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Money Laundering Regulations, Police State?

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  • spinbuster
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    An article in the Telegraph has recently quantified the limitations of “Action Fraud”. According to the article, combined sums of less than “£1m” will not be investigated by the police for cost reasons. See:- http://www.telegraph.co.uk/finance/personalfinance/investing/11812377/Victim-of-fraud-Why-the-authorities-WONT-investigate.html

    We are told that the main purpose of Anti-Money Laundering legislation is to deny criminals and terrorists the proceeds of their crimes in order to prevent further funding of crime and terrorism.
    However, it is clear that combined sums of less than “£1m” or even a single sum as low as say £10,000 could finance a lot of crime and terrorism. This leaves the state with a serious credibility problem.

    The article demonstrates the significant comparison that can now be made between the way the state is operating the Proceeds of Crime Act (POCA) as compared with the legal requirements POCA imposes on the private sector.
    It appears that cost can come before crime and terrorism unless the cost is incurred by the private sector and its customers. Clearly the state has the freedom of not enforcing the law when the cost of enforcement is deemed to be too high, and unlike the private sector there is no provision in POCA to prosecute its paid police force for lack of due diligence, this being quite rightly an internal disciplinary matter and not a criminal one.

    The private sector, however, has no such freedom. It is forced to endure considerable additional cost while its staff live in fear of prosecution for failing to perform additional unpaid due diligence duties imposed on it by the state. There is no minimum suspicious amount for the private sector but, in practice, the state appears to be working to a “£1m” minimum combined amount even when there is plenty of evidence, not just suspicions, i.e. with so called small frauds where allegations are supported by evidence, this evidence is far more significant and valuable in supporting police investigations than the mere suspicions that the private sector submits to the NCA in its mandatory suspicious activity reports (SARs).
  • spinbuster
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    redux wrote: »
    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
    Unfortunately. like some other contributors to this thread you misrepresent the issue as one of ‘Reporting v Not Reporting’ suspicious activity. However, the issue is one of ‘Voluntary Reporting v Mandatory Reporting’ i.e. When is it appropriate for the state to force law abiding citizens to report and become unpaid police?

    Witnessing a break-in or someone being attacked is witness evidence, not merely the reporting of a suspicion such as if someone was standing outside the building for too long and could not, or would not, explain the reason why. Many citizens including myself would voluntarily report the serious incidents you mention. However, should they be prosecuted if they don’t? Should a local resident who challenges the loiterer be prosecuted if he/she doesn’t report suspicious activity.
    Unfortunately, according to the article in the Telegraph above, the state and Action Fraud does not appear to have your, and also my, moral concerns
  • spinbuster
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    boring us with biased reports selected specifically because they support a very narrow view.

    Why not broaden the discussion and make it more interesting by submitting your own reference material?
  • spinbuster
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    surely booking an appointment with his democratically elected MP would be a better way to influence legislative change
    Good point. Contacting their MP (or SMP) and MEP would be a relevant course of action for law abiding MSE forum readers who have been adversely affected by the intrusive effects of Anti-Money Laundering Legislation. These intrusive effects could typically be where their consumer rights have been legally overridden by anti-money laundering legislation e.g.
    1) A bank account is frozen for no apparent reason and the bank does not respond or responds inadequately as defined by consumer rights legislation.
    2) A financial or legal professional ceases to respond to communications from the client without any warning.
    3) A financial professional asks for more personal and financial information than is thought appropriate for the business transaction in hand e.g. the customer just wants to invest a sum of money but is asked questions that would normally only be appropriate for taking out credit.
    4) A share dealing service asks for details of net worth, inheritances etc.
  • inflationbuster
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    Last time l phoned my broker she wanted to query my financials. I just told her l needed to rush and didn't have the time. Last l heard of it.

    The only time l got a call from the bank was when l transferred over £100K from my broker and my bank asked if l had liquidated my stock which funnily enough was the case. Otherwise l don't seem to get any calls when transferring say £50K in. I guess that's because my account manager knows my net worth and what l earn.
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
    Name Dropper First Post First Anniversary Post of the Month
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    spinbuster wrote: »
    According to the article, combined sums of less than “£1m” will not be investigated by the police for cost reasons.
    The article does not say that combined sums of less than £1m will not be investigated by the police for cost reasons. Again you are just spinning your own little viewpoint to give yourself a fake headline to rant about.

    The Smith & Williamson fraud team said that amounts under 100k were not worth pursuing because you could spend 100k to pursue and prosecute. Action Fraud noted that a small one-off swindle may not be referred unless there is a sizeable network to pursue.

    Separately, it was noted that cases of £10-50k are small beer compared to the massive cases which the Serious Fraud Office deals with (they would be unlikely to take on a case that was not in the millions).

    If my little old grandma is phone scammed or conned by a door to door salesman for £500 or £5000, I would not expect that this would qualify as something for the Serious Fraud Squad to get their hands dirty with unless there was a large . I'm quite happy for the SFO to just deal with SFs of the million-pound-plus variety.

