism conventions and protocols and Security Council Resolution 1373 (2001).
UNODC aims to assist member states in their struggle against illicit drugs, crime, and terrorism. It is also resolved to intensify efforts to fight transnational crime in all its manifestations, to increase efforts to implement the commitment to counter the world drug problem, and to take concerted action against international terrorism.
UNODC’s three main objectives are to:
- provide field-based technical cooperation projects to enhance the capacity of member states to counteract illicit drugs, crime, and terrorism
- conduct research and analytical work to increase knowledge and understanding of drugs and crime issues and expand the evidence base for policy and operational decisions.
The primary goal of the IMF is to maintain the stability of the international monetary system, which is the system of exchange rates and international payments that allows countries and their citizens to transact with one another. It accomplishes this by monitoring the global economy and the economies of its members, lending to countries experiencing balance-of-payments difficulties, and providing practical assistance to members.
The World Bank Group is a major source of funding and knowledge for developing countries around the world. Its five institutions are all dedicated to reducing poverty, increasing shared prosperity, and promoting long-term development. United Nations specialized agency established in 1944 at the Bretton Woods Conference to ensure international monetary cooperation, stabilize currency exchange rates, and increase international liquidity.