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What is Counter Financing of Terrorism & What Are the Basics for Traders to Know?

Counter Financing of Terrorism is a set of rules and regulations to stop and restrict the transfer of funds to terrorist groups. The purpose of Counter Financing of Terrorism is to make that these groups do not get any resources to carry out their missions or plans.

Furthermore, CFT also helps governments and authorities to track where the money went and the terrorists who received them. This results in restricted terrorist activities and governments can counter various terrorist missions.

Are you willing to learn more about the Counter Financing of Terrorism? Keep reading!

Some Basic Things to Know About Counter Financing of Terrorism

How Does CFT Work?

When it comes to terrorist activities, there are various methods that terrorists use for hiding the source of the funding and the activities that they perform with it. Regulatory bodies all across the world use a variety of techniques for stopping such activities. Some of the most common sources of terrorist funding are:

  • Religious Organizations
  • Kidnapping and Extortion
  • Corruption
  • Drug or Human Trafficking
  • Legal Businesses
  • Money Laundering
  • Government Funding

Most of the time, terrorism goes hand in hand with money laundering. So, the most sure-shot way to track terrorism activities is to track down money laundering activities. If a regulatory body detects and stops any attempt to launder money, they are also stopping that money from being used to fund acts of terror.

What are the Benefits of CFT?

The main objective or primary goal of Counter Financing of Terrorism is to put a stop to and prevent terrorist acts. Another argument in favour of CFT is the possibility of criminals abusing the financial system through engaging in money laundering and terrorism financing. Governments and people alike might lose faith in the financial system’s integrity if it is unable to detect unlawful behaviour or stop such activities.

Counter Financing of Terrorism also has a substantial financial impact on a country’s economy as well. The most significant of these impacts is the fact that CFT regulations keep a check on transactions and eradicate anonymity. They do this while ensuring privacy in all financial and other dealings that take place through a financial system.

In a Nutshell

CFT or Counter Financing of Terrorism is an initiative that not only helps regulatory bodies stop money laundering attempts but also limits acts of terrorism. This is because one of the key sources of funding for terrorists is money laundering and restricting the source of funding results in fewer terrorist acts.

Moreover, CFT also helps regulatory bodies or financial institutions to make sure that all transactions are carried out in a transparent manner and no shady deals are being made. Properly executing CFT initiatives can also have a substantial impact on the country’s overall economy and improve its standing among world nations.

How Does the Law Work for Cryptocurrency & Digital Currency Traders?

Cryptocurrency and digital currency trade are becoming more popular by the day. Traders are actively participating and investing in Bitcoin and other types of digital currencies. Thanks to the growing popularity, regulatory bodies are also coming up with different laws for cryptocurrency traders to ensure transparent trading.

That said, since the paradigm for digital currency trading varies from territory to territory, it is challenging for global regulatory authorities to ensure consistency in the laws for this type of trading. Furthermore, every country’s financial system has a different approach to crypto trades so their laws also differ from each other.

If you are willing to learn more about how crypto regulations work in different countries across the globe, keep reading!

Crypto & Digital Currency Trade Laws in Different Countries Around the World

The United States of America

The United States of America has a pretty sound Federal Cryptocurrency Legislation in place. However, there is a lack of consistency in the laws and legal guidelines for traders on individual state levels. The FinCEN or Financial Crimes Enforcement Network has declared cryptocurrencies to be money transmitters as they substitute the value of national currencies.

The United States of America also practices a set guideline system and tax approach to crypto and other digital currencies.

The United Kingdom

The regulatory bodies in the United Kingdom have had a limited and measured approach to digital currencies and their trading. There are specific laws that traders need to keep in mind when it comes to registering for the trading of Cryptocurrency.

The regulatory bodies in the UK have also declared digital currencies to have a unique identity and they also have separate tax treatments. The HMRC does not consider Cryptocurrency similar to other investment or payment options such as bonds, stocks, etc.

