Ned finds his way to Guernsey

It’s all too exciting: no sooner has Ned, the pig in sunglasses, made his debut on the UK stage than he hops on an Aurigny plane and arrives in Guernsey as well!  Yes, “Anti-Money Laundering: A Guide for the Non-Executive Director (Guernsey Edition)” is now available from the Book Depository, which means you can pay in sterling (subject to AML checks, of course) and get free delivery to Guernsey.  Even more thrilling, the BD currently has a sale, offering 10% off everything – bargain city!  (I’ve realised belatedly that telling you to click on the book cover to the right doesn’t work for those of you who get these updates by email, but only for people reading on the actual blog – apologies.  But at least it shows that you can indeed teach an old dog, etc.)

Ned will also be visiting Jersey very soon, and the Isle of Man too – all four editions of the book are now published and indeed listed on Amazon.com, so it’s simply a matter of time, waiting for the Book Depository to get them.  Crumbs: I just hope that people like them.

But just when did the offshore islands move onshore?

I am now working on the Isle of Man edition of my book for NEDs – it’s the last in the quartet.  I can’t begin to tell you how convoluted is the world of print-on-demand publishing for the UK author.  Getting the thing written is the simple part, but getting it listed on UK websites is a battle royal.  You’d think it wouldn’t matter, in this globalised, online world of ours, but it comes back to physical details, and specifically postage.  If you buy a book from the US, it costs a fortune to post it to Europe.  So I have been waiting until book distributors here in the UK notice that my books are on Amazon.com in the US (which they are – how exciting is that?), and start offering them locally – it’s a black art, involving book databases, bibliographical data and other things I don’t want to think about any more.

My whole reason for doing this is so that you can buy the book in sterling and – more critically – get free postage.  The distributor I have my hopes pinned on is the Book Depository (the UK version of the NEDs book is already there), so I thought I should check with them that their free delivery offer applies to Guernsey, Jersey and the Isle of Man.  You’re not on their list of free delivery destinations, so I thought I would ask, and this is the answer I received: “I can confirm that Guernsey, Jersey and the Isle of Man are part of the UK and we do offer free delivery to these places.”  Please don’t shoot the messenger: ignore the fact that you have been politically reassigned, and focus on the free postage element of it all.  Mind you, Royal Mail pulls a similar trick: ordinary letters to your three islands cost the same as UK letters, but for parcels you miraculously (and expensively) become foreign.

By the way, thanks to those of you who have taken part already in my poll on who should join Edward Jones, MLRO about town, in his next adventures.  Unless there is a late surge (voting is still open), it looks like I’m going to have to work a teddy bear called Winston into the story.  Perhaps he can be used for smuggling drugs….

So long, farewell, auf wiedersehen, goodbye

As I may have mentioned in passing, I have been busy recently writing books on AML for NEDs (aka the pig in shades).  One of the many pleasures of this project (well, come on – you knew I was AML-batty already – why are you surprised?) is that it has forced me to go Back to Basics for all four jurisdictions (UK, Guernsey, Jersey and Isle of Man) and really close-read the legislation to make sure that I am saying exactly the right thing.  This comparison has thrown up some interesting differences, which will provide fodder for blog posts to come, but one particular issue has been exercising me today – not least because someone asked me just this question last week.

It’s to do with record-keeping – stay with me, it gets better.  You have to keep due diligence and other records about your clients until a certain period (generally five years) has passed “after the end of your relationship with the client”.  It all sounds so neat and easy, doesn’t it?  But when is the end of a relationship?  Teenagers have enough trouble with this, although finding your boyfriend in a clinch with your best friend is often a good indicator.  But what about the poor old MLRO?  How does he know when it’s all over?  Sometimes the client will kindly close their account, putting a clear full-stop to the relationship, but more commonly they just drift away.  They stop calling, they never send flowers – but they never actually tell you it’s finished.  So when do you start counting?

Ned makes his world debut

While you’ve been kindly following my e-publishing adventures, I have actually been keeping a Big Secret from you: as well as e-publishing, I have been POD-publishing.  That’s print-on-demand, and it involves publishing a book that is printed whenever anyone orders a copy.  It’s a bit complicated, because the POD publisher I chose is in America, and my prospective buyers are in the UK (and soon in Guernsey, and Jersey, and the Isle of Man), so I had to wait until the two were in alignment.  And now – I can’t tell you how excited I am about this – they are, and so I can introduce to the world: Ned, the pig in shades.  There he is, over on the right → → → → →

Isn’t he a handsome beast?  He signals the launch of my new book: “Anti-Money Laundering: A Guide for the Non-Executive Director (UK Edition)”.  (Guernsey and Jersey editions are already on their way – again, we’re waiting for them to appear on a UK website – and IoM is next in line.)  I have felt for a while that non-execs (NEDs – hence the piggy name) are poorly served when it comes to info on AML/CFT, and so this concise guide aims to give them everything they need to know to contribute effectively to the design and monitoring of the AML/CFT regimes of the companies on whose Boards they serve.  You can buy it by clicking on the link above, or on Ned’s portrait over there → → → → →.  The UK distributor is the Book Depository, and they offer free postage to dozens of countries (including Guernsey, Jersey and the IoM, when your edition comes out).  I’m off to have a Jaffa Cake to celebrate – and it’s only 8.30am!