    However, you are looking at the practical lower limit of what the SFO deals with (because it's busy and focussing resources on the major multimillion frauds), and saying that the police won't look at anything below that level, which is patently untrue. And you are somehow seeking to bring that mis-reading of the article back to your rant about how you don't like AML regulations.

    We get it, you think financial services businesses which move money around for people should not be bound by anti-money laundering regulations because putting in a compliance department and potentially making suspicious activity reports when someone is behaving suspiciously with the money you are handling for him, is burdensome for those companies and, thereby, society.
    spinbuster wrote: »
    Good point. Contacting their MP (or SMP) and MEP would be a relevant course of action for law abiding MSE forum readers who have been adversely affected by the intrusive effects of Anti-Money Laundering Legislation. These intrusive effects could typically be where their consumer rights have been legally overridden by anti-money laundering legislation e.g.
    1) A bank account is frozen for no apparent reason and the bank does not respond or responds inadequately as defined by consumer rights legislation.
    2) A financial or legal professional ceases to respond to communications from the client without any warning.
    3) A financial professional asks for more personal and financial information than is thought appropriate for the business transaction in hand e.g. the customer just wants to invest a sum of money but is asked questions that would normally only be appropriate for taking out credit.
    4) A share dealing service asks for details of net worth, inheritances etc.
    The way you are talking, I must be in a tiny minority because for some reason I haven't ever had a bank freeze my accounts with no apparent reason and had the bank not respond; neither have the financial or legal professionals whom I come across abruptly cease communications with me.

    I have certainly had people who are investing my money for me, ask about my source of wealth and source of funds for the transactions. And share dealing sevices have indeed enquired about source of funds, likely level of transactions going through the accounts. I can understand why they do that, because I understand the regulatory regime, so it is not a problem; I can see why others might be curious why the information is needed, and hopefully the financial services businesses which want to take the customers money will be able to enlighten the customers as to why the questions are relevant.
    spinbuster wrote: »
    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.
    Why not broaden the discussion and make it more interesting by submitting your own reference material?
    Because this thread is basically your thread for crusading against anti-money laundering regulations adopted by most of the developed world. It is a minority interest thread. Most people do not have 'reference material' to share and do not have the inclination to go out and find some because it is not a very exciting topic, as judged by the number of views and posts compared to some long-running threads on here.

    Every few months you drop in and leave some random article you have seen (however many years out of date it is). Posters who point out flaws in your logic or try to explain things to help enlighten you or help improve your world view, are typically ignored or responded to with something that just makes them put their head in their hands and think... I can't be bothered getting into a discussion with this guy because he doesn't really want to know what I think, he just wants to make his point...

    It's not a particularly debate-stimulating trait that you have here - simply popping up when you have a random article that you like, not get many bites, ignore the ones you do get, then you simply go quiet, and then come back to relight the candle a few months later when you have a new article to share. As you are not engaging in real debate, but it's a subject area (financial services regulation) that people find it hard to be passionate about - it is not a particularly interesting thread. Thus, nobody is particularly stimulated to 'broaden the discussion'.
  • spinbuster
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    Consumers’ rights continue to be overridden by Anti-Money Laundering Legislation (AML).
    Individual customers and small businesses are being dumped by their banks in larger numbers with no explanation. This is supposed to be largely due to rigorous due diligence in monitoring suspicious financial activity.
    The Telegraph recently outlined the case of one particular High Street bank.
    See:-
    http://www.telegraph.co.uk/money/consumer-affairs/barclays-shut-my-accounts-and-told-me-to-go---no-explanation/
    See also:-
    http://www.telegraph.co.uk/finance/personalfinance/bank-accounts/11906413/Compare-bank-accounts-five-ways-youll-be-dumped-by-your-bank.html and
    http://www.telegraph.co.uk/finance/personalfinance/savings/10273512/Banks-dump-thousands-of-loyal-customers.html

    The temptation to offload unprofitable or inconvenient customers using AML must be overwhelming for Banks and Financial Service companies given the large number of AML official red flag suspicious risk indicators at their disposal (They say a doctor can find something wrong with anybody) and then they can block any challenge by refusing to communicate with their customers, referring only in their Ts & Cs which include AML requirements. This makes it virtually impossible for anybody to prove dumping for this reason, or quantify how much of it is taking place.