South Korea

The laws for Cryptocurrency traders are very strict and they have to follow specific regulations and guidelines while trading. Crypto and digital currencies are not declared as legal tender or means of payments. However, the regulatory bodies allow traders to make exchanges but that too in a very regulated and monitored setup. Despite the fact that South Korea has a very extensive legal and law system, especially when it comes to business and trading, Cryptocurrency trading is not well-defined.

One of the major reasons for this is that the finance regulatory bodies in South Korea do not categorize crypto as either currency or a financial asset. Another notable point is that digital currency trading is tax-free in South Korea. The Ministry of Strategy & Finance is now considering coming up with proper regulations and laws for Cryptocurrency traders to follow from 2022 onwards.

In a Nutshell

Cryptocurrency and digital currency trade are rising in popularity all around the world. With an increasing number of people investing and trading digital currencies, it is very important to have proper regulations in place for fair trade. The laws for Cryptocurrency traders vary from country to country and they have their own approaches to what trading should be like. If you are a first-time investor or trader of digital currencies, it is best that you keep these regulations in mind.

What Are Remittances and How Do They Work?

What Are Remittances?

Developing nations have limited sources of foreign income, but migrant workers play a vital role in establishing a stable flow of money to such countries. They work in foreign nations with inadequate knowledge of the language and social skills just so they can earn enough money to send back home. When migrant workers send money in foreign currency to their home countries, they are called remittances.

Most countries rely on foreign remittances to improve their GDP. In fact, some developing nations depend on remittance payments to stay afloat. In the past, remittances were only cash flow between a migrant and their family. It used to support the families of the migrants, but the modern processes of sending foreign remittances have become a crucial part of a country’s economy, especially in developing countries.

Remittance Transaction

Remittance transactions take place in three simple steps:

Step 1: Migrant workers get help from sending agencies by paying their remittances using a money order, check, cash, credit, or debit cards.

Step 2: Sending agencies to assign an agent in the recipient’s country to deliver foreign remittances.

Step 3: Foreign remittance is paid to the beneficiary with the help of the paying agent.

Types of Remittances

Remittance payment is crucial for the economic growth of a developing country. It can be classified into two types: Inward and Outward Remittance.

1. Inward Remittance

Inward remittance is the transfer of funds from a domestic or international account to another. When parents send money to their children living abroad, they are sending funds as remittances that become inward remittances for the children. Similarly, when children send back money after working in a foreign country, they send inward remittances to their families.

2. Outward Remittance

Sending funds out of the country is called outward remittance, which can be understood with the same example as an inward remittance. When parents send money out of the country to their children’s foreign accounts, it becomes an outward remittance. Outward remittance is for the countries sending funds, and inward remittance is for the countries receiving them.

Impact of Remittances on Developing Countries

Remittances can impact the lifestyle of receiving families as the funds would be higher than what they make in their own country. It also helps them improve their healthcare, education, and sanitary conditions. Foreign remittance can facilitate the accumulation of assets, ease the restraints on credit, and improve financial literacy. It affects a developing country’s economy in a positive way.

Despite the pros of remittances, it has certain cons for developing countries. It increases the use of non-tradable goods by raising prices and decreasing exports. It also makes the country dependable on remittance, making economic growth rely on it.

Final Words

An increase in foreign remittance has improved the lifestyle of many families in developing countries. They depend on remittances to improve their living conditions and provide for family members unable to make a substantial income in their home country. Remittances also play a role in the economic growth of a developing nation. For some, it is the main source of revenue to improve their annual GDP.

How to Reduce the Risk of Losing Money in Foreign Currency Trading

Foreign currency trading is a profitable market for people interested in financial trading knowledge. Globally, forex trading can be a potentially profitable market for traders of varying experiences. Unfortunately, not everyone is capable of reaping the profits.

Since entry into the foreign currency trading market is so easy, there’s a risk of losing money for inexperienced traders. The lack of correct information and understanding of the foreign currency market leads to decisions that cost money. The quick setbacks disappoint many traders who leave the market as soon as they enter. You should not make the same mistake! Here are some valuable tips to help you reduce the risk of losing money as a forex trader.

