Money Laundering Bulletin

De-risking – how to sharpen a blunt instrument

Observers of AML and the compliance scene more generally have long recognised that headline regulatory fines are only one part of the price paid for rule breaches: management time and remediation are two other submerged portions of the total costs iceberg, but not the whole. All three also have an opportunity cost element, which may be incalculable. Now a fourth cost, again double-sided, must be added, namely, de-risking.

Customer Due Diligence, Monitoring, Banks, Practice Findings, North America

“Goodness had nothing to do with it”- a quote, not a comment on the diamond trade

High and stable in value, durable, compact - diamonds hold a unique appeal, whether for the rich and famous, the young couple looking for an engagement ring or the criminal wanting to hide and move his funds. The stones may sparkle but the business has its flaws, according to Financial Action Task Force findings. Sue Grossey examines every facet of the AML/CFT standard setter’s report.

Typologies, Precious Metal Dealers and Jewellers, Government and International Bodies

Further steps toward UK public register of company beneficial owners

The UK government will push ahead with plans to create a compulsory register of beneficial ownership information that will cover private companies, it announced on 21 April.

Trust and Company Service Providers, Consultations and Responses, Government and International Bodies, Legislation & Guidance, Europe, Corporate Vehicles

Criminal negligence – why AML isn’t working

Spending on anti-money laundering and combating terrorist financing is reaching levels even institutional shareholders may start to notice, but to what purpose? Convictions for money laundering and recovery of criminal proceeds remain de minimis. Tristram Hicks lays out the reasons and points a way forward.

Money Laundering, Law Enforcement, Assets Recovery, Government and International Bodies, Practice Findings

Policy matters

The young high-flyers in Whitehall, who deal with UK financial crime policy, in between winging along the corridors of power found time to talk to practitioners at the Anti-Money Laundering Professionals Forum annual financial crime seminar in the City of London. Timon Molloy reports.

Government and International Bodies, Supervisors, Europe

Call my bluff – Crimea

Sanctions, on the hard edge of international diplomacy, are presently ratcheting up over Crimea, with US and EU asset freezes and visa bans prompting retaliation in kind by Moscow, but there are good reasons to think they won't go much further, says Timon Molloy.

Sanctions, PEPs, Legislation & Guidance, Europe, North America

Ukraine – EU & US move to freeze assets

Sanctions, the bloodless weapon of foreign policy, are trained on the ex-President of Ukraine and ousted members of the regime. Susannah Cogman and Rod Fletcher of Herbert Smith Freehills report on the West’s financial offensive.

Sanctions, PEPs, Legislation & Guidance, Europe, North America
Money Laundering

Trust fund?

AML compliance costs are escalating – that’s not in question: KPMG’s latest survey puts the average rate of increase globally at 53% since 2011. One answer is for firms to work together to avoid duplication of effort and expense.

Customer Due Diligence, Practice Findings, Europe

Animal attraction 2: hunting the hunters

Measures against financial structures that underpin the illegal trade in wildlife may be at an early stage but firms should take note, there will be more to come, predicts David Carlisle.

Typologies, Bribery and Corruption, Predicate Crimes, Government and International Bodies, Legislation & Guidance
Risks and Controls

Corruption – where the buck stops

Money laundering controls are viewed as an important defence against corruption but is this an example of the private sector in a co-opted law enforcement role and is the regulated sector any good at halting such flows, which range from small-scale facilitation payments to kleptocrats’ transfers, asks Alan Osborn.

Bribery and Corruption, Government and International Bodies, Practice Findings, Supervisors

Safe bet – the risk in online gambling

Odds are better, overheads low, customers plentiful – online gaming has struck lucky, but is the wise money on the criminal or AML compliance to win? Paul Cochrane checks the state of play.

Payments, Internet, Casinos

Shell-shock: corporate service provider controls put to the test

There is one sure way to find out if your AML defences are working: try to breach them. Jason Sharman, a professor at Griffith University, Queensland, Australia, has spent over two years setting up untraceable shell companies through corporate service providers around the world. He talked to Lee Adendorff about some of the surprising findings from his research.

Customer Due Diligence, Trust and Company Service Providers, Practice Findings

Banking secrecy – Switzerland contemplates life beyond

Numbered accounts and incuriosity as to source of funds – stereotypical Swiss banking secrecy is buckling before international efforts to combat tax evasion. Daniel Pruzin reports from Geneva on how this landlocked state at the heart of the European Union, yet not of it, is coping with the new transparency agenda.

Customer Due Diligence, Tracing and Recovery, Banks, Legislation & Guidance, Practice Findings, Europe
Terrorist Financing

More fingers in more AML dykes

During its February 2014 plenary meeting, the Financial Action Task Force approved a bumper crop of follow-up evaluation reports, writes Sue Grossey. Last month, we looked at the fate of Luxembourg, now it is the turn of their lowland friends in the Netherlands.

Terrorist Financing, Customer Due Diligence, Financial Intelligence Units, Government and International Bodies, Practice Findings, Europe

Banking in Lebanon – the ultimate balancing act

Lebanon’s hard-won, always precarious reputation as a comparatively clean banking location in the Levant was dealt a severe blow with the Lebanese Canadian Bank case in 2011 but it has restored confidence overseas, notably in Washington, in time to confront the financial fallout of war in neighbouring Syria. Paul Cochrane reports from Beirut.

Terrorist Financing, Sanctions, Banks, Money Service Businesses, Practice Findings, Supervisors, Middle East
Legal / Regulatory

Better late than out – Turkey tackles terrorist finance

Financial Action Task Force patience was running on empty when Ankara finally passed terrorist financing legislation. One crisis averted, perhaps, but Paul Cochrane, in Beirut, and Michael Kosmides, in Athens, find that other deficiencies persist.

Government and International Bodies, Practice Findings, Europe, Middle East

Control without constraint – EU’s e-money balance

Money flows constantly, always finding new, electronic channels. European legislators are hard at work on how to regulate rather than divert (much less stem) the tide of innovation. Robert Stokes reports on the current Fourth EU ML Directive proposals.

Payments, Banks, Money Service Businesses, Legislation & Guidance, Europe

Policy and practice: from beneficial owners to bank charges

Parliamentarians in Brussels are busily amending the draft Fourth EU Money Laundering Directive before May’s election purdah; the British will be happy, certainly, that the latest compromise proposals on beneficial ownership data further last June’s G8 transparency agenda espoused by PM David Cameron. While the lawmakers debate, major banks - notably, recently, BNP Paribas and Credit Suisse - continue to weigh the known and potential cost of non-compliance with existing legislation. Timon Molloy reports.

Sanctions, Customer Due Diligence, Tax Evasion, Legislation & Guidance, Practice Findings, Europe, North America

Facts and figures – KPMG surveys the AML world

Annual worldwide expenditure on AML is set to pass $10bn in the next couple of years while compliance professionals continue to cite regulatory change, rather than challenges in combating financial crime, as their number one concern, reports KPMG’s 2014 Global AML survey.

Sanctions, Customer Due Diligence, Training, Practice Findings, Supervisors