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Money Laundering Regulations, Police State?

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  • Minrich
    Minrich Posts: 635 Forumite
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    One of the biggest issues with Banks is that they are facilitating fraud offences from all around the world . Banks have opened so many fraudulent bank accounts they won't disclose how many but they have open tens of thousands all with fake identity , you only need to have a bank account to receive funds into it , then you can withdraw anywhere you can find a cash point . Banks openly rewarded their staff for opening accounts . Fake passports (police cannot spot fake passports let alone 20 year old bank staff) and other documents used and this has led to vast amounts of online scams and fraud over the last 10 years . Banks won't reveal information either like they used to and require production orders before judges to allow police access and pass details of account holders etc . This led to Action Fraud being the lead on this type of thing , who basically just record crimes and little else . Its a disgrace and something they seriously need to address . Even when the police tell them a certain account is being used fraudulently they still do not close if or freeze it !
  • spinbuster
    spinbuster Posts: 50 Forumite
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    Are customers and businesses carrying too high a cost burden in support of Anti-Money Laundering Legislation?
    Following the submission of 316,572 Suspicious Activity Reports in 2013, the National Audit Office (NAO) reported that of an estimated £52 billion Proceeds of Crime less than 1% was confiscated in England & Wales in 2013. (Ref : https://www.nao.org.uk/press-releases/confiscation-orders/ Dec 13).
    Also apparently, Transparency International recently quoted the UN as stating that only 1% of laundered money is ever detected worldwide.
    In view of this, are the majority of law abiding businesses and their customers being expected to conduct business in a climate of over regulation and legally imposed suspicion unnecessarily?
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    edited 12 May 2015 at 7:19PM
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    AML/CFT compliance is expensive for business. Some costs are also borne by the customers either indirectly through product prices or directly when they have to expend effort or cost providing information, explanations of their activities, or evidence of their identity etc, when carrying out financial transactions.

    If there is £52bn proceeds of crime (in total out there, or per year?) and less than £520 million was confiscated last year, this serves to indicate that getting money back off criminals is not particularly easy.

    The current regulations as implemented in the UK and most leading financial centres follow, broadly, the FATF recommendations, and have industry-specific guidance for regulated businesses to follow. At the moment, the 4th EU directive on AML is pretty much final and ready to be implemented by member states; it will have some further bits that were not in the previous regulations but are agreed by international politicians to make sense without being disproportionate to the objectives.

    If only some fraction of a percent of UK criminal proceeds is being recovered, and we have a large financial system so plenty of criminal money flows around it (either proceeds of domestic or foreign crime), this is probably something for which we should aim to improve efforts. But you think we should instead reduce efforts, or at least take whole swathes of our financial sector businesses and its workers out of the effort? Perhaps all commercial and private financial transactions should be carried out through used banknotes passed under the table with no monitoring or reporting possible or required? That would certainly be an easier life for regulated financial services businesses.

    But as people have a desire to move assets around the world electronically in milliseconds, and they do that with the help of lawyers, accountants, solicitors, bankers, custodians, trustees and other financial institutions, it would seem like you would be on to a winner if you involved those firms and organizations in the identification and monitoring parts of the anti-criminal regulation. They are well placed to assist or thwart the criminal objectives of laundering.