Do you feel lucky, punk?

(Yes, I know it’s Thursday and I normally post on a Friday, but what with the Easter weekend and all, I thought I couldn’t let you go off hunting eggs without a little thought from me.)

A story from Jamaica caught my eye this week (of my own accord…).  In many ways, it’s a very familiar one: gang runs fraudulent betting ring and lives high on the proceeds.  Twenty arrests, five people already charged, seizures of “five high-end motor vehicles” – I’m guessing this means expensive rather than jacked-up.  But what made me stop and think was the comment by Jamaican Security Minister Peter Bunting: “40% of the murders in St James are related in one way or another to the operation of the lottery scam.  [The parish of St James, with its capital Montego Bay, is the murder centre of Jamaica - there were 190 murders there in 2010.]  And I think it is important for people to make that connection so that there is no tolerance for this kind of activity.  We are generally way too tolerant of criminal activity in Jamaica and sometimes we don’t see the white collar crime as crime at all, we think of it as hustling, but in many cases that white collar crime feeds the violent crime at the street level, one way or another.”

I think Mr Bunting is absolutely right.  I don’t want to come over all prudish and killjoy, but sometimes we are too tolerant of white collar crime.  OK, so “The Sting” and “Hustle” are fun to watch, but not nearly as much fun to live through for the victims.  So in real life let’s not lose sight of the misery that these crimes cause, and – as Mr Bunting says – the way that they fund other, more obviously violent crimes.  Oh, and perhaps don’t book your hols in St James this year – unless you win the lottery, of course.  Winnings to be collected in a dark parking lot just outside Montego Bay.

My e-publishing adventure – part 10

It’s not quite the midnight launch of the latest Harry Potter, but I know that at least two of you have been asking about the latest instalment of Edward’s adventures, so here they are: “Suspicious Activity: The Adventures of an MLRO – Part 4″.  Just what you need to accompany all those chocolate eggs at the weekend.

Those of you who are following the story will know that Edward’s life is about to become very complicated with the appearance of a PEP on his radar, and I am thinking of introducing another character to help him deal with this.  I can’t quite decide who to bring in, and as a bit of fun thought I would ask you, my lovely readers.  So who should Edward team up with:

Legality versus morality

I’m not usually a big fan of Hugo Rifkind, as he is – to quote an old family friend – slightly to the right of the fish knife, but in The Times on Friday (30 March 2012), he published an article that pushed several of my buttons.  (Sorry I can’t give a link, but it’s behind a pay wall.)  Entitled “My tax-free bike isn’t taking you for a ride…”, it looks at the difference between tax avoidance for the public benefit (e.g. the Ride2Work scheme that enables people to buy cheaper bicycles and therefore reduce pressure on public transport, save the NHS money by being fitter, etc.) and that for individual benefit.

I’m not much of a political animal (beyond my rather unhealthy fondness for BoJo), and so I find pithy explanations of “who’s for what” to be particularly helpful, as in this clarification: “The reason Conservatives have an institutional belief in limited law and a small State is not because they believe that people with power should be able to do what they damn well like.  In fact, they believe in these things because they have a faith – an endearing, positive, child-like faith – that left to their own devices, people will do the right thing anyway.”

Of course, readers of this blog tend instead to believe that – left to their own devices – people will in fact traffic in illegal substances, sell their fellow humans as slaves, pinch whatever they can, and then launder the proceeds.  So perhaps we are less surprised than Hugo when he finds that, when it comes to tax matters, people confuse legality and morality: “In most areas of life, we understand that illegal is one thing and contemptible quite another.  So, a tax avoider not technically breaking the law?  So what?  What sort of people are we, if the right thing to do is the thing you can get away with?”  So it seems that I have uncovered another thinking man who rides a bike and – bonus – thinks that we’re too soft on tax avoiders.  Move over, BoJo and Paxo – I might have to switch allegiance.

