Off with his head! (Only joking, if you’re a Swiss lawyer)

Does anyone else ever feel that we are stuck in a bizarre Alice-in-Wonderland scenario with some of the money laundering stories we see?  One of my news feeds today informed me that Interpol has added Victor Khrapunov to its wanted list, as he is suspected of fraud, money laundering and organising a crime group – your basic PEP nightmare.  For Mr Khrapunov is indeed one of the PEP-iest of PEPs: during his illustrious career, he has served as Mayor of Almaty [the main commercial city of Kazakhstan], Minister for Energy and Natural Resources, Governor of the Province of Eastern Kazakhstan, and Minister for Disaster Protection.  He has also been awarded the Republic of Kazakhstan’s ‘Parasat’ award “for exceptional services in the fields of science and culture, literature and the arts, and for his promotion of human rights and the protection of social values”.  How do I know all of this?  Why, from Mr Khrapunov’s own website, of course!

I assume that Interpol has already followed this hot lead, and so knows that Mr Khrapunov now lives in Switzerland “from where he continues his commitment to his homeland by encouraging dialogue and democracy”.  He left Kazakhstan in 2007, where “ever more numerous instances of government dysfunction in his struggle to defend his vision of Kazakhstan’s national interest… undermined his health.  With heavy hearts, Viktor Khrapunov and his family resigned themselves to leaving their beloved homeland.”  And why Switzerland?  Well, he was drawn to “the Swiss system of direct democracy, which justly guarantees to all its citizens the right to participate in their own government”.  I’m sorry – I’m just having too much fun with this.  Now, I’m no Queen of Hearts, advocating “sentence first, verdict afterwards”, but I’m fairly sure that Interpol would not be pursuing a spotless campaigner for justice and democracy.  And some bloggers are questioning Mr Khrapunov’s need to support his campaign with a bank balance of 400 million Swiss francs, which seems rather a generous salary for a Kazakhstani government minister…  But it is a jolly nice website.

Order, order!

Frustration, irritation, restriction and humiliation.  No, this is not my recipe for marital success, but the welcome result of the application of one or more of an array of Orders that the UK’s Serious Organised Crime Agency now has at its disposal.  Locking criminals up is rather satisfying, and certainly puts a crimp in their holiday plans, but we’re all realistic enough to know that incarceration rarely has much of an impact on a criminal’s finances – thanks, of course, to money laundering.  In recognition of this, UK legislators have gradually provided more and more Orders to curtail the financial and other activities of naughty people.

The daddy of them all is the Serious Crime Prevention Order, under which all sorts of restrictions can be placed on you: the amount of cash and number of bank accounts you have, the technology to which you have access (such as phones and computers), the people you can meet and the cars you can drive.  Financial Reporting Orders are another major inconvenience, requiring you to report your financial details at regular intervals – for up to fifteen years for most criminals, and longer for some.  And then there is the Travel Restriction Order, designed specifically to curtail the movements of serious drug traffickers, and often requiring the surrender of your passport.  Break the terms of any Order and you’re back inside, as money launderer Raj Koli recently found out.

So if you’re up for a quick helping of Schadenfreude, why not read SOCA’s latest list of who’s subject to which Orders – and thank your lucky non-criminal stars that it’s them and not you.  And for the MLROs among you, it might just be worth a quick scan of the client lists to check that you don’t have anyone under Orders not to be there…

Deficient or just plain black?

I’m a big fan of the Financial Action Task Force – I even call them “eff-ay-tee-eff” as I think this is more respectful than “fat-eff”.  But dealing with them, even at my lowly level of simply reading whatever they publish on their website, requires the acquisition of a new vocabulary.  They don’t just have meetings – they have “plenary meetings” which generate “outcomes”.  But perhaps the area in which the FATF is most mealy-mouthed is in its expression of displeasure.

In the outcomes from their plenary meeting in Paris last week, they updated their list of what they rather coyly call “jurisdictions with strategic deficiencies regarding anti-money laundering and combating the financing of terrorism”.  They have struggled with this before – do you remember the Millennium-marking list of “non-cooperative countries and territories”?  It even sounds a bit jolly, being an NCCT.  I do sympathise with the FATF: when a friend’s toddler recently bit my thumb, I made some craven comment about his liveliness and healthy teeth.  What I should have done, however, is tell it like it is: he’s a little devil who should be muzzled.

And so, as Ghana, Indonesia, Pakistan, Tanzania and Thailand join the merry band of jurisdictions with strategic deficiencies, please can we tell it like it is?  This is not a list of non-cooperatives or deficients, but a black list of naughty countries.  Sugar-coating it does no-one any favours, and the shock might actually get speedier results.  The media in those five countries aren’t fooled: not one report about this mentions “deficiencies” in the headline, while the word “blacklist” appears remarkably often.

