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Money Laundering Regulations, Police State?

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  • dunstonh
    dunstonh Posts: 116,865 Forumite
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    penalties have largely been financial. Running into millions of pounds.
    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.
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    BillJones wrote: »
    I don't monitor the numbers, I just make damned sure that I'm not among them. We all do, with repeated training in the area.

    If you want an example, though, look at HSBC.

    Yes but that was an American money making venture on foreign banks as much as any sign of error or culpability. I'm not sure there are any foreign banks that haven't been hit with fines for operating in the us and it seems to have been treated as just an additional tax by most the commercial decision being it's still worth it for the presence in the country. Same as standard chartered for supposedly breaking sanctions.
  • spinbuster
    spinbuster Posts: 50 Forumite
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    To reduce the “immense burden of the regime on the private sector” and its customers and return it to the public sector, a possible alternative method of working could be:-
    Continue the reporting of ML warning signs by the private sector as long as the police need it. A specialist police force then decides which of these it will investigate.
    Trust the good apples to report, and remove the threat of imprisonment from them for not doing someone else’s job correctly. Remove the requirement to retain confidential client information in order to prove a check has not been missed.
    Deny service only on the instruction of the specialist police.
    Specialist police continue to monitor for bad apples
  • redpete
    redpete Posts: 4,697 Forumite
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    spinbuster wrote: »
    What do you think about it?
    I'm more bothered by your continued use of tiny fonts than I am by the regulations you mentioned.
    loose does not rhyme with choose but lose does and is the word you meant to write.
  • atush
    atush Posts: 18,731 Forumite
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    I agree, highly irritating
  • spinbuster
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    Apparently, it is now suspicious to be a politician, or related to a politician, which could result in a suspicious activity report (SAR) being sent to the NCA.
    The relevant wording appears to be:-
    [FONT=&quot]“[/FONT][FONT=&quot]Holds or has previously held a public position (political or high-level professional appointment) or has professional or family ties to such an individual and is engaged in unusual private business given the frequency or characteristics involved.”[/FONT]
    [FONT=&quot] [/FONT]
    [FONT=&quot]See [/FONT][FONT=&quot]http://www.bbc.co.uk/news/uk-politics-29618172 and listen to BBC Moneybox 25 Oct14 for the fallout.[/FONT][FONT=&quot][/FONT]
    [FONT=&quot][/FONT]
  • dunstonh
    dunstonh Posts: 116,865 Forumite
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    Apparently, it is now suspicious to be a politician, or related to a politician, which could result in a suspicious activity report (SAR) being sent to the NCA.

    PEP checks have been in place for some time. It is not something new. Also, it does not require a suspicious activity report to be sent. It just flags up further checks.

    Stop living in Daily Mail land.
    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.
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    spinbuster wrote: »
    Apparently, it is now suspicious to be a politician, or related to a politician, which could result in a suspicious activity report (SAR) being sent to the NCA.
    The relevant wording appears to be:-
    [FONT=&quot]“[/FONT][FONT=&quot]Holds or has previously held a public position (political or high-level professional appointment) or has professional or family ties to such an individual and is engaged in unusual private business given the frequency or characteristics involved.”
    [/FONT]You are making it up as you go along. It is not a 'suspicious activity' to be a politician and simply being one does not result in reports being generated, at all. A SAR is a report of suspicious activities.

    Perhaps being 'engaged in unusual private business' as you describe it, may indeed result in undertaking certain transactions that would be considered suspicious if they did not have obvious economic benefit and if you as the banker or solicitor or accountant or broker/custodian did not understand the nature of how the account would likely be used. So, as a regulated service provider to a politically exposed person (PEP), a higher standard of client due diligence would typically be required, in order to establish source of wealth, source of funds etc.

    Regulated financial services businesses have had PEPs on their radar for years, since before the last regulations came in in the UK in 2007. Regulations are developed internationally and around the world there is an acknowledged risk of the potential of corruption when working with individuals who have political or high profile corporate exposure and more opportunities and incentive to be involved in corruption, bribery and other acts that they may wish to conceal from public record. Hence, regulations designed to prevent or detect financial crime, money laundering or counter the financing of terrorism, quite reasonably highlight a political exposure as a point of risk, compared to another customer who does not have such exposure.

    All AML work these days is driven from risk-based frameworks. Sometimes that results in the practical implementation being driven by checklists to control the risks and ask the right questions to cover those risks. You might dismiss that as a 'box ticking exercise' however you have not proposed your own alternative solution on this or any other thread even after being prompted several times. On the Beeb article, a Lord called for a balance so "terrorists and criminals" were targeted, leaving "the rest of us free to go about our business".

    In other words, "Don't try to target me, or look for risk indicators for me, or make me prove anything about the legitimate source of my wealth, because I'm a good guy. There have never been UK politicians who have ever abused power or status, or concealed the results of illegal economic benefits they obtained. You just need to be targeting all those other bad guys cheers thanks bye."

    You can see some guidance on the subject matter on the Law Society website here or from FATF themselves here.

    When the FSA carried out its review of practice within banks (a small subset of its regulatory remit) in 2011 it noted that examples of 'good practice':
    • A clearly articulated definition of a PEP (and any relevant sub-categories) which is well understood by relevant staff.
    • Considering the risk posed by former PEPs and ‘domestic PEPs’ on a case-by-case basis
    Bad practices included:
    • Informal, undocumented processes for identifying, classifying and declassifying customers as PEPs.
    • Failing to carry out enhanced due diligence on customers with political connections who, although they do not meet the legal definition of a PEP, still represent a high risk of money laundering
    Inevitably we would expect the market practices to evolve over time and react to worldwide guidance from international think-tanks such as FATF which are funded by the governments.

    The fact that an individual MP or Lord moans to the BBC that his daughter had to jump through an extra hoop to satisfy a financial service provider should not change the global standards or put undue pressure on his government colleagues to change the rules. Sitting in government and making one rule for yourself and another for everyone else "Ha! I claim Diplomatic Immunity!" should not be encouraged. Most people have no sympathy with MPs or other PEPs. They should be honoured to have the opportunity to serve, whether by election or birthright, and they should take the bad with the good when it comes to consequences of their office.

    But to clarify the implication you made in your original point: merely being related to someone does not automatically result in an SAR being filed to the police. If your transactions are suspicious and you are not forthcoming with reasonable explanations, perhaps it might, because that is the point of a suspicious transaction report.

    IMHO, while you market yourself as 'spinbuster', in fact it is your own spin that is in need of busting.
  • spinbuster
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    Mr Andrew Bailey deputy governor of the bank of England recently expressed concern about the widespread examples of firms withdrawing services and dropping customers in many parts of the world because of anti-money laundering legislation (AML). Perhaps, this will lead to a review of the “bad for business” anti-tipoff requirements in AML.
    He is also very concerned about banks being heavily fined by US authorities for laundering money.
    See:- [FONT=&quot]http://www.ft.com/cms/s/0/9d92da98-431f-11e4-8a43-00144feabdc0.html#axzz3I12hLwPE[/FONT]
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    He is concerned by US authorities fining banks without consulting with the home regulator because it can threaten financial stability if banks are suddenly on the hook for multimillion or billion dollar fines without their home regulator working with the US for a coordinated approach.

    He also doesn't want to see banks just stop serving people to avoid incurring the wrath of a heavy handed regulator, as that doesn't actually achieve the objective of banks countering the threat of money laundering; it just pushes clients away to other banks that will take them.

    Both of those positions seem common sense to me.

    I'm not sure how you make the leap from that to the review or repeal of 'anti-tipoff' requirements. What do you suggest, 'pro-tipoff' ?
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