World Money Laundering Report: Volume Four

Just when you thought it was safe to go back into the audit.

The woes of the big accounting firms continue in the USA. PriceWaterhouseCoopers and its broker-dealing arm PriceWaterhouseCoopers Securities LLC have been the subject of a series of adverse findings by the Securities and Exchange Commission and a cease and desist order has been made in addition to other orders.

Hawala : down but not out

As the move to regulate the funds transfer industry gains speed, Western Union has been advertising heavily in places like Malaysia and Singapore where large expatriate populations live and work in menial jobs and send money back to Indonesia and the Philippines, predominantly. The clampdown seems to be having some effect as the Saturday afternoon queues at the money transmitters in Orchard Road ("send money to anywhere in The Philippines for three Singapore Dollars") appear shorter these days.

Flip Side

WMLR discovers a website that makes one wonder why money laundering is needed; another monument to government

A costly business

When it comes to the total cost of purchasing, installing, providing effective technology, commissioning and operating technology "solutions" for detection and prevention of money laundering, no one's telling. The spend is going up by the day as company after company reports its latest sale and more and more companies spot what they think is a lucrative space in the market.

Don't mention the laundry

She's an heiress to the fortune of the Tesco supermarket empire but Dame Shirley Porter claims to have no money.... Certainly, she does not look poor.

Borrowed Place, Borrowed Money

It was only two years ago that the Washington Post's features section said that the worst was behind Hong Kong: "The good times are well and truly back in Hong Kong" it proclaimed in April 2000. The optimism was misplaced. Yes, there was money being spent but not by the people who had it.

Too Much Perfection

On 13 October 2002, Bali woke to scenes of devastation that it never thought possible. About twenty years ago, a Qantas pilot commented "It gets to be a bit of a drag - there is only so much perfection you can take." That was before Bali became the tourist destination it is today. There are many possible motives for this attack which is probably not as simple as initial comment would suggest.

PATRIOT Games

With compliance due now, what has been the reaction since the USA PATRIOT Act was passed?

FED: The Importance of Risk Management

Susan Bies, Governor of the US Federal Reserve Bank has spoken of the importance of risk management in financial institutions.

Nigeria Gets Heavy

With some financial crime being capital offences in China, the severity of punishment for similar offences across the world seems relatively lightweight. Nigeria, presently under criticism for permitting the death penalty meted out by religious courts, intends to get close in relation to financial criminals.

FED: Greenspan on the Strength of the US Financial Sector

Come home, IBM. Your economy needs you. Greenspan says so.

Nigeria calls time on money laundering but foreign financial services businesses have new burden to meet.

Small financial services businesses such as lawyers, MSBs and accountants will become the new front line when the FATF's countermeasures are imposed, as is probable, on 15th December 2002. They will have no idea how to deal with the new requirements.

Sanctions: Only if the USA Says So

The USA imposes sanctions on countries it does not like - but levies penalties on those who abide by sanctions that the USA does not approve of.

UK: Lawyers Under Fire

The UK's FIU, NCIS (the National Criminal Intelligence Service) has complained, non stop since 1994, about the low level of reporting of suspicious transactions by professional firms. Their complaints have a singular logic: if lawyers and accountants don't know what their clients are up to, then they are not doing a very good job of understanding their clients.

FATF: consultation on review of Special Recommendations

Is this a sly suggestion that cash transaction reporting should become obligatory under the FATF Recommendations at the next major review?

FATF NCCT List

Full details of changes.

IMF says investor confidence remains low.

New Zealand is debating if that is true. But the IMF also considers issues relating to banks. Question - are some of the issues related to costs of regulatory reform and compliance and, if so, are some of the regulatory changes intended to increase the barriers to entry to the financial markets in the developed world?

FINTRAC has delayed some of its reporting requirements.

The machinery is not in place.

Costs of compliance.

When a government department calculates the expected life span of its hardware and software, does this help or hinder those trying to secure budgets in financial services businesses?

Unleashing the Trade Winds by Robert Zoellick, United States Trade Representative and a member of President Bush's cabinet.

As President Bush's first term approaches its midpoint, the commentary about American trade policy has shifted. The debate is now over how -- not whether -- the United States is advancing free trade, says Zoellick.

Bank of New York: The Legacy.

It's a little over three years since the Bank of New York was embroiled in a controversy about money laundered by one of its staff. And it has an interesting and disturbing legacy.

Allied Irish Bank / AllFirst: the story so far.

The report into AIB's AllFirst debacle show some worrying signs of warnings gone unheeded.

Risk Management in Malaysia

In general, Malaysians are awful drivers: for the most part, they entirely lack any ability, or willingness, to read the road further ahead than the bonnet of their cars. And this characterises the problems faced by risk managers.

IMF: Must Try Harder

The IMF really should try to count the noughts when it defines its terms.

IMF: Global Financial Stability Report

The IMF's report on Financial Stability contains a number of factors that are worrying for business development.

