I’m off on hols to Sri Lanka on Wednesday. Go on, check out the weather forecast for Galle, and then weep with envy – we’re talking 30˚ and wall-to-wall sunshine. To secure my week in the sun, I had to apply for a visa. It was all very simple, just an online application and the handing over of about £25, because it is a standard 30-day tourist visa. It is not – drum roll, please – a Golden Visa.
This is apparently the new name for what I used to call “citizenship for sale” or “passports for purchase”. The Organised Crime and Corruption Reporting Project defines them thus: “For a sizeable investment, wealthy people can zip to the front of the immigration line for a growing list of attractive countries”. And a couple of weeks ago they published a series of stories detailing the availability of Golden Visas in seven EU Member States – Austria, Cyprus, Hungary, Latvia, Lithuania, Malta and Portugal – as well as looking at Golden Visa schemes that are proposed in Armenia and Montenegro. Transparency International is – unsurprisingly – concerned about the migration of Golden Visa schemes from standalone palm-fringed islands to the EU, as it fears that “European countries are selling access to the Schengen visa-free travel area, and even EU citizenship, to foreign investors with little scrutiny, transparency or due diligence”. The European Parliament warned about the risks of Golden Visa programmes back in January 2014, and the European Commission is due to publish a report on the impact of Golden Visa schemes later this year.
From an MLRO perspective, when looking at a client’s shiny new passport, it is as well to be aware of the countries that operate these schemes, and perhaps to ask how (and why) he managed to obtain his new nationality. Mind you, with Brexit looming, I might just consider communing with my own inner Austrian or Hungarian… if only I could afford it.
Posted in AML, Due diligence, Money laundering
Tagged AML, due diligence, financial crime, Golden Visa, government, legislation, money laundering, organised crime, PEP, tax evasion
Thanks to my capacious TV recording device – known in my house as the magic box – I rarely watch anything live any more, except the news and weather. And so this weekend I finally got around to viewing a documentary called “Stealing Van Gogh”. Narrated by excitable but unkempt art historian Andrew Graham-Dixon, it told the story of the December 2002 theft of two paintings from the Van Gogh Museum in Amsterdam, and the subsequent investigation to recover them.
Thanks to my day job interest in money laundering and my hobby research for one of my novels (“Portraits of Pretence”, which concerned art fraud in the post-Napoleonic years), I know a little – a very little – about art crime. And I have blogged before (here and here, for instance) about how criminals can put their money into and through the art markets for various laundering purposes. But this documentary taught me something new (spoiler alert!).
The two pieces were stolen – perhaps to order – by a prolific burglar who climbed the wall of the museum, smashed a window and then abseiled away. He sold them almost immediately – for a paltry 100,000 euros – to one of Italy’s most successful drug dealers. But this fellow did not want them for laundering, or even for selfish viewing in an underground or mountain-top lair, Bond-villain-like. No, he simply wrapped them in tea-towels and hid them under a false floor in his dad’s kitchen near Naples. For he knew his Italian law. And when he was eventually caught, he offered up the two “Van Gogh artworks of inestimable value” (as he described them on his own statement of assets) in exchange for a reduction in his sentence. He bought them, in other words, as bargaining chips. This explains why he wasn’t bothered about which paintings they were; the burglar simply snatched the two nearest the window in the museum. As all the art experts interviewed in the documentary explained rather tearfully, the thieves and the master criminals do not see art as art: to them, it is simply another currency. When used as payment, its value is calculated at 10% of its open market price. And when push comes to shove, the criminals hope that its importance to the art world will work in their favour. The fiends.
As I prepare to launch my fifth historical crime novel on the world (you can read all about it here), I see that those dastardly money launderers have found a way to do their stuff via Amazon. Well, why not – it’s the world’s favourite marketplace, after all. Here’s how it works.
The criminal uses the Amazon self-publishing service to produce a book. It matters little what the book is called, and when potential readers click to “Look Inside” they will see only computer-generated text – gobbledegook, if you will. What matters is that the book’s price is substantial – tens or hundreds of dollars. No-one in their right – i.e. non-criminal – mind would buy such a book, but the money launderer does, using stolen credit card details to make his purchases. As the publisher of the book, he is eventually sent his royalties for the sales – about 60% of the purchase price, at the highest end of the scale. And if his bank asks where his money is from, it comes as a legitimate bank transfer or cheque from Amazon.