Tips for Foreign Currency Trading

1. Practice First. Use a Demo Account

Trading platforms have demo accounts for newcomers to practice their skills and learn the ins and outs of the platform. Anxious newbies make the mistake of investing first and losing money, thinking it’s part of the process. It does not have to be when practice accounts are available for you to learn forex trading.

A practice account helps traders become acquainted with the platform’s operations. It lets you learn about the user interface to avoid losing money after pressing the wrong button. Basically, the account will ease you into the life of a foreign currency trader without the risk of losing money.

2. Consider Investing in Currency Hedge Funds

Currency hedge fund investment is an easy way to reduce currency risks. You can neutralize the risk of losing money in foreign currency trading by buying funds that exclusively invest in European and Japanese stocks. This will hedge out the exposure and minimize the risk for your investment.

3. Invest Globally for a Diversified Portfolio

To avoid the risk of losing money, you should invest globally and build a natural hedge in your portfolio. You can buy index funds with concentrated exposures to currencies, like Euro, Dollar, or Japanese Yen.

When one currency is strong such as the dollar, other investments will become profitable for you. If non-dollar funds are weak, your dollar investments will be significant.

4. Invest in Standard & Poor 500 Index Fund

As a beginner in the market, you do not want to be exposed to currency risk. By investing in S&P 500 Index, you diversify your investment into the collection of hundreds of top US companies and protect yourself from losing money.

The companies have national and international sales that cover the profits. They also hedge their foreign currency risks, so it will reduce the risk of losing funds for you. Additionally, you do not need a diverse or established portfolio to get into an S & P 500 index fund—it is easy and inexpensive to buy it.

Final Words

The global foreign currency trading market offers low barriers to entry and high amounts of leverage, which is attractive for many traders worldwide. Even if you are willing to become part of the crowd investing in foreign currency, do not make the mistake of investing without research and risk analysis. Approach forex trading as a business and make a profit by using investment strategies that reduce the risk of losing money.

Tips for Traders to Avoid Losing Money in Foreign Exchange Trading

The global foreign exchange market is one of the largest and most profitable financial markets in the world. it attracts traders from all over the world. These include everyone from beginners to experienced trading specialists. Foreign exchange trading lets traders with even a minimal investment come in and generate revenues and create a fortune.

While on one hand, the forex market is extremely profitable, there are various things that can make traders quickly lose their money. Even the most seasoned traders need to be careful if they want to cut back on their losses.

If you are willing to learn more about what you need to do in order to avoid losing money in foreign exchange trading, keep reading!

How to Avoid Losing Money in Foreign Exchange Trading? – Tips for Traders

Hire a Credible Broker

It is very essential for you to align yourself with a credible broker so that you can avoid making a bad investment. Having a broker can help make sure that your deposits are safe and that your investments generate the revenues that they should. Get referrals or check for online reviews before you select a broker. Make sure you can fully trust them before you delve into the market.

Protect Your Trading Accounts

Every trader wants to make money right off the bat when they enter foreign exchange trading. While making money is important, it is also very important for traders to maintain the integrity and credibility of their trading accounts. One of the easiest ways to achieve this is to avoid losing more money than you can afford. Traders need to learn all the necessary money management techniques so that they make successful transactions and withdraw from the unsuccessful ones in time.

Minimal losses and reasonable backfalls can be achieved if the traders use a protective stop loss and practice it promptly during their trades. There has to be a daily limit set for traders so that they stop when they reach that point and do not initiate new trades or risk losing more money.

Always Start Small & Create Variety

Even if you learn everything about foreign exchange trading, there is nothing better than going live in the market and experiencing it firsthand. Once you are certain that you have all the necessary information to proceed, you can start investing your money. However, make sure that you start small and do not place a large chunk of your investment funds in one avenue. Create a variety of portfolios and take things one step at a time so that you do not lose too much money even if you make a wrong decision.

