Author: Rose Chapman
ISBN No: 9780749481896
Review date: 25/04/2024
No of pages: 232
Publisher: Kogan Page
Publisher URL:
https://www.koganpage.com/product/anti-money-laundering-9780749481896
Year of publication: 24/07/2018
Brief:
price
£34.99
Money laundering – and the requirement to guard against your business being used by criminals to launder – covers more people and places than you might think, a how-to book on the subject of AML (anti-money laundering) shows.
Be assured that the subject is important – the amounts laundered are estimated in the trillions – and reputationally important also; consider the public interest in the leak of the Panama Papers.
The book from the business publisher Kogan Page rightly starts with definitions. Money laundering is the ‘movement or use of the benefits of criminal activity’. Note right away that it need not involve money, for it includes disguising the source of the benefits, whether they are cash, property or goods, so that the criminal can in safety use the ‘laundered’ proceeds of crime. An early example offered is what sounds like an old-fashioned crime, of airport staff such as cleaners taking left or lost property, or outright stealing, and pawning it (sometimes cash, but as likely mobile devices or toys) or using it themselves. As that implies, money laundering is partly about the criminals trying not to leave a trail, because if they do (such as the Find my iPhone option offered by Apple) and they’re caught, the money-laundering is a crime besides the original theft or fraud.
The authors split the subject into three – placement, layering and integration. Briefly, the stolen money or goods are placed into a financial vehicle (such as a bank account). The ‘dirty’ money is moved through the financial system, to throw law enforcers off the trail. And lastly, now ‘clean’, the proceeds are used in the legitimate economy, whether for gambling at a casino, or to buy property or luxury goods.
Such crimes have long gone on, but as the book points out, regulation (internationally) to make first the financial sector and then others comply, to guard against money laundering, is quite recent. That amounts to a second reason for a security professional to attend to AML, besides the original crime and risk to the business. The book suggests that even if you don’t fall within AML, ‘many organisations can learn from the principles used in AML regulation to inform risk assessments of their own activities’. AML controls can help you to check where money coming into your business is coming from – for example, is funding to or from a ‘charity’ in fact going towards terrorism?
Banks, casinos and online and other, high street betting companies are required to ‘know their customer’, and to identify and manage ‘high risk’ customers. You may be thinking already, that’s all very sound, but will it work in a business that wants to make profit, precisely most from those ‘high risk’, high spending and high value, customers? In other words, as elsewhere with compliance, if AML gets in the way of a good sale or a ‘good’ customer (good in sense of how much is spent, not morally or legally), does AML get sidetracked? Cases released by regulators as quoted in the book suggest that happens at least some of the time.
Hence the book offers an ‘AML strategy wheel’ and speaks frankly about the advantages and disadvantages of weak or strong regulators (because a weak sector regulator in one country may be strong in another and what if your business operates in both). The book acknowledges that AML can be hard to do – it quotes the stabbing to death of PC Keith Palmer outside the Houses of Parliament last year; the terrorist bought a kitchen knife to commit the crime from the high street; the retailer could not very well use AML controls to spot terrorism beforehand. In AML, as in other such regulations, the book admits that ‘development is essentially reactive’.
AML, then, is about training of staff (do they know how to fill in SARs, suspicious activity reports, and what to do with them?), communications, and governance and the ‘culture’ of a business, besides following the actual regulations such as doing due diligence and monitoring of transactions. The book goes through a ‘risk-based approach’ of assessment, for instance of particular products or channels (new ones, such as banking by your mobile phone – will money launderers be able to exploit them?).
The book – by an author with a compliance background – does a good job of appreciating that it’s quite a job to keep up with the new rules for AML, just as the criminals forever seek new and better ways to launder their profits, and the UK having a London property boom and the City as a centre of financial services and an open economy generally, is a ‘magnet’ for launderers. Hence last year the latest law, the Criminal Finances Act. It introduced for example ‘unexplained wealth orders’, that a buyer of London (other cities are available) property might have to comply with to justify a purchase, if a buy seems out of proportion to their taxed income, but only if they are suspected of association with crime. As with the crime of bribery since the Bribery Act 2010 in the UK, a failure to act against money laundering (because processes or managers weren’t equal to the task) can count as a crime.
If you are in a hurry, each chapter has ‘take-aways’ for you to skip to, and likewise if you want to learn more there are plenty of references and websites; such as the anti-corruption pressure group Transparency International.