UK's FSA makes substantial changes to Handbook

The UK's Financial Services Authority has made a number of substantial changes to its Handbook. The Handbook is where one finds the Source Books which are, in turn where one finds the Rules. And as the Rules have the effect not merely of regulatory provisions but of statutory effect as secondary legislation, changes to the Handbook affect anyone doing financial services business in the UK. WMLR examines the changes.

USA opens consultation to population at large

A centralised place where all US government consultation can be found and responses made.

Identification/ Authentication protocols.

Post Identification Authentication (PIA) is the biggest problem facing the pragmatic KYC questions in a remote world. Can you tell that the person you are dealing with is the person you contracted with?

Cayman Islands: banks' reputation in tatters? No, just reality becoming public.

The discovery that a Cayman Islands banker was lifting the lid on customers' affairs is only a part of the story. It's really about the separation of powers.

Euro Bank Corporation Debacle: background and reasons for trial collapse.

The trial of four directors and officers of Euro Bank Corporation is the latest in a saga that started with a US bank allegedly selling some 900,000 credit card details of, mainly, visitors to porno web sites, to a convicted criminal - who then, it is alleged, charged more than 25 million dollars to those cards and laundered the proceeds through a series of companies, on shore and off, and some banks with less than perfect controls. WMLR's major analysis of the money, where it came from and where it went and the astonishing reasons that the trial went horribly wrong.

US to change Tax Code following WTO ruling: impact on worldwide earnings rule.

The US wants to tax its residents and corporations on world wide income. The WTO is not pleased. Will the USA's attempts to change things work, and will they impact on the offshore world or the EU?

UK Customs grabs the cash - and more.

Whilst GBP1 million a week seized in suspected criminal assets will not turn HM Customs into a profit centre, it will do very nicely, thank you.

Shorts

Banco Popular; Taiwan bank gets HGK banking licence; Citi gets China licence for internet banking for businesses, US Ambassador Hartwick on Laos armed resistance.

Nigeria: Overbanked and Under- capitalised.

With 900 banks, Nigeria has a regulatory nightmare. THe Central Bank of Nigeria is taking radical steps to reduce the scale of the problem.

Development of Cook Islands AML laws and implementation

Mathilda C.R. Uhrle, commissioner for Offshore Financial Services, Cook Islands Monetary Authority, examines the state of play in the jurisdiction that remains on the FATF NCCT list despite significant changes in the law.

QWEST ex-executives charged with fraud

The US Department of Justice has a task force dedicated to corporate fraud - and it is showing its muscle.

UK: FSA to fence in prepayment cards?

The UK's Financial Services Authority has produced a consultation paper on prepaid services. But the premise is deeply flawed.

UK: Customs moves to negotiated civil penalties.

The idea of negotiated civil penalties is well established in the US but it is a comparatively new phenomenon in the UK.

Thailand's Drugs Crackdown

A rising death toll has some questioning the wisdom of the new hard-line policy to curtail the rapidly escalating number of drugs abusers in Thailand.

Identifying Terrorist Funds: continuing problems

Peter Gallo examines some of the underlying problems for banks and others when they are enlisted in the "financial war on terrorism."

US Department of Homeland Security in quandary over novel.

A new book is fiction but its stories of how a cyber-war may be unleashed and the problems in preventing it are causing consternation at the USA's new flagship department, says the author.

XIII Non Aligned Movement Summit.

The Non Aligned Movement met in the shadow of threatened action by the US and the UK against Iraq and continued illegal occupation of Palestinian territory by Israel and these issues dominated the Summit, but there was much, much more as this extensive coverage shows.

Concentration of Risk : who owns the bank?

In 1999, in "How not to be a money launderer," Nigel Morris-Cotterill, editor of World Money Laundering Report wrote "never allow any customer to own more of your business than you do." At that time, the idea of concentration of risk was then little regarded - but since then it has become a major part of the risk based approach to prudential management and forms a significant plank of the BASEL II approach to banking management, which is beginning to have a significant impact on strategic regulatory planning.

IMF/ World Bank and Anti Money Laundering

The IMF has reviewed its work on the financial sector assessment programme and reached conclusions on further action. In doing so, it has examined a range of topics including financial stability and money laundering.

International Criminal Court: first prosecutor appointed

The International Criminal Court has appointed its first prosecutor: Mr. Luis Moreno Ocampo, of Argentin

Legal Professional Privilege

A UK Court has ordered that information contained in a file and other documents may be disclosed where it does not itself relate to the case.

The Ari Files.

The White House Press Briefing held daily is where journalists get to ask Ari Fleischer, the White House Press Secretary, tough questions and, sometimes, to get answers.

USA seeks Iraqi funds

The USA is claiming "billions" (they mean milliards) of dollars has been secreted outside Iraq by Saddam Hussein and his associates...

Chasing down the terrorist cash.

Operation Green Quest. Find the money....?

Who was briefing against Bush?

Whilst researching the story about Bush and Iraq, we came across the interesting website called opensecrets.org which collects data about political contributions.

