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?
I hate money laundering 
Susan, isn’t the reality that most companies will, in any case, keep all records way beyond the stated term to play safe?
I’d be interested to read your thoughts on why the offshore islands get so much scrutiny and hostile press when the CIA Factbook still accounts the UK as a ‘money laundering center.’ 🙂
Hello Roy
Many thanks for your comments.
I think you’re right about companies keeping records for longer, just in case, but then you run into difficulties with data protection – which requires that you keep records for only as long as is necessary (e.g. to meet legal requirements). It’s all a bit circular.
As for your other comment, well, I offer no defence for the UK at all. The same question applies to the US, which never appears on its own (or anyone else’s) list as a jurisdiction of money laundering concern, but then tops every list of ML centres. The scrutiny I think comes from the outdated reputation of the offshore islands as “sunny places for shady people”. And the hostile press is probably down to fevered imaginings of you lot all sitting in mansions, counting your money and laughing at the devious tax avoidance schemes you have created! Same reason for that complete prawn disrupting the boat race at the weekend in order to protest against elitism – jealousy is probably at the root of it. But this Englishwoman loves you all!
Best wishes from Susan
While the account remains open, there is an ongoing contractual relationship between the owner and the financial institution. If practice, accounts that become inactive and then dormant are eventually terminated according to the account terms, with balances being sent to central bank “lost and found” in some countries.
Great post, and looking forward to reading your book.
Hello Matthew
Yes – I had heard of this dormant account fund – I think our government is planning to spend some of the UK’s one quite soon (http://www.bbc.co.uk/news/business-17602323).
And I do hope you enjoy the book.
Best wishes from Susan