For instance, have a look at the prodigious output on Amazon of one Latha Shilvanth… She’s written on all sorts of topics, from healthy living to corporate logos, from data analysis to writing plays and poetry, from computer programming to maintaining an everlasting relationship. And they’re selling for thousands. Quite why I’ve gone to all this trouble of actually writing these five books, I cannot imagine – there are obviously far easier ways to make money from self-publishing.
You all know how I feel about Brexit, so we shall draw a discreet veil over the months of wailing and gnashing of teeth and rending of garments that have befallen Grossey Mansions. However, as I had feared, we are now starting to hear about the possible outcomes for law enforcement – and it’s all rather frightening.
In an article subtitled “Gangsters’ paradise” (well, that’s not good to start with, is it), the Economist is of the view that “for organised criminals, Brexit is perhaps the most promising rearrangement of the European scene since the fall of communism”. Oh dear. The combination of an open border outside the customs union (as touted by the UK government as the answer to a maiden’s prayer) will lead, it is suggested, to “an explosion of smuggling”. Closer to home, in AML terms, is the fact (and it is a fact) that every other legislative development will have to bow before the altar of Brexit, resulting in delays to updates and – inevitably – the creation of loopholes and the return of our old friend “regulatory arbitrage”. In short, criminals will make laundering hay while the sun shines. And while they’re haymaking, the hands of law enforcement will be tied by our expulsion from all sorts of handy arrangements such as the Schengen database of passport details, and the European Arrest Warrant.
In a press release put out by the National Crime Agency on 17 February 2018, Director General Lynne Owens said that “we are confident that these requirements are being taken into account by the Prime Minister and officials responsible for negotiating Brexit”. Well, I’m glad someone is, because I’m certainly not.
Posted in AML, Legislation, Money laundering
Tagged AML, asset forfeiture, Brexit, due diligence, equivalence, financial crime, government, legislation, money laundering, organised crime, proceeds of crime, white collar crime
Last week I wrote a blog post about French gangster Jacques Cassandri, who is currently on trial for laundering the proceeds of a bank robbery that he claimed,in a book he wrote, to have masterminded. And this has started me thinking about criminals making money by writing about their crimes. Way back in October 2007, then-chancellor Gordon Brown gave a speech at the University of Westminster on the theme of liberty, in which he said: “No one wants to see criminals profiting from publishing books about their crimes. At the same time, we must ensure that the freedom of the press to investigate and report is maintained. Our preferred option, subject to further technical examination, would be for the public to have the right through civil orders to recover payments made to people where these payments can be constituted as benefits of crime.” As far as I am aware – and I would be delighted to be wrong about this – no such civil orders have yet been made.
And yet Monsieur Cassandri is far from the only example of criminal-turned-autobiographer. In 2007, OJ Simpson’s book “If I Did It” was leaked online after publication was cancelled. The book told the story of how the American footballer was tried and acquitted of murdering his ex-wife Nicole Brown Simpson and her friend Ronald Goldman, and before publication was abandoned the publisher had said that she thought the profits would go to Simpson’s children rather than to him. In the end, the book was renamed “If I Did It: Confessions of the Killer”, and a Florida bankruptcy court awarded the publication rights – and therefore the profits – to the Goldman family.
Nick Leeson wrote his story while he was in prison, with the book “Rogue Trader” being published in 1996 and then made into a film starring Ewan McGregor in 1999. In an interview with the Telegraph in 2009, Leeson explained that the profits from the first book were used to pay his lawyers. A 2015 piece in the same newspaper comments that “on his release, liquidators from the bank served him with a bill for £100 million and he was only allowed to earn a modest monthly living allowance. He did this by delivering after dinner speeches, for which he was paid handsomely, often £6,000 a pop. Initially, the liquidators took a cut, but after five years they finally gave up.”
I appreciate that criminal autobiographies can be instructive; this is why “Mein Kampf” should not be banned, because it gives such a great insight into the mind of Hitler. I also see that they can be helpful to criminologists and sociologists who may be researching what makes a person stray from the path of righteousness – and therefore what can be done to prevent future crime. But I cannot help sympathising with Nicholas Edwards, a senior investment banker in the London office of Barings who met Leeson in Singapore. In that same Telegraph article in February 2015, he takes this view: “I do think it is wrong that Nick is able to earn a living from his notoriety. If he wants to earn a living stacking shelves at Tesco, that’s absolutely fine. But I do have a problem with someone paying him a handsome fee for talking about how he brought down Barings.”