In a Nutshell

It is extremely important for traders to do their research and learn skills when they trade in a competitive market like foreign exchange trading. Forex is a market that has very high returns but bad decisions can make traders lose money as well. They need to be mindful of things like creating variety and starting small in order to avoid losing money. Moreover, they need to also make sure that they protect their trading accounts and hire credible brokers so that there are minimal risks involved.

How Does AML Software Work and How Does It Help with Money Laundering?

According to research conducted by the UNODC, a whopping 800 billion to 2 trillion dollars are laundered every year. This makes up around 2 to 5 per cent of the global GDP. Prevention of money laundering activities is a must and there are several anti-money laundering software available that can help with that. AML software uses technology and digital footprints to make sure that financial institutions and legal authorities are complying with the requirements of regulatory bodies.

If you want to know more about how anti-money laundering software works, keep reading!

How Does an Anti-Money Laundering Software Work & How Does It Benefit?

It Screens the Names of Blacklisted Customers

One of the best things about AML software is that it highlights the names of the customers that have been blacklisted by regulatory bodies. Every country has its own regulatory bodies and they maintain a record of such customers. AML software screens for these customers by filtering and maintaining a database of participating countries. The software does not only point out the blacklisted customers but it also notifies the institution ensuring that they get caught immediately. These customers also include PEPs that are Politically Exposed Persons and anyone who receives sudden adverse attention from the media.

It Monitors Transactions

AML software uses historical data to identify peculiarities in specific account profiles. Such software focuses on spotting suspicious patterns in consumer transactions and creates a Suspicious Activity Report (SARs). You can use AML software to track suspicious transactions and highlight the people who made them and their locations.

It Complies with the Day-to-Day Requirements of AML Compliance

The daily application of compliance standards is one of the best features of anti-money laundering software. AML software’s data management features are very helpful and effective in tracking reports filed to financial authorities. This helps institutions remain vigilant and alert against new threats and not get complacent.

It Keeps Up with Cashless Banking

The number of transactions that AML technology systems effectively track has increased significantly. This is a result of the expansion of various electronic payment instruments and the decline in cash payments. The customer experience and services will suffer if financial institutions opt to manually scan this data for monitoring. This is also a very time-consuming process and there is a chance of errors and omissions.

Concluding Remarks

In a nutshell, we can say that anti-money laundering software is a great tool for tracking and preventing financial crimes all across the globe. This software monitors transactions to point out the suspicious ones and flags the blacklisted customers to the authorities so that they cannot get away with any such activity. Moreover, they comply with the daily requirements and adjustments of AML compliance so that the process of tagging money launderers becomes smoother and fast. In the digital world, AML software is a great way to track and prevent financial crimes even for cashless banking systems.

What Are the Most Common Perks of Trading in the Currency Market?

The foreign exchange or forex market is one of the fastest-growing and most profitable financial markets in the world. It offers very high returns to traders and requires minimal effort. Trading in the currency market is a great way to grow your wealth as the market is extremely liquid. Moreover, the forex market has the highest daily volume for trading compared to several other investment avenues.

If you are skeptical about whether or not to start trading in the currency market, here are some benefits for you to consider!

The Top Benefits of Trading in the Currency Market

Flexibility for Traders

One of the key factors that make trading in the currency market so popular is that there is a lot of flexibility. There are little to no restrictions for traders regarding when they can work or how much money they need to invest in the market. This is one of the biggest selling points for anyone who wants to pursue currency trading as a side-hustle or doesn’t have a lot of money to invest.

Higher Liquidity & Leverage

Liquidity means how fast you can buy or sell your assets in the market, and leverage means using borrowed money to place your trades in the market. Since the daily volume for trading in the currency market is very high, the assets are more liquid, and the trades are extremely profitable.

Forex is generally known as the most liquid financial market in the world. You can easily get leverage, as well. With higher leverage, traders can acquire more funds and invest more money to generate profits. This also increases traders’ exposure to the market, and they can generate more profits with lesser investments.

