Sorry boys, when it comes to American justice, size matters!

Now here is an interesting blog entry on US Justice, deferred prosecution agreements and that old chestnut that size does matter.

HSBC executives get no jail time forterrorist financing while somali is jailed

Whilst, IMHO, the conclusion is a little stretched, it's still worth a few minutes of your time.

The Hindu : News / National : SC notice to Centre in money laundering case against Lilawati Hospital

Image via Wikipedia The Hindu : News / National : SC notice to Centre in money laundering case against Lilawati Hospital

India's move to implement modern AML controls starts to bear fruit.

Does the Italian Tax Amnesty create problems for UK MLROs? Part I

Here is an interesting conundrum re Suspicious Activity Reporting (SAR) and the 3rd EU AML Directive. The highlighted Bloomberg article outlines the confluence of a Tax Amnesty, Money Laundering, Tax Evasion, the bank induced recession and the law of unintended consequences.

This proposed Tax Amnesty law was approved by the Italian Government on 2nd October 2009 (see BBC article: http://news.bbc.co.uk/1/hi/world/europe/8288185.stm) and it poses an interesting challenge to UK AML regulated MLRO’s and firms.

Here is a hypothetical question for you which may highlight why. An existing client, probably with an Italian connection, wants to repatriate funds / financially convertible assets to Italy. Your routine monitoring of transactions illicits an admission that your client wants to take advantage of the announced amnesty. Under UK AML regulation and law, where does that leave you and your personal reporting obligation?

Well I’ve got a view (it’s Part II ) but I’d love to hear what you would do and why?

Review of the UK's 2007 Money Laundering Regulations announced

HM Treasury (HMT) and the Better Regulation Executive have announced plans to review the UK’s anti-money laundering regime under the 2007 Money Laundering Regulations.



http://www.hm-treasury.gov.uk/fin_crime_review.htm

As well as focusing on guidance, communication and engagement with stakeholders., the two departments are particularly interested in:

• Views on how the regulations are designed,


• How they work in practice,


• How effective and proportionate they are and


• How much engagement there has been.

I found the following sentence particularly noteworthy. “The review will also consider supervisory arrangements, industry practice and the customer experience under the regulations.”

To this end, HMT will start the next month with a “Call for Evidence” document, which will explain the issues that they are especially interested in.

It is thought that the review contribution period will last until December 2009.

Whilst respondents will be free to make comments on any area of the regime under the 2007 Regulations, HMT have made clear that they will not be reviewing the wider operation of the separate suspicious activity reporting or consent regimes. (After all, that is a Home Office issue!)

Interestingly, HMT have announced that they intend to hold meetings in Belfast, Edinburgh and Birmingham as well as London. Now I am a great believer in participatory democracy, so either watch this space for details or get out there and contribute.

So if you have a view on the current AML regime in the UK, now is your time to voice it!

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Book-Keepers can launder money.

We are now some 22 months into the UK's implementation of the 3rd EU AML Directive, and I'm still encountering people who argue that book-keepers don't need to be registered for anti-money laundering purposes.


Wrong. You and your firm do either with a professional body like the International Association of Book-keepers (http://www.iab.org.uk/ ) or HMRC.


Why, because book-keepers have access to company financial records, which they can manipulate and steal from which is why they were deliberately included in the Anti-Money Laundering regulations in the first place.


Now the example above is of a US book-keeper will serve up to 16 years in prison – with four years fixed – and he will have to pay his former employer, $500,000 in restitution.


IMHO, The addition of money laundering to theft charges will become the norm in the UK as well.

Any questions?

Now that's what I call an expensive press release.

Image by Getty Images via Daylife

It was the late, great Ronald Reagan who said "The most terrifying words in the English language are: I'm from the government and I'm here to help. "



Somebody form the US Department of Justice (DoJ) should have been paying attention and here is why.



When it gets to classic, large scale eye wateringly expensive money laundering scams that can crucify bank's then the Bank of New York (BoNY) scam in the early 1990's comes pretty close to the top of the list!


BoNY admitted that a rogue employee laundered $7.5 billion from Russia through the bank in the 1990s. However, it had not admitted criminal wrongdoing when it reached a $14 million non-prosecution settlement with the American government in 2005.



According to the New York Times, the Justice Department then issued an incorrectly worded press release that announced not only the settlement but also that the bank had admitted guilt. At which point lawyers for the Russian government seized upon as the basis for their own lawsuit. And that's what appears to be close to settlement (according to the paper on September 16th 2009).

