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Money Laundering Regulations, Police State?

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  • spinbuster
    spinbuster Posts: 50 Forumite
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    bowlhead99 wrote: »
    So, we wait with baited breath for your solution which revises how it all works.
    It is clear that the reporting of suspicions is necessary in relation to unorganised crime, especially in the current climate, although the exhaustive list of checks could be reviewed.
    As the “immense burden of the regime on the private sector” and its customers still remains, it would be more constructive and less cynical if you would make your own suggestion as to how this could be alleviated. Also, I am sure contributions from other sources would be welcome too.
  • dunstonh
    dunstonh Posts: 116,809 Forumite
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    Are there any legal eagles out there who can comment on this?

    excuse the copy and pasting....

    The Money Laundering Regulations 2007 – This implements EU law requiring financial firms to carry out Customer Due Diligence;

    The proceeds of crime act.

    Arranging - A person becomes involved in an arrangement they know or suspect
    involve the proceeds of crime. (14 years and/or a fine)

    Failing to report - An employee of a regulated firm fails to notify the MLRO that they know, suspect, or should have suspected, that a person is involved with the proceeds of crime. ( 5 years and/or a fine)

    "should have suspected" is where execution only firms can get caught. There is a legal respectability to report. Firms also have a responsibility to maintain awareness and be able to supply proof they are complying. Also, identity theft is one of the biggest issues in money laundering and the internet now accounts for 80% of all identity crime. (I sat my annual financial crime examinations recently which involved a re-read of the material, which included stats and snippets of examples).

    Interestingly, the material I read, put financial advisers at a low risk of financial crime. Completing due diligence is a little easier for us as we find out information that doubles up as useful for advice and allowing us to meet the guidelines. Completing due diligence is harder for firms that do not ask that information as part of their normal service.
    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.
  • JuicyJesus
    JuicyJesus Posts: 3,830 Forumite
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    spinbuster wrote: »
    As the “immense burden of the regime on the private sector” and its customers still remains, it would be more constructive and less cynical if you would make your own suggestion as to how this could be alleviated.

    Maybe it doesn't need to be.
    urs sinserly,
    ~~joosy jeezus~~
  • Tiglath
    Tiglath Posts: 3,816 Forumite
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    spinbuster wrote: »
    OK. So, for clarity, which authority is now receiving the notifications?

    The NCA (National Crime Agency) - replaced SOCA last October.
    "Save £12k in 2019" #120 - £100,699.57/£100,000
  • innovate
    innovate Posts: 16,217 Forumite
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    there's nothing like knowing your facts if you want to change the world.
  • spinbuster
    spinbuster Posts: 50 Forumite
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    Retesting/rechecking of bank account money for cleanliness?
    If a source of money is a bank account and it is transferred to an account in a different bank why would it need to be checked again?
    (N.B. This point was raised by my solicitor).
  • Aegis
    Aegis Posts: 5,688 Forumite
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    spinbuster wrote: »
    Retesting/rechecking of bank account money for cleanliness?
    If a source of money is a bank account and it is transferred to an account in a different bank why would it need to be checked again?
    (N.B. This point was raised by my solicitor).
    Because banks can't always be trusted to run their own checks properly?
    I am a Chartered Financial Planner
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
  • dunstonh
    dunstonh Posts: 116,809 Forumite
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    edited 18 June 2014 at 3:33PM
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    If a source of money is a bank account and it is transferred to an account in a different bank why would it need to be checked again?

    Because the second bank wont know if the first bank carried out AML checks on it. The second bank carries the liability
    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.
  • spinbuster
    spinbuster Posts: 50 Forumite
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    Yes I suppose it’s the inevitable consequence of the suspicion-based regime”. You cannot trust anyone else to do their job properly.
    So what happens if the receiving bank’s ML retest fails? The client must then be reported and service denied. But what about the source bank? Will it be reported as well? Will the receiving bank have to block all transfers from the source bank while a real policeman investigates to see if there is a plant i.e. a money laundering accomplice in the source bank?
  • Freecall
    Freecall Posts: 1,306 Forumite
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    I have often considered that we are in a kind of interim state when it comes to establishing identity for financial purposes. Remember, in banking terms this is all pretty new.

    The end-game has to be some sort of clearing house that establishes the identities of those undertaking financial transactions (run by a body such as the Payments Council under regulatory control maybe?). This would handle identity information for the entire financial sector.

    The cost of a specialised organisation doing this must be much less than each individual bank and financial institution doing its own checks and it would be easy to bring new financial operators into the fold when required.

    From the point of view of customers, they would only have to go through the checking process once (which because it is a one off process could be more thorough than it is now if required). This would mean that people find changing service providers much more straightforward.

    With the current system the point that dunstonh makes regarding the second institution carrying liability is a valid one but with a central clearing system liability for complying with the regulations could sit firmly with the clearing house.

    IMHO the current system of posting bits of paper here and there has to be unsustainable in the long term.
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