Very Low Transaction Costs

Trading in the currency market means that traders do not have to bear very high transaction costs compared to other investment options such as stocks, bonds, etc. This is especially true when you compare percentage point basis. Forex markets are mostly operated by dealers, and they provide two-way quotes, so the risk is covered amongst them, reducing the overall transaction costs for traders.

The Market is Accessible & Decentralized

With an average of 6 trillion dollars traded daily, the forex market is globally the largest and potentially most profitable financial market. It is also very easily accessible to small and big traders, and they can trade and invest with ease.

Moreover, just like other financial markets, trading in the currency market is not controlled by a single entity. It is a decentralized system that has participants from all across the globe coming in and trading their currencies. Consequently, bigger players cannot manipulate or dominate the prices, and they stay the same for everyone.

Final Thoughts

All in all, there are several factors that affect how well a market performs and how profitable it becomes for traders. Trading in the currency market is extremely profitable because the market is very flexible, and there is very high liquidity and leverage for traders. Moreover, the transaction costs in the currency market are very low, and the market is accessible and decentralized to make it easier for traders to trade. All of these factors come together to make the currency market the most popular and profitable financial market in the world.

How Are Digital Currencies Changing the Face of Global Economy & Trade?

In recent years, technologically advanced nations have moved towards an increasingly cashless system to avoid thefts and decrease risks. Digital currencies play a vital role in this. These currencies come with numerous benefits, from lower transaction costs to accessibility. However, there are several drawbacks as well, such as volatility and monetary stability.

Are you willing to learn more about how digital currencies are impacting modern global trade? Keep reading!

Impacts of Digital Currencies on Global Trade & Economy

Increased Risk of Financial Instability

The adoption of digital currencies jeopardises financial stability to a great extent as they are more volatile. Their pricing has been observed to vary a lot, and the fluctuations pose a risk of substantial losses.

For instance, a sudden surge in prices can cause the financial system’s stability to go down as well. That said, the total value and usage of digital currencies aren’t sufficient to pose a substantial threat to the financial stability of the global economy at this point.

 

However, according to the Bank of England, there are a variety of scenarios that could increase the risk of digital currency compromising financial stability.

Participation of SMEs in Global Trade

The global trade financing gap that reaches up to 2 trillion dollars disproportionately impacts SMEs (Small and Medium-Sized Enterprises). The major reason that this happens is that these businesses lack a solid financial history. Digital currencies could help resolve this problem.

For instance, digital currency public ledgers could be used to communicate payment and financial history when these SMEs apply for import and export loans. This could increase their participation levels in global trade.

De-Risking & More Accessibility

De-risking places barriers on countries with significant Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) risks. These are the countries that are willing to participate in global trade but cannot do so due to FATF restrictions.

Such restrictions can raise transaction costs for buyers and sellers in these countries. While digital currencies will not help these countries to lessen AML and CTF issues, they may give alternative payment methods. These payment methods will allow consumers and businesses to reconnect with overseas buyers and sellers using digital currencies.

Demand & Supply of Forex

It is uncertain if digital currencies will boost trade in all countries, but they do have an impact on the demand and supply of international currencies.

The potential benefits may help certain nations increase their trade volume. However, the fundamentals of international trade, which are based on comparative advantages, will remain unaltered.

Countries that struggle with economic development or political stability may continue to confront similar problems even with digital currencies.

In a Nutshell

Digital currencies have transformed global trade and the economy to a certain extent. These currencies can increase financial instability to a certain extent, allow SMEs to participate in global trade, and increase accessibility for countries limited by FATF restrictions. The forex market has also experienced a boost as more people are now trading using digital currencies.

How to Protect Your Small/Medium-Sized Business from the Threats of Money Laundering?

Money laundering is a financial crime where people attempt to hide the source of any illegally acquired funds from the financial and regulatory bodies. In order to turn the illegal funds or ‘Black Money’ into legal funds people invest them it into legitimate businesses. Most of these businesses are small-medium-sized. They have a higher risk of becoming a victim of money laundering compared to larger corporations.