Details of what appears to be a a $400 million trade-finance facility to be available to Russian state banks to help fund imports and exports by BoNY would appear to be on the table. Renewable every 180 days, it would run for five years on very favourable terms. Apparently this good will gesture is totally unrelated to the Russian Federation dropping the lawsuit and BoNY paying $14 million to the Russian government for legal fees incurred.

But, dear reader, the points I want to make about this case are as follows:

• The true cost of a major money laundering case can be measured in years of management time
• Your firm's reputation can be almost permanently linked to the incident
• Once it has gone public, you are no longer in control of who takes an interest in what you did or didn't do
• Government Department's can sometimes make everything much worse!

And that's why, boys and girls you make damn sure your expensive complex and ever changing AML systems actually work BEFORE it all goes pear shaped.

Related articles by Zemanta

• Bank of New York Settles a Protracted Russian Lawsuit (nytimes.com)


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RICS secure an AML exemption

The Royal Institute of Chartered Surveyors (RICS) announced on the 14th of September that it had managed to negotiate an exemption for some of it's members from the 3rd EU AML Directive.

RICS noticed that certain property managers and letting agents, who provided accounts information to clients without necessarily ever handling any of the client's money, could have become part of the Regulated Sector under the 2007 Money Laundering Regulations.

HM Treasury apparently accepted the argument that this was an unintended consequence of the EU regulation and granted an exemption.

IMHO, however, RICS slightly muffed it by going on to state "All businesses should be vigilant, of course, and we do recommend property firms to adopt voluntary procedures to identify and prevent money laundering." (My emphasis). Someone down there believes that it is possible to be just a little bit pregnant!

Oh, and the OFT ought to take note of the closing comment on the RICs press release "RICS is scrutinising OFT's current plans to register, charge and supervise estate agents, who, of course, are part of the Regulated Sector under the money laundering regulations. RICS is currently examining ways in which these plans might be challenged."

So there!

Should MSB’s “beware the ides of err... September?”

Image via Wikipedia

As I say to my clients on a regular basis, Money Launderers don’t think the way we do! For example, they look at religious festivals across the globe and then work out how they can use them to their advantage.

So my thanks go to the sharp eyed Neil Tyson of GNT Fraud Solutions, (here is his company’s website http://www.gntfraudsolutions.co.uk/ ) who spotted an interesting article from Crimestoppers, the UK centred independent charity that helps to find criminals and solve crimes.

They have issued a warning about money launderers using the month of September to co-mingle the proceeds of crime with the legitimate remittance traffic from Money Service Bureaus (MSBs). Crimestoppers assert that the residents of two London boroughs can reduce the risk (although Crimestoppers boldly state prevent) their money being used to fund serious crimes by only using registered (with HMRC) money bureaus when transferring money abroad.

And why September? Well they feel that the message is particularly relevant during this month as a number of different faiths transfer money to relatives or charities abroad in line with the celebrations occurring around the middle (or ides) of the month. Namely and in no particular order:

§ Eid, the Muslim holiday that marks the end of Ramadan, the Islamic holy month of fasting
§ Navratri the Hindu festival of worship and dance
§ Rosh Hashanah which we commonly refer to as the "Jewish New Year."

So the, the argument goes, the volume of money sent goes up and, as a result, it is easier to mix extra illegal funds into the mix.

So potential customers are asked to avoid unregistered MSBs.

This, from my slightly jaundiced point of view, gives rise to a number of issues for those businesses in the regulated sector:

1) Do you advertise that you are regulated?
2) If you don’t, shouldn’t you? E.g. a notice in the shop window and a note on your website.
3) This kind of notice from Crimestoppers should be looked at as part of a continuing educational process for consumers.
4) It is worth remembering that a failure to register automatically makes your enterprise guilty of an infraction of the Money Laundering Regulations, and, subject to possible sanctions under criminal law
5) You might also find that the authorities find out about what you’re doing, by virtue of your clients (actual or potential) phoning someone like Crimestoppers to tell them what you have been doing. By the way, the CrimeStoppers number is 0800 555 111, should you feel the need.

It’s that point 5 that goes to my view on this. Cheap intelligence that could really have an impact on possibly criminal operations.

Now that, I like.

A literal launderer. Nicked & convicted.

A London based cannabis dealer seems to have taken money laundering a little to literally when he used a washing machine to conceal his cash!

