Kafkaesque Terrorist Freezing Orders, The UK Treasury Way

Many of my training clients will know that I tend to bang on about the risk to the AML regulated sector posed by HM Treasury's (HMT) liberal use of Statutory Instruments to fight terrorism and serous organised crime.

Little did I know that this Labour Government would prove my cynicism right in spades.

Below, you'll find below a copy of the Channel 4 News item first aired on 23rd March 2009.

In it one man known as 'Q' tells how his life was ruined after the government froze his bank account under the UK's terror laws. HMT Treasury can and do impose this Kafkaesque regime on anyone it suspects of funding terrorism

Under laws that the Treasury wrote, it doesn't have to bother about bringing charges, or even informing the subject of the order what the nature of the allegations are.

Under these orders, your bank accounts and all your assets are frozen and you need ministerial approval to buy a pair of shoes. You cannot undertake any financial transactions - making it virtually impossible, in the interviewers opinion to work.

In the interview with Channel 4 news, one man known as 'Q' says his life has been ruined after he was blacklisted without ever knowing why.

May I suggest that you pay close attention to Dominic Grieve's contribution toward the very end of the video (6:16).



Despite this "proportionate" behaviour going on, HMT still appear to be living in cloud cuckoo land. At a counter terrorist conference I attended in July in London, it became abundantly clear that once anyone had come out of this terrorist blacklisting, the regulated financial sector was expected to give the victim of this order full access to all financial services.

Taking a risk based approach, mindful of the fact that some one is publicly labelled as possibly financing terrorism, that this listing has been based on most secret Government information (which they are certainly not going to share with the regulated institutions / firms)and that the Governments action may actually have radicalised the subject of the order, no institution in it's right mind would touch that person with a barge pole. Well not unless the Treasury was to indemnify the AML regulated firm against all future acts by this person in perpetuity.

Is all cash over £ 1,000 now dirty in the UK?

I've been doing a lot of Anti-Money Laundering (AML) work with accountancy service providers recently in the UK.

As a result I've joined a number of accounting fora in order to improve my understanding my client key concerns. So far so good.


Then the other day I responded to an initial thread about a bankrupt asking for a payment in cash. Before I knew it, I was contributing to the post and I came up with a rather unpleasant thought. I've posted an edited version of my post below. I'd welcome your thoughts.

Police can stop someone with £1000 (or equivalent in cash), police can almost automatically confiscate because:

1. It meets their targets for asset recovery (if set).



2. No "ordinary person" carries that much money around, ergo you must be up to something (therefore the officer could be said to be disrupting unidentified criminal activity).



3. You can always get it back from the Magistrate's (at your expense).
   

Its a no lose situation for the police and almost completely irrelevant to dealing with those who have got £500,000 stuffed in their car/spare tyre and no plausible explanation.

Of course, if you then link this power in with research demonstrating that all cash notes (90% +) are contaminated by illegal drugs then the cops can argue, on the balance of probabilities that this cash is iffy.

Should you be rash enough to film what the police are doing on your mobile phone they will detain you under the 2008 Counter Terrorism Act (see link: http://news.bbc.co.uk/1/hi/england/london/8163428.stm )! How interesting that the UK Governments mantra of "If you have nothing to hide, you have nothing to fear" does not seem to apply to uniformed officers, going about their business in public places!

I am beginning to wander if, in short, the government and the police get to ban cash without having to submit your plans to anything like that pesky Parliamentary scrutiny.

Of course if you really want to help illegal cash transactions / cross border money laundering then you increase the maximum value of your notes to say something like €500. Doh!

So what starts as a perfectly reasonable attempt to seize the proceeds of crime can (has?) becomes a shortcut for the police doing what they want when they want with no effective oversight.

My concern, as an AML specialist, is that police forces may try and police (arrest) the easy to catch low hanging fruit of any criminal activity, whilst using anti-terrorist legislation to curtail legitimate oversight and questioning as to what they are doing and why.

For those in the regulated AML sector, in short its much easier to nick an established businessman or woman who has made a mistake in trying to apply complex AML law and regulation than to send an officer to Bogota!

I'd welcome your thoughts/ feedback as I am off to take an anti-paranoia pill.

Though a glass darkly

Welcome to The Watchman blog.

This is a moderated blog (i.e. posts are subject to review) which aims to draw together peoples experiences in implementing risk based Anti-Money Laundering (AML) systems together with your views, experience, wisdom and concerns.

By way of background, I've been involved with the UK's Anti-Money Laundering (AML) regime since the turn of this century and I am worried. In theory, there are good guys and bad guys and some poorly drafted law in between!

IMHO, what appears to be happening is that politicians and civil servants are flooding the AML segment with poorly drafted laws and regulations and failing to give either clarity in areas of confusion or moral leadership. Leaving the AML regulated sector to muddle through as best as it can whilst the sector absorbs more and more of the cost of fighting financial crime, i.e. off the Governments profit and loss account.

Now don't get me wrong, Money Launderers are intelligent, capable, manipulative and very, very harmful to the good of society and us as individuals. They need to be indentified and stopped. However if we don't step back and think about the issues raised and to constructively (aspirational point here people) or at least wittily hold the powers that be to account, then we end up with the worst of all worlds.

Which would be an expensive, bureaucratic, only occasionally functioning Kafkaesque system in which the good guys (and girls) are policed for profit, whilst the targets of the legislation, the organised criminals, the terrorists and the launderers get away because the Government hasn’t built enough prisons etc.

My hope is that those who choose to participate in this blog will be open, funny and helpful and that it will in time be a useful resource that is read by just more than the odd AML junky.

Let's see!