Posted in AML, Fraud, General thoughts, Money laundering
Tagged AML, communication, financial crime, legislation, money laundering, proceeds of crime, publications, white collar crime, writing
Cast your minds back to the summer of 1976. Here in England we were sweltering, as the mercury stayed above 30˚ for a straight fortnight, and eventually Denis Howell was appointed the Minister for Drought. It must have been even more scorchio in the south of France, where a gang of eleven determined robbers spent weeks tunnelling through the sewers of Nice to get access to the basement vault of the local branch of Société Générale. When they finally broke through, on Friday 16 July 1976, they used blow torches and crow bars to open the safety deposit boxes. Over the weekend they removed 46 million francs (about £26 million in today’s money) in banknotes, jewellery and gold bars, refreshing themselves with picnics served on silverware stored in the vault. Heavy rain on the Monday morning started to flood their escape tunnel and so they left, welding the vault door shut behind them. On the wall of the vault they had chalked a message for the police: “Sans arme, ni haine, ni violence” – without gunshots, nor hatred, nor violence.
People loved the story, which was told in books and films. One robber – Albert Spaggiari – was eventually put on trial, but bolted from the courtroom in Nice in dramatic style (he jumped out of the window onto the roof of a parked car and sped off on a waiting motorbike) and spent twelve years on the run until he died. And that, we thought, was that. Until 2010.
By then, a career Marseilles gangster called Jacques Cassandri had had a bellyful of Spaggiari claiming to have organised “the heist of the century”. And now that the statute of limitations had expired on the robbery Cassandri could put the record straight, which he did by publishing a book under a pen-name which was quickly traced to him. In this, he explained that he was the brains behind the outfit. “How handy,” said French prosecutors, albeit in French. “Alors, we can charge him with money laundering, which – unlike robbery – has no statute of limitations.” And so Monsieur Cassandri was put on trial for money laundering on 12 February 2018. He has pleaded not guilty, saying that he made very little from the robbery and has spent the lot; prosecutors allege that he has lived the high life on the proceeds of the robbery for the past forty years. Proof, if you needed it, that the money laundering offences are A Very Good Thing.
There’s more than one way to skin a cat, and although I have devoted my working life to AML I am always thrilled to hear of other initiatives that are launched to take the profit out of crime. And recently I have been enjoying two in particular.
The first is the arrival of the UWO – the unexplained wealth order. I have written about these before, but they are now finally available for use, as of 31 January. And – thanks in no small part to “McMafia” on the telly – the UK press has been speculating about the impact these will have on rich Russians living lavish lifestyles in London. In an interview with the Times, Minister for Security Ben Wallace warned that wealthy people who are unable, or unwilling, to explain the source of their money would feel the effect: “We will come for you, for your assets, and we will make the environment you live in difficult.” And in a rather pleasing response, the same newspaper reported days later that at least ten rich Russians have written to Vladimir Putin to ask if they can return to Russia without fear of arrest. I think that’s a fine and pleasing example of a rock and a hard place.
And the second is an announcement at the beginning of the month by the Bulgarian government that their chief prosecutor has ordered that all 435 luxury vehicles registered in the country – including Maybachs, Bentleys, Lamborghinis, Rolls-Royces and Ferraris – be checked to establish where the money came from to purchase them. And that’s not all: the Bulgarian authorities have said that they will look into the financial affairs of the 245 residents who spent over 255,000 euros on a home in 2015 and 2016. The majority of these fancy pads are in Sofia, where the average price for a two-bedroom flat is under 100,000 euros and the average monthly salary is 500 euros. Rossen Bachvarov of the National Revenue agency is certainly optimistic about what they will find, saying that there are some “eloquent cases” in which people had acquired “very expensive property, but at the same time have little or no income”.
As you tuck into that heart-shaped box of chocolates and gaze at the dozens of red roses currently scenting your surroundings, spare a thought for the victims of romance fraudsters. I have written about these poor people – poor in both senses, by the end of it – before, but it seems that the fraudsters are growing ever more wily and ever more ruthless. In the good old days, romance fraudsters were content simply to ensnare their victims with sugared words of love and entice them to send money. But your modern romance fraudster does all of that and then – then! – persuades his victim to launder money for him as well.