One of the major reasons for criminals to go after small\medium-sized businesses is that they lack experience and knowledge of such activities. More often than not, money laundering schemes are disguised to look like investments in your business or sudden and considerably large transactions. There are several precautionary measures that you can take in order to avoid any threats of money laundering and protect your business.

If you own or run a small/medium-sized business, here are a few things you can do to avoid the threats of money laundering!

Tips for Protecting Your Businesses from the Threats of Money Laundering

Be Thorough & Ask Questions

Whenever an organization or entity approaches you with a business proposal or transaction request, make sure that you do thorough background checks. Moreover, there are different things that you have to ensure to see that the partnership is legitimate and there are no potential threats of money laundering.

As business owners, you should ask a lot of questions and inquire about their business, amount of money, and investors. If you sense vagueness in the responses and replies, consider it a red flag and dig deeper. Sudden and abrupt investments and transactions should also raise concern and you should investigate them thoroughly.

Do Research & Learn About Money Laundering Schemes

There is no one way for criminals to turn their illegitimate money into legal and spendable funds. They always keep coming up with newer ways and tactics to trick people into such schemes. You need to make sure that you learn everything there is to learn about money laundering schemes and keep your team in the loop. This will help you in detecting any money laundering attempts and protecting your business against them.

Make Sure to Conduct Regular Reviews

It is very important for firms and businesses to regularly review their finances and transactions. This helps them prevent or stop any money laundering activity midway and cope with the litigations effectively. You can even introduce a financial crime compliance program to identify the transactions within the firm that pose a threat.

In a Nutshell

To put it simply, money laundering is a constant threat for small/medium-sized businesses. One of the key things that business owners need to be mindful of is that they need to have knowledge of every kind of money laundering activity or scheme out there. They also need to do their due diligence and investigate all transactions beforehand, especially the ones that seem fishy.

So, be thorough and ask a lot of questions about their business, investors, amount of money, etc. In the end, it’s on you to make sure that you decrease the threats of money laundering for your business and protect your employees.

Dos and Don’ts of Currency Trading for Beginners to Keep in Mind

Foreign exchange is the biggest financial market in the world and has the largest daily trading volume. The currency market is even bigger than the stock market with more and more people entering and trading every day. However, currency trading also calls for particular skills as people tend to lose more than they make initially.

Keep reading if you are a beginner to forex trading and want to learn about the things you should and shouldn’t do!

What are the Dos and Don’ts of Currency Trading for Beginners?

Be Optimistic & Determined

It is very stressful for traders to go through the ups and downs of the forex trading market. People often tend to give up and stop being optimistic, especially when they lose their money at the beginning.

When it comes to currency trading for beginners, it is essential that you stay determined and optimistic without rushing things. Pay close attention to the laws and regulations  in place so that you can make more informed and rational decisions rather than giving up.

Have a Set Trading Plan

A clearly defined plan is a must if you want to succeed as a forex trader. Make sure that you come up with a trading strategy that you create in light of real-time market fluctuations and conditions. This is going to help you in the long run so that you can effectively read the market and make decisions.

One of the best ways to come up with an effective trading plan is to make use of demo accounts available on various trading platforms. These offer a risk-free environment for cultivating your forex trading skills and can help you learn what to avoid and vice versa. It can help prepare you for the pitfalls of forex trading in the real world.

Don’t Be Emotional or Greedy

It is very natural for traders to become emotional when they make profits or lose money during currency trading. Some of the best currency traders in the world are the ones that are able to think straight and detach themselves from their personal emotions and feelings.

So, make sure that you do not get aggressive when you lose money or get overly excited when you make a profit. Moreover, you should also not become greedy and try to do it all because this might cause you to lose even more money.

In a Nutshell

Currency trading is one of the most powerful investment tools that can help you make some additional money and grow your funds. However, if you are trying to learn about currency trading for beginnings, make sure that you have a fool-proof trading plan and the determination to pursue forex trading regardless of the ups and downs. Besides this, forex traders should think rationally and keep their emotions aside so they can make better and informed decisions. You can also try out demo accounts to build your skills before you try out forex trading in the real world. Best of luck!

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