World Money Laundering Report: Volume One

Volume One, Number One

Compliance.Prediction - within five years, compliance will be at the centre of all financial services businesses in highly regulated markets, taking over from sales and marketing and even audit as the most important areas of management of those businesses. Until now the compliance officer has been regarded as a nuisance. Now he may be regarded as the saviour of the licenses of his colleagues.

Hot Seat: Interview. James Sloan, Director, FinCEN, tells WMLR that he sees a need to better educate people about the value of information collected as a result of the Bank Secrecy Act, and that his ambitions for FinCEN include that it becomes the centre of an information network that every enforcement agency in the USA can work with in confidence.

Bank of New York: a story waiting to happen? Why is it that a case of laundering in the UK is prosecuted in New York? Is it because the UK intelligence authorities are so short of money they have to beg cast-off computers from City institutions and prosecutors cannot afford to pursue complex cases? Or perhaps because the geographical boundaries of different police authorities in London mean that cases in the centre of London don't come under a single police force? And why was the Bank of New York case suddenly brought to public attention? Was it part of a strategy to raise the profile of one of the rival police bodies in time for the next funding round? Or was there a deeper, international, political reason? Whatever the reason, the investigation is shaping up to be another debacle.

Scoop: FinCEN - the background story. Poor morale, artificial intelligence systems that do not work properly, a virtually non-existent public profile. These are the features that face FinCEN's new director.

Flip Side. The UK Government is making a commitment to the battle against organised crime. It is sending in the spin doctors. No money, then.

Comment: FATF - A USA Lackey? Who is (are?) the Financial Action Task Force? It meets in closed session, releases sparse information yet provides an opportunity for public servants to travel the world, communing in interesting places. It castigates, in public, small nations that are members and anyone who chooses not to join the club. Its results are slow to appear and have often been trumped by commercial concerns or even other inter-governmental agencies. It is time for it to wake up or break up.

Offshore Update: Inter-governmental efforts to foil international tax evasion may be unfair and immoral but they are inevitable. Allegations of extra-territorial actions by jurisdictions such as the USA and damning reports by such as the FATF and the OECD are part of a concerted attack on offshore jurisdictions. Yet the criticisms appear to take no note of the fact that there are considerable efforts being made to bring some offshore jurisdictions into line with the best of the traditional financial services centres.

Legislation: the EU's Draft Second Money Laundering Directive. The UK's law is strong but little used, and worse, undermined by the professional bodies that are supposed to ensure that their members comply and trade associations that want to minimise its impact. Ironically, the express wording of the proposed second directive whilst making it clear who must comply may actually militate against the strength of the current UK law.

Basics. The terminology of laundering and laundering prevention.

Conference Notebook. The 17th International Symposium on Economic Crime, Cambridge, England, September 1999.Topic: Bank Secrecy.

Book Review: Understanding Russian Banking. Lapidus and de Waal-Palms

Volume One, Number Two

Hot Seat: Interview. Ricardo Galvez, Solicitor General, The Philippines on proposed money laundering laws and the problems of tracking the Marcos Millions.

Compliance. The interface between the laws of various jurisdictions can cause problems when reporting in one jurisdiction may be a criminal offence in another. And international compliance is a mess where it one jurisdiction requires reporting but a company's overseas subsidiaries are not subject to any such requirements. WMLR identifies one major UK insurer that has no checking procedures at one of its overseas subsidiaries - but is not breaking any laws in that country or in the UK. The conflict of confidentiality laws is making it increasingly difficult to consider the setting up of a global reporting system.

Scoop: Labuan - Malaysia's island in a glittering sea. Labuan is not an offshore jurisdiction in the usual sense of the word. In fact, it is more akin to Dublin's International Financial Services Centre than it is to the more accepted definition of offshore. For example, it has no government and no central bank, it has no legislative powers and there is no Labuan police force. All of these functions are provided by Malaysia. And so, any review of Labuan inevitably means a review of Malaysia. And Malaysian laws do afford the sort of facilities prized by money launderers. But that's only a part of the story. This is part one of a two part analysis of Malaysia's legislative position.

Offshore Update: Jersey. The Edwards Report into the financial services industries in the Channel Islands and the Isle of Man created a climate for reform. Or so the UK Government would like to believe. In fact, Jersey was already well on the way to reforming its laws to take account of the need to avoid its financial institutions being blacklisted by the international community. In fact, the Edwards Report was a UK Treasury initiative, put out by the Home Office as a smokescreen. The primary thrust was to try to prevent tax-drainage but that would have been unpopular. So some sort of acceptable spin had to be put on it. And money laundering was a convenient excuse. This is part one of a two part examination of Jersey's legislative position.

First Asia Pacific Conference on Cyber Law, Multimedia Universiti Telekom, Malaysia, November 1999. Conference Paper - The Identification and Prevention of Money Laundering on the Internet.

Basics: Staff resent another set of rules. Can you sell money laundering compliance as a benefit?

Book Review: Laundering and Tracing, Birks (ed)

Flip Side. The leaders of the UK's two main political parties have agreed on something - Britain is an offshore centre.