Investment banks don’t yet know their ABC

One of the most important lessons in life is how to prioritise things – how to spend your limited time, energy, money and other resources on the things that matter.  It’s the bedrock of the risk-based approach beloved (-ish) of all MLROs.  So when the government brings  out a shiny new piece of legislation called the Bribery Act, and the financial regulator lets it be known that this is going to be a priority for them, you’d think that those concerned would take notice.  Heavens above: if your local bobbies say that they will be targeting drink drivers, you do not head down to your local boozer for a skinful before pouring yourself behind the wheel and weaving off down the road.  (Hopefully you wouldn’t do that anyway, but you see my point.)  And yet it seems that UK investment banks refused to see the huge “ABC” written in ten-foot high letters on the wall.

The FSA has just published the findings of its thematic review into anti-bribery and corruption (ABC) systems and controls in investment banks, and their report does not make happy reading.  Among the fifteen banks they visited, nearly half did not have an adequate ABC risk assessment, while only two firms had carried out specific ABC internal audits.  Senior management were not provided with enough information to discharge their oversight duties, and there were “significant issues” in firms’ dealings with third parties used to win or retain business.  Unsurprisingly, the FSA is now considering whether further regulatory action is required in relation to certain firms in its review.  Can we make it any clearer?  Whether you agree with the Bribery Act or not, it is here, and the authorities have a bee of Zeppelin proportions in their bonnet about it.

PEPs cost Coutts dear

In its largest-ever financial penalty levied for AML failings, the FSA has fined Coutts & Co £8,750,000 for AML failings.  The full FSA notice is here, and it makes depressing reading – one might have hoped that the banker to the Queen would have been more aware of the concept of the PEP and the responsibilities of serving them.  Back in October 2010, the FSA was doing a review into how banks were dealing with high-risk money laundering situations, and (to quote from the FSA notice) found that “Coutts did not apply robust controls when starting relationships with high risk customers and did not consistently apply appropriate monitoring of those high risk relationships”.  Looking at the hard facts: “The FSA reviewed 103 high risk customer files, and identified deficiencies in 73 files (71%) as a result of the Firm’s failure to gather appropriate due diligence when accepting a new customer and/or the Firm’s failure to conduct appropriate ongoing monitoring of existing customers”.  ”Even more sadly, as you know how I love those who work in AML, “the AML team at Coutts failed to provide an appropriate level of scrutiny and challenge”.

One possible explanation is this: “Coutts was expanding its customer base during the Relevant Period and staff were incentivised in part to increase the number of customers taken on.  As such, it was important that there were appropriate systems and controls in place, including with respect to the risk of money laundering.”  A few years ago I thought about doing a PhD in criminology, and the subject I chose was the impact of the bonus culture on AML compliance.  I didn’t do the PhD in the end, because I discovered that 103.5% of criminological research is statistical and mathematical and I’m no good at that, but I am still fascinated by the basic premise: how can we ask people whose take-home pay depends on bringing in business to turn away certain types of business – perhaps the most lucrative business they will ever be offered?

If only he’d been called Charles Dodgi

(Just before I start – over 6,000 hits on this blog!  Woo-hoo!)

Anyway, back to the serious matter in hand.  There has been such a lot in the news recently about Ponzi schemes, what with Allen Stanford, Kautilya Pruthi and the continuing fallout from our friend Bernie Madoff.  It seems that in times of financial hardship, people are even more willing to believe promises of astonishing returns – Pruthi offered 13% per month.  Odd, when my own bank is paying about 0.00000000000032% on my savings.  Per annum.

Fraud is as old as civilisation, of course – there was probably a caveman who convinced his neighbour to share his stash of berries on the promise of a share of a yummy mammoth later in the season, knowing full well that mammoth never venture this far south.  But the man who gave his name to this particular type of fraud – whereby early investors do indeed get tempting returns but funded only by later investors, until the whole structure collapses – was Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi, born in Italy but working the US and Canada.  Charles Ponzi promised his clients a 50% profit within 45 days, or 100% profit within 90 days, by buying discounted postal reply coupons in other countries and redeeming them at face value in the US.  By May 1920, he had made US$420,000 [nearly $5 million in today's money].  His victims mortgaged their homes and invested their life savings with him, most taking no returns in order to reinvest.  Ponzi deposited $3 million in the Hanover Trust Bank of Boston and so gained a controlling interest in it – a ruse still extremely popular with money launderers today.  But on 26 July 1920, a financial analyst called Clarence Barron published a story noting that for Ponzi’s scheme to work, 160 million postal reply coupons would have to be in circulation – but only about 27,000 were.  He also noted that Ponzi had not invested in his own scheme…  Ponzi’s own PR man then found several highly incriminating documents and went public with them.  It was the beginning of the end: Ponzi ended up in prison for five years, and then was deported.  In common with many fraudsters, he was rather low on remorse; in his last interview, he told an American reporter: “Even if they never got anything for it, it was cheap at that price.  Without malice aforethought I had given them [the Americans] the best show that was ever staged in their territory since the landing of the Pilgrims!  It was easily worth fifteen million bucks to watch me put the thing over.”