Hope springs eternal, it seems, for despite all the publicity people are still falling for these frauds in their droves. Statistics from the US reveal that reported romance frauds are increasing by 20% a year – and you have to remember that many victims (the FBI reckons about 85% of them) are far too embarrassed to report what has happened. The people most likely to fall victim – 82% of them – are women, and the majority of those are over fifty years of age. In an interesting twist – and perhaps we should blame this on chick clicks and chick lit, where reforming the bad boy is a standard trope – some fraudsters admit their crime to their victim but say that they have actually fallen in love with her, and just need a bit more money to come and see her and beg her forgiveness in person…
But back to this money laundering development. In 2012, Sherroll Foster in Uxbridge registered with an online dating website. She soon “met” a man called Mark Hamilton who convinced her that he needed money to release £4 million in gold deposits in Ghana. Well of course he did. Sherroll began sending him money in February 2013, taking out an overdraft and loans to send him a total of £65,000. He then told her that other friends were also trying to help him but didn’t have access to bank accounts, and needed to use her account to send the money to him… In fact they were other women he was scamming, and one of them realised what was happening and reported the fraud. Sadly for Sherroll, even after she had been arrested and charged with fraud and money laundering and was on bail to the court, she refused to believe that her paramour was a cheat; she accepted a further £3,500 from another victim and transferred it to her “soulmate”. In August 2016 she admitted money laundering and was ordered to repay the £3,500. Mr Hamilton has not been traced.
I’ve never watched “Strictly”, or “Big Brother”, or “I’m a Celebrity”, so it’s safe to say that I am not a fan of reality shows. But in the Economist this week I read about one reality show that I would watch religiously, were it broadcast in the UK: “Integrity Idol”. This show was first put on in Nepal in 2014, and was so popular that the format has been replicated in Pakistan, Mali, Liberia, Nigeria and South Africa. The AML-ish among you will spot that these are not countries that score highly when it comes to the tackling of corruption, but it seems that the worm may be turning and people are tuning in in huge numbers to watch contestants being rewarded for their, well, integrity.
The format is simple: contestants (who have either applied or are nominated) are whittled down to five finalists, who demonstrate in short videos why they are deserving of being recognised for their honesty. As you might imagine, some people have a fairly generous definition of integrity; apparently one applicant thought that turning up for work on time made him eligible, while another quickly recused himself when he heard that background checks would be done on him. The public are then invited to vote for the winner.
Fascinatingly – and I guess this is why the Economist has taken an interest – the Massachusetts Institute of Technology has started to measure the impact of the show. It might make people think more about what integrity is (and therefore what corruption is), or it might demonstrate that the honest can get on in life. This is certainly the case in Nepal, where the organisers talk of “naming and faming” officials who do the right thing – winners have included a school headmaster, a Chief District Officer and District Education Officer. As to whether a UK channel might pick it up, I suspect it all rather depends on whether they think they would get enough contestants.
I’m not a great fan of many of our current politicians – I’m sure you know why. But I do like Angela Merkel, and in particular Tracy Ullman’s version of Angela Merkel. And I have recently come to admire Elizabeth Warren, a Democratic senator representing Massachusetts. She recently called Mr Trump a racist bully, but that’s not why I like her: it’s because she’s tough on money laundering.
Ms Warren made headlines when HSBC was hauled over the coals in the US in 2013, quizzing officials from the Treasury Department, Federal Reserve and Office of the Comptroller of the Currency about why the bank wasn’t stripped of its licence and prosecuted for money laundering. When the Justice Department said that HSBC was too big to fail, she was outraged: “How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?” I’m not making the case for or against the punishment of HSBC – I don’t know nearly enough about the facts to do that – but I do like the fact that a politician is willing to ask the questions that the general public must be asking: if individuals can be sent to prison for laundering a few thousand pounds of drug money, why can’t institutions be shut down for laundering billions?
And now she’s at it again. On 19 January 2018 Ms Warren attended a meeting of the Senate Banking Committee which was discussing, among other topics, the collection of beneficial ownership information, the use of artificial intelligence to spot dodgy money, and the sharing of information between law enforcement agencies and banks. It is worth remembering that the American AML system is based largely on the requirements stated in the Bank Secrecy Act, which was passed in 1970. Just to remind you how long ago that was, here’s what I looked like in 1970:
Both money laundering and I have aged and become much more wily since then. And, as Ms Warren put it: “It seems to me we need to re-think a lot of our money laundering laws, some of which were written back in the 1970s and are badly out of date. That makes it hard for law enforcement trying to stop money laundering and bad for financial institutions trying to comply with these laws.” So she’s anti-Trump and pro-AML – that’s my kind of politician.