    Meanwhile the same bank above, which applies rigorous due diligence to its retail customers, did not find anything particularly suspicious about a £1.88 billion pound “Elephant Deal” and was fined by the Financial Conduct Authority (FCA) a headline £72 million which, after consideration for the Bank’s cooperation, cost the Bank a £19.8 million fine plus disgorgement i.e. the return of the £52.3 million revenue it made from the deal. The deal was reported as being top secret even within the bank. So it would be interesting to know how the FCA got to know about it.
    See: http://www.fca.org.uk/news/fca-fines-barclays-72-million-for-poor-handling-of-financial-crime-risks

    The FCA says it did not find any evidence of criminal activity. However, it uses the word “disgorgement” which is defined in the Cambridge Business English Dictionary as ​“a situation in which a ​person or ​organization is ​forced to ​pay back ​money that they have made in an ​illegal way”. Also, the FCA is not a criminal investigation agency.
    Those who believe that AML has not been reduced to window dressing will therefore, no doubt, want to know:-
    Have the alleged “Failure to disclose” and the “Tipping Off” offences been referred to the National Crime Agency (NCA) for investigation of the individuals involved?
    What was the status of the £1.88 billion pound transaction?
    Was it laundered money? (£1.88 billion pounds could finance a huge amount of crime or terrorism.) If it was, “Failure to Disclose” and “Tipping Off” could indicate complicity.
    Who were the politically exposed persons, British citizens or foreign nationals?

    The bank itself, however, has committed no offence because AML does not apply to corporates.
    The issue of Corporate Vicarious Gain i.e. proceeds of misconduct, has been discussed at length in parliament.
    See: Hansard http://www.publications.parliament.uk/pa/cm201516/cmhansrd/cm151103/halltext/151103h0001.htm#15110343000526

    Conservative MPs were noticeably absent from the debate apart from the minister.
    As Corporate Vicarious Gain results in National Vicarious Gain, I do not expect to see any new corporate law coming soon, ‘Too Big to Fail’ so ‘Too big to Prosecute’.
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
    Name Dropper First Post First Anniversary Post of the Month
    edited 11 April 2016 at 1:59PM
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    I'm not quite sure what your point is. On the one hand you are talking about the fact that there is no corporate criminal liability for all manner of misdeeds, and linking us to Westminster debates. Presumably because you think it is bad that companies don't get prosecuted or are too big to prosecute or whatever, when they do bad or reckless things. So, you would like them to face some sort of consequences when they do wrong, I assume?

    So with this example the bank made a bunch of money from a transaction which they put together quickly, and they didn't follow the rules which they are required to follow in terms of considering and documenting financial crime risks in relation to the transactions they facilitate. Instead they saw dollar signs and waved it through without the usual safeguards to be followed with high profile transactions.

    This doesn't sound like what we want banks to do. One of the tenets of the regulations is that you shouldn't circumvent normal procedures to make a quick buck; you shouldn't avoid getting all the relevant documentation from your customer for fear of upsetting him. We don't want a situation where banks will bow down before Mr Moneybags just because he's wealthy and well connected and threatens to sever ties if they follow the rules. That behaviour would effectively give all criminals carte blanche to act with impunity simply because they are rich.

    So, recognising that the bank had done wrong, the FCA said the bank had to give up all its revenues from the transaction and pay a £multi million fine on top. Thus drumming home the point that banks should not turn a blind eye to financial crime risks, whether or not there was indeed any money laundering or other financial crime being conducted on this occasion.

    So are you saying you do or don't agree with penalising the bank for its bad behaviour that we wish to discourage? Doesn't seem obvious from the tone of your post.

    Personally I don't really care whether or not that particular transaction was actually a money laundering one or not, and whether the PEPs were Brits or foreign nationals. It might be completely legit. The problem is the bank -in pursuit of profit - deliberately "turning a blind eye" to whatever's going on, and not doing all the usual checks and balances to be clear on whose money it is, where they sourced it, where it's going afterwards etc.

    A regulator or the police can only act when they receive information, tip offs, suspicious activity reports etc - And yet the bank decided to avoid doing its filing properly or following its normal process which could have led to such criminality being uncovered, because it wanted to grab some quick profits and not risk ruffling any feathers.

    An analogy -we want to ban drink driving outside schools so maybe we do random spot checks breathalyzing near pubs for people who are driving badly on Friday lunchtimes. If a policeman deliberately avoids breathalyzing everyone with a nice car leaving the pub because they might be rich and know a powerful person who could have his job... that's just not on. It doesn't matter whether the driver turns out later to be actually drunk or sober or a UK citizen or a foreign national- our collective concern is that the officer is avoiding doing his job properly because he wants an easy life.

    So, IMHO it is good to see Barclays get their knuckles rapped. While a few tens of millions of fine is not massive in the grand scheme of things, one can imagine that the ramifications of fining banks and taking revenues off them may help encourage their peers in the banking industry to focus on doing things properly and not trying to sidestep the global best practices around countering financial crime.

    On the other side of the coin you see some retail customers complain that banks are difficult to deal with in this day and age because of the red tape and regulation. An inevitable unfortunate consequence. Law and regulation often has such side effects. Looking wider than financial services: if there were no laws or rules for anything, we might be initially happy with our "freedoms" but then ultimately be unhappy because we don't actually want to be overrun by criminals and anarchy.

    One of the telegraph articles mentions 20-30 a month (so, call it 250-400 a year?) complaining to FOS of their accounts being unduly closed, accompanied by an explanation with which the account-holder wasn't happy. Out of 40,000,000+ adults in the UK, many of whom who have multiple accounts, this doesn't seem outrageous.
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