Eds and NEDs

I know how you clamour to hear the latest sales figures for the adventures of Edward Jones, MLRO-about-town, and what a bumper month we had in January!  I think we can safely make reference to lukewarm cakes, the selling thereof.  I sold seven copies of “Suspicious Activity Part 1“, seven copies of “SA Part 2“, and six copies of “SA Part 3“.  The sales were through the UK and US Amazon stores; oddly enough, the Germans, French, Italians and Spanish are resisting the manifold charms of Eduard/Edouard/Eduardo.  But with £13.60 in royalties in the kitty, I’m laughing!  By the way, if any of you has bought any part of Edward, I would be inordinately, hugely, immeasurably grateful if you could pop along to Amazon and leave a review – if it’s a positive one, it will help my rankings enormously.  At the moment, in ranking terms Edward is languishing somewhere between “The Harry Redknapp Guide to Personal Finance” and “The Imelda Marcos Song-Book: Ballads and Despots”.

On a related publishing matter, concerning my idea for a guide to AML for UK NEDs, I have now heard back from the IoD and they are not interested.  It seems that they publish from within only, and their publishing calendar for this year is full.  So off I go down the self-publishing route once more.  Do you have any views on whether it should be an e-book, or a print-on-demand paperback, or simply a PDF download?  (And don’t worry, offshore readers: once I’ve got the UK version nailed, I hope to be Guernsey-fying, Jersey-fying, Manx-ifying and Gib-ifying.  Any views on local demand?)

Selling ice-cream to Eskimos

One of the biggest challenges the MLRO can face is that of “selling” AML/CFT to the holders of the purse-strings.  Most Boards now know that they have to do something AML-ish, but some will try to pare it down to the very barest of essentials.  For the MLRO trying to do his job well, this can be an enormous frustration, and so here are a few tips on how to get your own way:

1. Think like a director, and use words that they will react to – such as “reputation”, “financial penalties”, “senior management responsibility”, “shareholder” and “pension”.
2. Provide them with real-life examples of what has happened to firms similar to your own that have got it wrong with AML – there are plenty of scare stories out there.
3. Recognise that AML is not a revenue-generator, but stress its benefits.  It takes time and money to build an effective AML regime, and more time and money to keep it current.  A slipshod AML regime will both expose the firm to danger, and ensure that good compliance staff leave in disgust.  Failures in AML and the resulting regulatory censure will sour future business, reducing client take-on and putting off potential partners.
4. Accept their criticism.  Often a Board will feel aggrieved at the demands made by AML legislation and regulation, and you will bear the brunt of this.  Let them have their say, murmur your sympathy, and then repeat your request (see step 1 above).

And in case you need some more encouragement, bear in mind the story of Sheila McIntosh, the only ice-cream maker on Barra in the Outer Hebrides.  Often in the face of howling gales and driving rain, she takes her little red ice-cream van to every event on the island.  Mind you, she also offers a handy sideline in Hebridean knitwear…

The joys of tech support

I’m rather proud of the fact that I created this blog all by myself.  Granted, it’s not like the old days, when you had to code in, well, code: all I did was choose a pretty template and then bung in my own words.  But I have worked out how to add widgets (that’s those bits over there on the right → → → → → → → ) and how to link from page to page and to external stories.  The downside of being so techie-lite is that when something changes, I’m not quite sure what to do about it.

Some of you may have noticed one such change.  It used to be that there were my ten most recent posts on this front page, where you’re reading now, and you had to click “Previous” to get back to older ones.  This meant that when you scrolled down to the foot of the page, you reached the foot of the page – and could see how many people had visited the site and other riveting details.  But now, when you scroll down the page, you just keep going.  Go on – give it a try (but then please come back).  Personally, I don’t like this – it makes me dizzy to see the page constantly refresh.  And often I do genuinely want to see those stats at the bottom.  So I put up a question on a WordPress forum – and it turns out that their techie elves have unilaterally installed this new feature onto their templates.  It is called, rather sinisterly to my mind, “infinite scrolling”.  I’ve asked them to stop it.  I’ll keep you posted (that’s a blog joke).

Now let’s share nicely

You know organised crime?  Well, it’s crime and – follow me carefully – it’s organised.  I think this major characteristic is sometimes overlooked in all the hand-wringing and gnashing of teeth over how we’re never going to beat it.  A few years ago I went on holiday to Sicily, and dragged my poor husband into the rather faded Grande Hotel des Palmes in Palermo – I even visited the velvet-draped ladies’ room with its plastic pot plants and sickly air-spray.  Why was I so keen?  Well, this hotel is where Mafia leaders meet every year to carve up the globe: you do this crime, we’ll do that one, and we’ll stop wasting time getting in each other’s way and having to kill each other.  Cin cin!  (That’s Italian for “bottoms up”.)  They have done this every October since 1957 – hence the relative lack of Mafia wars in recent years.

I’m not one to glamorise crime or criminals – filthy scumbags, the lot of them (except perhaps Butch Cassidy, and then only when played by Paul Newman).  But I do admire their ability to see the big picture and realise that co-operation is the way to go – while we, on the side of the angels, seem to conjure up obstacles out of nothing.  We don’t have an internationally-agreed list of dodgy jurisdictions – why not?  We don’t have an internationally-agreed list of PEPs – why not?  We don’t even have the all crimes approach in all jurisdictions – why not?

