1. Dr. Nicholas Ryder Professor in Financial Crime
Globalisation and the fear factor of the financial crime compliance regimes
Dr. Nicholas Ryder
Professor in Financial Crime
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2. Introduction What is money laundering? The scale of money laundering
How is money laundered?
A global money laundering policy
The United Kingdom
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3. What is money laundering?
Money laundering is:
the illegal process or act that relates to the proceeds of criminal activity,
by which these individuals or groups attempt to,
disguise, hide or distance them from their illegal activities.
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4. The extent Between 2 and 5 % of Global GDP (IMF, 1998),
Between $590bn and $1.5tn per year (FATF, n/d),
$1.6tn (United Nations Office on Drugs and Crime, 2009) and
There is no visible data on the amount of money laundered.
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5. The how Financial institutions, Virtual currencies,
Cash intensive businesses,
Property transactions,
Stocks, shares and other investments,
Case intensive businesses,
Mobile devices and
Cash couriers.
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6. A global policy Criminalisation of money laundering,
Implementation of international legal AML instruments,
Recognition and implementation of international best practices and industry guidelines,
The adoption of a risk based strategy,
Creation of AML authorities,
Criminalisation of money laundering,
Mutual legal assistance,
Preventative measures and
confiscation of the proceeds of crime (Ryder, 2012)
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7. Key Players United Nations: The Vienna Convention (1988)
Palermo Convention (2000)
Corruption Convention (2003)
European Union:
Council of Europe Convention (1990)
Warsaw Convention (2005)
Money Laundering Directives (1991, 2001, 2005 and 2015)
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8. Key Players Financial Action Task Force: Established in 1989,
40 recommendations tackled money laundering,
Not legally binding,
Best international standards,
Remit extended to include terrorist financing since 9/11 (9 Special Recommendations) and
Extended in February 2012 to include bribery and corruption.
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9. The United Kingdom The current legislation: Terrorism Act 2000
Financial Services and Markets Act 2000
Financial Conduct Authority Hand Book
Systems and Controls or SYCS
Proceeds of Crime Act 2002 (Part 7)
The Money Laundering Regulations 2007
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10. The Compliance Regime
Regulated sector are required to report any allegations of money laundering to the National Crime Agency,
Regulation 7
due diligence requirements
Suspicious transactions sent to firms MLRO
Complete a suspicious activity report (SAR) and file it with NCA.
NCA will determine if more investigation/action is required.
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11. Compliance Regime How do you define suspicion?
R v Da Silva [2006] EWCA Cro,
K v National Westminster Bank, HMRC, SOCA [2006] EWCA Civ 1039.
Shah v HSBC Private Bank (UK) Ltd. [2010] EWCA Civ 31; [2010] Lloyd’s Rep F.C. 276 (CA (Civ Div).
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12. The Compliance Regime Defensive Reporting:
In 2008, the Serious Organised Crime Agency received 210,524 SARs;
240,582 in 2010,
247,601 in 2011,
278,665 in 2012,
316,527 in 2013,
354,186 in 2014 and
In ,882.
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13. T The Compliance Regime
Compliance costs:
£250m p/a (British Bankers Association),
£90m (KPMG, 2003),
£650 (Alexander, 2007),
£1bn (Harvey, 2005) and
Reviews to reduce costs include:
Better Regulation Executive and
Competition and Markets Authority.
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14. The Compliance Regime FCA have adopted a credible deterrence strategy
imposing financial sanctions on individuals and firms
Issuing private warnings, public statements of misconduct, unlimited financial penalties and a prohibition order.
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15. T The Compliance Regime
MLRO:
Bank:
Michael Wheelhouse was fined £17,500 (October 2008),
Sudipto Chattopadhyay fined £14,000 (May 2010) and
Syed Itrat Hussainn £17,500 (May 2012).
Guaranty Trust Bank (UK) Ltd £525,000 (September 2012)
Coutts & Company £8.75m (March 2012),
EFG Private Bank £4.2m (March 2013) and
Standard Bank Plc £7.6m (January 2014).
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16. The Compliance Regime
1999
2000
2001
2002
2003
2004
2005
2006
2007
Prosecutions
126
129
182
256
300
552
1,327
2,379
2,318
Convictions 39 50 75 86
123
207
595
1,273
1,348
Convictions (%)
30.95
38.76
41.21
33.59 41
37.5
44.84
53.51
58.15
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17. Recent Developments Fourth Anti-Money Laundering Directive
Implements five important changes:
Risk based approach,
Potentially exposed persons,
Beneficial ownership,
Tax crimes and
Scope.
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18. Recent Developments
Action plan for anti-money laundering and counter-terrorist finance:
A stronger partnership with the private sector
Enhancing the law enforcement response
Improving the effectiveness of the supervisory regime
Increasing our international reach (HM Treasury, 2016)
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19. Recent Developments Criminal Finances Bill (2016):
New corporate offence for employees to facilitate tax evasion,
amendments to the confiscation of the proceeds of crime and
the refocusing of the SARs regime.
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20. Conclusions Too many governments place restrictions on AML measures,
Too many vulnerable governments have not criminalised all forms of money laundering,
Too many governments place restrictions on AML measures,
International cooperation not sufficient and
Laws and regulations fail to keep pace with new ways to launder money.
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