    If we're currently only annually confiscating a few hundred million of the tens of billions of criminal proceeds swilling around the UK financial system, and you want more, what is your solution for getting more, and ticking up the recovery rates to collect hundreds of millions or billions more? Surely you would prefer criminals not to get away with their crimes so I await your solution.
  • spinbuster
    spinbuster Posts: 50 Forumite
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    bowlhead99 wrote: »
    what is your solution for getting more, and ticking up the recovery rates to collect hundreds of millions or billions more? Surely you would prefer criminals not to get away with their crimes so I await your solution.
    For there to be a criminal, a crime and the proceeds of crime there has to be a conviction of an individual.
    In my opinion:- a circa 1% confiscation rate is about all that can be expected from legislation that targets individuals but not whole organisations. You cannot put a whole bank in jail. You could use the Proceeds of Crime Act to prosecute a few individuals/scapegoats? but that would not improve the confiscation rate. This leaves the lion’s share of dirty money passing through the banking system being considered as the proceeds of misconduct under “too big to fail”. (Proceeds of misconduct would include; fixing of Libor, Foreign Exchange rates, & interest rate swaps, plus; drug money, money from Tax Evasion, and money stolen by politicians from their own countries, etc).
    As the financial services sector is such a large part of our economy, we all benefit as a nation from the proceeds of misconduct on a top down diminishing basis. Perhaps this is why Andrew Bailey tried to persuade the USA authorities to reduce or eliminate their large fines on our banks as they are considered an unwelcome cost of doing business. See: http://www.ft.com/cms/s/0/9d92da98-431f-11e4-8a43-00144feabdc0.html#axzz3I12hLwPE
    John le Carre gave us a fictional depiction of money laundering in the City in his novel “Our kind of Traitor”.

    If the nation benefits from the proceeds of misconduct then should we be surprised at the reluctance to turn it into the proceeds of crime in order to able to confiscate it? The current national inertia in reacting to the huge proceeds of misconduct however, makes anti-money laundering legislation look like expensive window dressing funded by the majority of law abiding consumers and businesses.

    Not surprisingly, I do not have a solution for confiscating the billions.
    Perhaps the solution, if the state wants one, lies with other legislation which is more suited to the job.
    See, for example:- “HSBC should face UK criminal charges, says former public prosecutor” at http://www.theguardian.com/politics/2015/feb/22/hsbc-uk-criminal-charges-former-public-prosecutor-hmrc

    See also: “London property boom built on dirty money” at http://www.independent.co.uk/news/uk/home-news/london-property-boom-built-on-dirty-money-10083527.html?origin=internalSearch
  • spinbuster
    spinbuster Posts: 50 Forumite
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    bowlhead99 wrote: »
    Surely you would prefer criminals not to get away with their crimes so I await your solution.
    The concept of the ‘Proceeds of Crime/ Possession of Stolen Property’ predates Anti-Money Laundering legislation.
    I fully agree that criminals should be denied the proceeds of their crime i.e. “Criminal Property” as defined in the Proceeds of Crime Act 2002 (POCA).
    I support the enforcement of the primary “Money Laundering Offences” in Part 7 Sections 327,328 & 329 (14 years imprisonment) i.e. Acquisition, Use, Possession, Concealment etc. of “Criminal Property”. These are the relevant offences committed by money launderers who will include in their number a minority of corrupt professionals.

    The Proceeds of Crime Act sections that create the high cost burden for businesses and their customers by creating totally new offences are:- 330 Failure to disclose (5 years) & 333 Tipping Off (2 years). These sections force the majority of law abiding professionals into becoming unpaid partly undercover police persons probing their customers financial affairs beyond that required by the business transaction in hand. However these sanctions are not a problem for corrupt professionals who will ignore them and will be able to submit plenty of Suspicious Activity Reports (SARs) about their law abiding clients in order to provide a cover for their illegal activities.
  • spinbuster
    spinbuster Posts: 50 Forumite
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    What is the cost of Anti-Money Laundering legislation (AML) compliance?


    The Economist estimated the annual costs of anti-money laundering efforts in Europe and North America at US$5 billion in 2003. (Ref. Wikipedia AML).
    Do any of you moneysavingexpert folk know what it is now?
    Is the AML consultancy sector opposing reform?
    See “AML in the Real World: Progress & Problems” at http://slideplayer.com/slide/1682422/ (especially slides 18, 20, 23 & 24) for a balanced view.
  • redux
    redux Posts: 22,976 Forumite
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    If you are worried about other entities being required to report suspicions, and thus according to you being dragooned into doing the police's job for them, what is your attitude to other types of crime besides money based?

