Money Laundering Regulations, Police State?

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The EU third money-laundering directive is given effect in the United Kingdom by the Money Laundering Regulations 2007.

I believe that the government and EU are demonstrating double standards and hypocrisy regarding Anti-Money Laundering Regulations which corrupt a basic principle of law by requiring proof of innocence and which increase the size of the Police State.
Since the introduction of the “ New Labour ” Money Laundering Regulations 2007 anyone wishing to transfer money through the accounts of professionals can be asked to provide “ proof of innocent acquisition of funds ”. The old legal principle “innocent until proven guilty” no longer applies. Basically, every solicitor, accountant, banker etc. is now acting as an unpaid state policeman in addition to providing the service their clients pay for. Also, should any of these proxy policemen suspect money laundering is taking place, they are required to notify the authorities without informing their client. They face criminal sanction if they are deemed to have knowingly or unknowingly laundered funds through their accounts or have tipped off their client. These extra unpaid duties required of them by government increase their cost of doing business.
(See The Law Society’s checklist on how to become an unpaid state policeman:- http://www.lawsociety.org.uk/advice/practice-notes/aml/money-laundering-warning-signs)

Are the regulations counterproductive and do they reduce security?

Large amounts of Sensitive Confidential ID information including quality copies of passports, bank statements, national insurance numbers etc. have been gathered and are now sitting in professionals’ files nationwide at risk of misuse i.e. leakage to criminals and terrorists.
The anti tip-off rule could be totally ineffective as withholding service from the client is, in effect, tipping them off. Would a good intelligence/security service operate in this way?
Also are some professionals and financial institutions taking advantage of the regulations to demand more personal information than is required i.e. phishing?
(See e.g. Selftrade at: http://www.ft.com/cms/s/0/f919cace-ca12-11e3-ac05-00144feabdc0.html?siteedition=uk#axzz2zj1JC8Si and comments)

Double Standards?

Ordinary people and professionals are subject to criminal sanction but Banks and Financial Institutions just get fined in a continuing climate of light regulation.
Ominously, recent actions against UK institutions appear to have been initiated mainly by oversight authorities in the USA forcing the UK reluctantly into late action.
(See:- “Notable cases” at Wikipedia http://en.wikipedia.org/wiki/Money_laundering

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9413299/HSBC-money-laundering-where-was-the-regulator.html

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9939463/Argentina-charges-HSBC-with-alleged-money-laundering.html

http://blogs.telegraph.co.uk/finance/ianmcowie/100011790/tax-amnesties-turn-hmrc-into-biggest-money-laundering-operation-in-history/ )

Also the rich, especially the foreign rich, appear to have acquired a certain immunity.
See http://rowans-blog.blogspot.co.uk/2013/04/russian-money-laundering-in-london.html
This issue has also been recently covered, but less provocatively, by the BBC.

(See Lord Jopling’s request for change here :- http://www.bigbrotherwatch.org.uk/home/2009/12/your-financial-transactions-are-far-from-private.html )

What do you think about it?

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Comments

  • Happychappy
    Happychappy Posts: 2,936 Forumite
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    Money Laundering Regulations = Criminals stopped freely moving money round freely ?

    Don't agree with the conspiracy theory and everyone's out to get me routine, nothing to hide, so happy to answer questions.
  • MarcoM
    MarcoM Posts: 799 Forumite
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    Money Laundering Regulations = Criminals stopped freely moving money round freely ?

    Don't agree with the conspiracy theory and everyone's out to get me routine, nothing to hide, so happy to answer questions.

    The problem is that these regulations are not applied properly by banks. There are financial advisers who have had cheques written by wealthy customers bounced because banks use this as an excise to call the client in for a sales chat under the disguise of a signature check. Ask the financial advisers on these boards if they and their clients have had problems caused by these regs.
  • Happychappy
    Happychappy Posts: 2,936 Forumite
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    It's no different to the current tax laws ! Those with money can evade, avoid or whatever their highly paid accountants dream up, but to base laws on the likelihood that 100% will comply is unrealistic.