According to a press report in the Independent Newspaper (25th August 2009) Karim Bernia was sentenced to 4 1/2 years in jail for attempting to smuggle the cash from his drugs operation back to his native Morocco. Having hollowed out the innards of a washing machine he then stuffed black bags containing nearly £600,000 in the machine with a further £85,000 in the front for good measure. Fortunately the van carrying this loot this was discovered at Dover and the operation was traced backed to him.

IMHO, this is what cash seizure laws shouild be aimed at. So, well done people!

UK & Singapore increase the pressure on tax evaders

Image via Wikipedia

It still comes as a surprise to some that the UK has, since 1993, included tax evasion as a notifiable offence under its anti-money laundering regime. Which, for students of history, was a Conservative Government decision (Ken Clarke, if my memory serves me correctly).

Now followers of the dark art of money laundering will know that placing the proceeds of crime and or transferring them through offshore financial centres / international transactions is an essentai step in the layering process. So Sept 1st 2009 was a bad day for those people as the Singapore and UK Govt. announced an agreement to improve information sharing between the two countries. Our friends at the Association of International Accountants have pointed out that in March 2009, Singapore endorsed the new internationally agreed Standard for the exchange of information for tax purposes. It'll take some time for the details to be thrashed out, but times continue to change.

A blast from the past

Image via Wikipedia

Hi,

This post has nothing to do with money laundering but a great deal to do with fun.
In this case The 1980 Harvey's Casino Bombing. The link in the title takes to a short video clip of the event with background and narration by the FBI agent involved. Please note that no one was hurt in the making of the film. I also find it vaguely reassuring to note that human behaviour won through and that gamblers in Las Vegas used this rare event to make book on something new.
Enjoy.

Come on everybody, it's registration time!

You will recall that when the UK implemented the 3rd EU AML Directive in December 2009, it also made 22 existing organisations (like the AIA and IAB) responsible for regulating their members for the purposes of identifying and preventing money laundering and counter terrorist financing.

One of the new organisations which gained AML oversight responsibility was the UK Government’s Office of Fair Trading (OFT).

The following types of business are supervised by the OFT and will need to register:

• Consumer Credit Financial Institutions. These are businesses carrying on consumer credit lending activity who are neither authorised by the Financial Services Authority nor money service businesses supervised by Her Majesty's Revenue and Customs.

• Estate agents. This covers those engaged in estate agency work as defined by Section 1 of the Estate Agents Act 1979.
  

From 31st July 2009, the OFT now requires all its supervised businesses to register before the 31 January 2010. Fees would appear to range from £115 to £2,300.

Failure to register could lead to the OFT imposing a civil penalty or taking a prosecution if business is carried on after 31 January 2010. Prosecution could result in a sentence of up to two years in prison and/or an unlimited fine.

Remember, if you are supervised by the OFT you need to:

1. Register with the OFT before the 31 January 2010 - see Registration page.
2. Comply with the Regulations - including
a) confirm customer identity and ongoing monitoring of business relationships
b) keep records for 5 years from the end of the business relationship or, if an occasional transaction, the end of the transaction
c) appoint a Nominated Officer
d) implement risk based compliance policies and procedures, and
train staff in law and procedures.
3. Make Suspicious Activity Reports

From an economic point of view, the timing isn’t brilliant.

However, it is now time to implement your new systems, register and comply.

Money Laundering in action: Mixed views about this one..

This is a January 2008 story, originally shown as part of the BBC's CrimeWatch programme. So it is not fresh but it encapsulates nicely how:

1. Money Launderers don't care if you or your firm is regulated for AML purposes, they will just use you.


2. Transaction costs are of little consequence to Money Launderers.
   
3. Money Launderers ability to use your own systems against you (in this case ticket machines).


4. I've mixed views about this because although what they are doing is obviously a crime and they should be stopped, it does seem to be that they targeted some of the companies that I've commuted with! Sympathetic to the plight of these companies, I am afraid I am not.

"CCTV shows a large-scale money laundering scam taking place at train stations in south London, Surrey and Kent. Several suspects have been caught on camera using ticket machines to get rid of dyed/damaged notes stolen during cash-in-transit robberies. They select the cheapest fare, pay with a stolen note and then pocket the change. The scam is believed to have resulted in around £60,000 worth of notes being pushed through the machines in the last four months."

For CCTV footage of the people police want to talk to in connection with money laundering in London, Surrey and Kent, please follow this link :
http://www.bbc.co.uk/crimewatch/appeals/2009/02/train_station_money_laundering.shtml

Crime date: 19 January 2008
Nature of crime: Money laundering
Where: Train stations, London, South East
Contact: British Transport Police
Phone: 0800 405040