    If you see someone breaking into a building, or someone being attacked, does that invoke a similar revulsion that someone should be doing something about this, but not necessarily you?
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    spinbuster wrote: »
    The Economist estimated the annual costs of anti-money laundering efforts in Europe and North America at US$5 billion in 2003. (Ref. Wikipedia AML).
    Do any of you moneysavingexpert folk know what it is now?
    No. Like most estimates of global costs in relation to any person's or special interest group's pet issue, it is not the sort of number that the average layman has in their back pocket, nor is it a number about which they are passionate or even interested in.
    Is the AML consultancy sector opposing reform?
    I would doubt it, because compliance consultants make their living from changes to regulations.
    See “AML in the Real World: Progress & Problems” at http://slideplayer.com/slide/1682422/ (especially slides 18, 20, 23 & 24) for a balanced view.
    I wouldn't see slides 23 and 24 as 'a balanced view'.

    One asks some of your questions about whether actions are targeted effectively, without proposing answers - presumably the author actually giving the presentation would have expanded on the bullet points and talked around them, but these throwaway questions by themselves are not particularly enlightening.

    The other is specifically a list of "devil's advocate" views, which suggests that the amount laundered is not very high, impounding assets won't make criminals stop being criminals, and government has lost the war on crime so there's no point continuing; which also seems to be your misguided view but probably not one shared by many.

    As the presentation was posted almost a decade ago and doesn't appear to contain any facts since 2003, it pre-dates the EU's Third Money Laundering Directive which came out 2005, the UK's Money Laundering Regulations off the back of that (which are themselves 8 years old now), FATF's 2012 recommendations, and the forthcoming EU fourth directive which implement them. So, it's hardly a 'current state of the nation' address.

    Your 'spinbusting' viewpoint seems to be that implementing measures to contain financial crime and imposing them on financial institutions is expensive and intrusive, and the police should somehow fight the good fight against criminals and terrorists without recourse to the data held by financial institutions (and that the financial institutions should make no effort to identify their clients or monitor transactions for any kind of suspcious activity).

    Perhaps your way of doing it would be cheaper, but ineffective. So the question is do we want to spend money and implement rules and controls to do something effective against criminals, at the cost of some ££ and minor personal liberties; or not? In other walks of life for the fight against other types of crime, we accept rules and controls and costs as being a necessary evil to avoid a portion of the evil that would be done unto us by the criminals.
  • Transformers
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    POCA assists in the control of all types of criminality - including terrorism.

    I just don't get why this one poster feels it necessary to 'crusade' on here - surely booking an appointment with his democratically elected MP would be a better way to influence legislative change... rather than boring us with biased reports selected specifically because they support a very narrow view.
  • Pincher
    Pincher Posts: 6,552 Forumite
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    The bureaucrats are always making up rules to cover their back sides.


    Remember the Indian arranged marriage brides had to prove they were virgins to be allowed into Britain? Now we are the women who have to prove we are virgins.


    In a cherry picking system, what do you do if you lost your cherry?


    If I pay off a £150k mortgage from a bank account, you can bet that money hasn't been sitting in that bank for months, not making interest. In fact, it's bound to be from multiple sources. If the lender queries, or the bank does, it could be quite a process. In this paperless age, I have no doubt these paper pushers will want "original" statements, which they will promptly scan and shred.


    If I lent somebody £5,000, and they paid me back, and there was no loan agreement, how is it going to look if I got audited by the HMRC?


    I know this couple, who were market stall traders.
    There was one incoming amount that they couldn't produce a statement for, and the Inland Revenue assessed backdated tax and destroyed them financially.


    Not everyone has a steady job, one wife, one ISA, one mortgage, and one bank account. Suspicion of money laundering and undisclosed income can mean triggering a major rogering from the HMRC.
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