Flip Side: How to get spammed

It's not rocket science but the USA's FTC, as part of its anti-spam campaign has pointed out that the easiest way to get spammed is to put your e-mail address onto a web page.

Er…..I'll think about it.

A personal Flip Side note from your editor - "Why I won't take that job"

UK Confiscation: Lucky the old law's gone.

The man known as Goldfinger already knew that he would be able to keep the GBP33 million he took in a series of frauds because the Court of Appeal told him he could and told prosecutors that they could not appeal their order. Now the Court of Appeal has sat in review of their peers, creating confusion as to the authority their latest decision holds. And the Home Office is looking for ways to have another go. WMLR analyses what happened and tells the Home Office that it's actually all very easy to mount another attack on the money.

Hawala: USA to aid Philippines in setting up an alternative / the fight against terrorism.

The visit of the Philippines president Arroyo to the USA has resulted in a long overdue recognition of the problems of the millions of Filipinos who work overseas and send money back to their families. The US government produced several documents that contain much of importance in relation to both the question of money transfers and of trying to contain terrorism. Significantly, US definitions of terrorism appear to be flexible, at least when a visiting head of government who battles with it almost daily is in town. And the interchange between the leaders was not just a mutual appreciation society.

Aceh: a new front on terrorism highlights problems in definition.

Just four days after the Indonesian government moved into Aceh, WMLR prepared a detailed analysis of how the problem arose - and notes that the actions are an opening up of a new front on terrorism and new opportunities for it. The article examines definitions of terrorism and some possible consequences for banks and others in the region.

UK: Labour packs Bank of England Court

The Labour government has packed the Court (Board) of the Bank of England with its supporters and there are some odd appointments - like the man who reportedly said of Robert Maxwell "what he was not was a crook." Aside from that, the group seems to be remarkably inter-connected.

MGM Casinos: The trouble with SARs

No not the disease, the forms. And the blame for the circumstances that led to a massive fine is all being piled on one former employee.

Mauritius: the new Codes.

Mauritius has passed forceful new counter-money laundering measures. Many FATF members should be ashamed of themselves when they see the degree of commitment made by a small offshore centre.

The Ari Files.

Just as we disclose to the world at large the sayings of Ari Fleischer, President Bush's primary flak taker, he announces his retirement. But there is life in some of his recent statements and here we see how he deals with press questions on whether Bush took his eye off the war on terror to start his Iraqi adventure.

Flip Side

Miami enforcement agents disclose the way they decide if Cuban migrants are "real rafters."

Where we are, how we got here and where we are going

Nigel Morris-Cotterill's editorial analyses the past ten years and suggests areas of concern for the next five years.

United States Anti-Terrorism Strategy

Raphael Perl, a specialist in international affairs with the U.S. Congressional Research Service, sets out the recent development of anti-terrorism measures and forewarns of future developments

Due Diligence and Anti-Money Laundering Measures British Virgin Islands

Stuart Carson, compliance specialist with BVI law firm Harneys (www.harneys.com) explains the development and current standing of BVI AML laws and regulations.

Money Laundering in Romania: a progress report.

Michael Salzak, a researcher in AML issues, examines Romania's sometimes uncertain road to putting in place AML measures.

The United States' Effort to Combat Trafficking in Persons

John R. Miller, Senior Adviser and Director of the US Office to Monitor and Combat Trafficking in Persons on the scale of the problem and whether it is possible to reduce it.

Shorts:

Nauru: First a government, now no more banks.

US: Fed takes unusual steps against individual Displaced Persons: UN starts Afghan clearup. US: Broker Dealers at last within AML Regime.

For parallel banking, read parallel universe.

Sit back and prepare for your sense of reality to become seriously distorted, warns Nigel Morris-Cotterill as he examines some bizarre get-rich quick schemes and the payment mechanisms behind them.

Prime Bank Guarantee: get a real one.

Prime bank guarantee. The words are enough to strike terror into the hearts of most risk management and compliance teams. But what if you could actually deal with Prime Bank?

UK: Financial Services Authority's approach to anti-money laundering

Carol Sergeant, Managing Director, Enforcement for the Financial Services Authority spells out what the FSA is looking for when it visits a bank.

Passing off

Some websites are a bit too similar for comfort. Banks are having to deal with this and it is perhaps time for Regulators to consider if they can help.

The World Customs Organisation and Money Laundering

Michel Danet, Secretary General of the World Customs Organisation, examines the role of customs authorities in anti money laundering and countering terrorist financing.

Money laundering risk of the ABSA case.

Nigel Morris-Cotterill thinks about the question of who is accessing bank accounts which then raises the question of identifying the perimeter of the organisation. Internet banking pushes the perimeter to the user, and therefore outside the control of the bank.

Flip Side

A conference in Nigeria is a giggle but offers to sell shell banks and credit unions less so. See the documents.

Daiwa's slow rehabilitation.

The long-tail effects of regulatory problems can be seen with the announcement earlier this year that the US Federal Reserve have approved the application of Daiwa Bank, Limited of Japan to open a representative office in New York. So what incensed the regulators so that it took seven years to get this far?