As every MLRO can recite in his sleep, there are four elements to money laundering risk analysis: customer risk, product risk, delivery channel risk, and jurisdiction risk. Only by looking at all four of these can you come up with a realistic assessment of the money laundering risk of a particular relationship or transaction. And of the four, the one with which the MLRO gets most external help is the last, jurisdiction. For there is no shortage of lists of countries: good ones, bad ones, corrupt ones, reliable ones, ones with “critical deficiencies in their AML/CFT regimes”, ones that are improving, ones that are worsening… it’s dizzying. Once upon a time, when I was a naive and optimistic young AML practitioner, I bought a large map of the world and a box of coloured map pins, and started labelling up the countries, changing their colours as they scooted up and (more frequently) down the scale of AML respectability. Readers, it was like being in one of those war movies, in an airless bunker somewhere under London, trying to keep track of who’s on our side and who isn’t – but without the welcome distraction of handsome men in uniform and moustaches. I soon gave up.
On 18 October 2013, the FATF updated its list of naughty countries, and then last week the CFATF announced that it is particularly upset about Belize and Guyana. The FATF list was echoed without change in the UK by HM Treasury, and then echoed with local flavouring in Guernsey. And now we hear that on 3 December 2013 Transparency International will issue the 2013 version of its Corruption Perceptions Index. (I swear they have a mole in my office; CPI updates are always announced the day after I have prepared about three thousand slides for various clients, covering the previous index in great detail.) For the MLRO who is trying to abide by guidance which requires him to “be aware of lists and warnings issued by domestic and international bodies” (or some such wording), it can mean days trawling through all these lists in a giant “compare and contrast” exercise, interspersed with nights waking in a cold sweat in case he has missed one. I understand why we can’t, I really do, but wouldn’t it be lovely if we could have a central list-making body?
a colleague of mine is a qualified accountant of many years’ standing with an impeccable employment record, peacefully going about his day-to-day business, adding value to the business in the best way he can, as we all do. oh, and he’s from Nigeria. guess that elevates him pretty high up the Corruption Perceptions Index, then. guilty until proven innocent! don’t leave your coffee unattended! bring on the 24 hour surveillance!
the whole naughty list initiative means that everyone’s so busy with their maps and drawing pins (NOT a critisism – in fact, I want one too) that they simply don’t have the time to perform common-sense risk analysis. think if I were a money launderer then I’d probably be clever enough to stay one step ahead of the rules (by singing up to your blog, for instance) and deploy “clean” frontmen who hang out in nice anonymous places like the City of London. if you know how the “tick list” system works within the providers of financial services, would have thought is easy to navigate your way around it if the stakes are high enough. ditto shoebombers in aeroplanes, creating yet more non-jobs that the non-corrupt majority end up having to foot the bill for.
all this is a symptom of the general malaise of businesses becoming FAR TOO BIG for their own good. when banks were small-scale operations working within local communities acting as “middlemen” between those with surplus cash and others with a cash need, there was simply no need for MLRO’s (sorry, Susan) because everyone knew everyone else personally. in this respect, maybe we have something to learn from the goldfish bowl that is Alderney after all…
From the somewhat grandiose scale of the TaCL office set up that you have previously described, there can’t be that many possibilities for the CPI “mole”.
In terms of having easy access to the office without arousing too much suspicion, my money is on the office cat !!
You may be right: I know for a fact that she will do almost anything for a bowl of cream… They say that every man has his price, and I daresay the same applies to felines.
Best wishes from Susan