    I agree that most regulations have loopholes and can be exploited, but hopefully it will disrupt some criminals, admittedly not the criminals with good accountants, such as MP's ; )
  • spinbuster
    spinbuster Posts: 50 Forumite
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    The main issues affecting ordinary people arising out of the Money Laundering Regulations are:-
    1) Proof of innocent acquisition of funds required.
    2) Denial of service taking place without explanation or accountability e.g. freezing of Bank Accounts and House Purchases. (N.B. Denial of service without explanation is in conflict with consumer protection legislation).
    3) Proxy police force created i.e. Solicitors, Accountants, Bankers etc. where one group i.e. the Bankers, are both police and criminals with de facto immunity from prosecution.
    4) Increased exposure to ID theft e.g. of Passport Details, Bank Account Details, NI numbers due to widespread digital copying of this information.
    5) Abuse of the regulations i.e. Companies phishing for additional personal information beyond that required by the regulations.
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    I've seen about 10 posts from you in the last month or so decrying the effects of anti money laundering regulations.

    Essentially,
    1) Financial services providers are required to attempt to establish the identity of the depositor and legitimacy of the funds before investing or holding them for a customer.

    2) They do this using a risk based approach using principles which follow local regulations, which are, broadly, agreed on a global basis between most credible financial centres (some of which inevitably have more stringent rules than others).

    3) Certain organisations will for one reason or another take a heavy handed approach or a light touch approach depending on their own attitudes, but they play on a locally or globally competitive paying field with other firms so can't afford to annoy their customers too much, which introduces a bit of self-moderation.

    So, those are the facts. What I haven't seen from you is a suggestion of how the world could better counter money laundering and the financing of terrorism.

    You don't want the banks or investment firms to fully identify their customers or be able to request explanations for source of funds or general source of wealth, because that might be offensive to people who were not criminals. And in the course of documenting who the customers are, you don't want the financial institutions to record any personal information, in case when they do this electronically, they accidentally publish copies of it to all and sundry or forget to implement decent security.

    So, I'm curious how you would propose to address the issue, other than voting UKIP in the hope that they ignore what the rest of the world is doing and maybe come up with something you prefer.
  • dunstonh
    dunstonh Posts: 116,661 Forumite
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    1) Proof of innocent acquisition of funds required.

    Not normally required unless it is a larger amount or unexpected for your typical circumstances.
    2) Denial of service taking place without explanation or accountability e.g. freezing of Bank Accounts and House Purchases. (N.B. Denial of service without explanation is in conflict with consumer protection legislation).

    Rarely happens. Only normally when sufficient evidence exists to take it to that level.
    3) Proxy police force created i.e. Solicitors, Accountants, Bankers etc. where one group i.e. the Bankers, are both police and criminals with de facto immunity from prosecution.

    Rubbish. bank staff can face imprisonment.
    4) Increased exposure to ID theft e.g. of Passport Details, Bank Account Details, NI numbers due to widespread digital copying of this information.

    There are databases with that information on. A lot of it is in the public domain.
    5) Abuse of the regulations i.e. Companies phishing for additional personal information beyond that required by the regulations.

    There is no requirement by regulations. There are guidelines which are left open to interpretation and based on risk analysis. It would be rare for any info from AML checks to be useful for marketing purposes.
    What do you think about it?

    Don't you have something better to do with your time? or perhaps you have something to hide and that is why you don't like it?
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • BillJones
    BillJones Posts: 2,187 Forumite
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    OP, are you equally as upset by security tags on clothes, barriers on the tube trains, and security desks in office buildings?

    The world is absolutely filled with checks and systems that are designed to stop bad people, but which also inconvenience the rest of us. Cracking down on money laundering is a pretty useful thing to to, and the checks are a very minor inconvenience to people who don't wish to break the law, so why get so upset?
  • JohnRo
    JohnRo Posts: 2,887 Forumite
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    "Give me control of a nation's money and I care not who makes it's laws" — Mayer Amschel Bauer Rothschild.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
  • magpiecottage
    magpiecottage Posts: 9,241 Forumite
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    BillJones wrote: »
    OP, are you equally as upset by security tags on clothes, barriers on the tube trains, and security desks in office buildings?
    Or speed limits which would not be necessary if everybody drove according to the abilities of themselves, their vehicles and the road conditions.

    A pain, yes but the alternative is worse.
  • spinbuster
    spinbuster Posts: 50 Forumite
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    I am advocating revision/amendment not abolition. Also, I believe all the major points in my post have been supported by a reference.
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