And even down at individual company level, we are hamstrung.  I do understand that there are commercial considerations, but surely protecting the world’s financial sector should override these?  If everyone asked the same (tough) due diligence questions of all new clients, then there would be no weak links in the system for them to exploit.  If institutions were allowed to pass on information about rogue clients and employees, those naughty people could not simply go down the road and diddle someone else.  I know that I will be accused of living in Cloud Cuckoo Land (no, not the boutique in St Peter Port), but if nasty Neanderthals like criminals can sort out their differences over a few drinks at the Grande Hotel, why can’t the world’s legislators and FIUs?

Insatiable blood-sucking monsters

No, I’m not talking about our government.  When I first started doing AML training, an older and wiser trainer warned me: “When it comes to case studies, your clients will be insatiable, blood-sucking monsters.”  In fact, the vast majority of my clients have proved to be absolutely delightful people, generous with the chocolate biscuits and entirely un-monstrous, but he was right about the case studies: they love ‘em.

Personally, I’m in two minds about case studies.  The ones publicised by agencies such as SOCA and the Egmont Group (is it just me, or does that sound like a great name for a band?) are, by necessity, anonymised.  The ones in the FATF reports have all identifying details removed apart from their country of origin.  And although these outlines are comforting, in that they provide evidence that money laundering really does happen, for instance, through charities and trust companies, they really don’t give us any more insight than a reasonably imaginative MLRO could guess for himself.

I don’t think clients really want what business schools call case studies – detailed descriptions that take half a day to read and another week to work through.  I think they want colourful stories involving their sector that will make staff sit up and take notice, and think, “Wow – that could have been us!  I’d better be more vigilant.”  So when I am asked to include “case studies”, what I try to do is find relevant stories in the media.  I look for human details that will appeal to staff – the little video of Obiang’s fancy cars being hauled off the streets of Paris was pure gold-dust.  I look for an underlying crime that will anger people.  And I look for a bad outcome for the launderer – rotting in prison, that sort of thing.  We’re all quite childlike really: we dignify them with the term “case studies” because we’re grown-ups at work, but actually what we want are some darned good stories.  Are you sitting comfortably?  Then I’ll begin.  Once upon a time there was a very naughty world leader…

Not nearly clean, but really dirty

I am sure that you, like me, are saddened to read of the deterioration in the health of Manuel Noriega, ex-dictator of Panama.  (What’s next on the career path for an ex-dictator, do you think?  Tyrant?  Grand Poobah?)  According to the Beeb, Noriega has been taken to hospital suffering from a suspected stroke, although the Panamanian Health Minister says that tests show no sign of this.  As I fumed in an earlier post, Panama allows convicts aged 70 or more to serve their sentence at home, but so far Noriega has been kept in El Renacer jail, south-east of Panama City, since his extradition from France on 11 December 2011.

So why am I so unforgiving?  Well, as you may have guessed, I think money laundering is a rather serious crime.  I call it “the enabler”, as it allows criminals to profit from all sorts of other crimes.  And when I ask people to define money laundering, and they say, “It’s how criminals clean up their money”, I am afraid that my blood boils just the teensiest bit.  To my mind, criminal money is never cleaned.  It is always, forever and to infinity DIRTY.  It is the proceeds of greed and misery, and no amount of placement and layering and integration should change that.  Just as, no matter how soft and cuddly and decrepit our friend Manuel may get in his old age, we must never forget that he murdered his political opponents (calling them “rabid dogs” who needed to be exterminated) and laundered millions of dollars for drug traffickers.  I’d suffer from high blood pressure too, with all of that on my conscience.

What’s on your bedside table?

Hah – I thought that title might get your attention!  It’s not nearly as steamy as you might imagine: what I am curious about is what you are reading at the moment.  Yesterday evening I went to a talk by Stella Rimington, ex-DG of MI5 or – as the red tops prefer it – the housewife super-spy.  She was a very nice woman, who looked more like the archivist she originally was than anyone out of “Spooks”, and spoke very well.  Someone asked her what she used to read to relax when she was the HSS, and she said, “Thrillers – particularly spy thrillers”.  Talk about a busman’s holiday.  She said that she did learn things from them, but more insights into human nature rather than how to do the spying stuff.  She now writes spy thrillers herself, and is the first to admit that, human nature aside, they bear little relation to the reality of espionage.

All of this got me thinking, and I started to wonder whether all professionals actually prefer to read about their own subject.  Does Igor Judge, Baron Judge (the UK’s most senior judge – the name is just to die for) have a Kindle stuffed with Rumpole?  Is David Cameron working his way through the oeuvre of Michael Dobbs?  (After all, we are told that Mrs Thatcher loved “Yes, Minister!”.)  And do you, my lovely fellow AML addicts, seek out financial crime for your bedtime reading?  Glancing at my own “to read” pile, I have the second half of “The Money Laundry” (I’ve already talked about this in an earlier post), ”Financial Games for Training”, “Before the Bobbies: Police Reform in Metropolitan London, 1720-1830″ and “Medea” (the ancient Greek tragedy – I belong to a rather odd book club).  I know: I need to get out more.  But what about you – do you read about laundering out of love as well as obligation?