One of the things I like best about AML training is when someone asks a question that heads towards the philosophical – where we can metaphorically kick off our shoes for a few minutes and even more metaphorically pick the bones out of the AML regime and rationale. One question that comes up from time and time is “Why is there no de minimis for reporting suspicions?”. Accountants ask this more often than most, as they find it irritating to have to report a client for a £23 anomaly in his VAT return that he has persistently refused to put right – even though they strongly suspect that it’s thanks to laziness rather than laundering. But others in the regulated community also question the benefit (to the AML effort) of reporting suspicions about very small amounts of money – and some suggest that the system would run more smoothly if, say, all transactions of less than £250 were excluded from monitoring and reporting.
So what answer do I give to these questions and suggestions? As I see it, there are two main justifications for not applying a de minimis. The first is that criminals are actually quite smart, and more than capable of breaking down their large transactions into small ones if they feel that these will pass under the radar. Indeed, a recent UN paper on cyber-laundering reports that “Cyber criminals are increasingly looking at micro laundering via sites like PayPal to avoid detection… Micro laundering makes it possible to launder a large amount of money in small amounts through thousands of electronic transactions.” And FIUs have often commented that it is the build-up of several SARs on small transactions that allows them to spot a pattern indicating a more extensive laundering scheme.
And the second reason for not applying a de minimis is that – to my mind – criminal proceeds are criminal proceeds, whether large or small. Who is to say what is an “acceptable” level of criminality? Is it OK to ignore the possible laundering of only £250 – bearing in mind that Havocscope.com (the trusted website tracking prices in the criminal market) reports that you can have sex with a child prostitute in Japan for £80, or in Brazil for just £5? I am not sure that I would feel comfortable deciding what’s naughty enough according to my own standards of outrage: I’d rather just report it all and let the NCA make those decisions.
Now there’s an interesting website. And a depressing one. We’re not even scratching the surface.
I consult Havocscope a lot – it’s particularly useful for headline stats for staff training. Yes,depressing – but imagine how much worse we would feel if we weren’t even trying…
Best wishes from Susan