Plain sailing for money launderers

When I first started working in AML, shortly after Boudica hung up the scythed wheels of her war chariot, the only businesses covered by the Money Laundering Regulations were, in essence, banks and others offering standard financial services.  Then – and I don’t want to imply that this was the work of a moment, because it took some doing – the Third Money Laundering Directive ensured that the “regulated sector” was extended significantly.  (I’m probably wrong, but I like to imagine the EU legislators sitting in a Brussels conference room, mainlining espressos and petits fours, turning the pages of the Second Directive in despair while looking at the most recent laundering statistics, and saying, “Zut alors/verflixt/¡ay caramba!/botheration – it appears that the dastardly fellows are still managing to launder their filthy proceeds.  Which other gaps do we need to plug with AML requirements?”)  And so in came lawyers, accountants, estate agents, casinos and high value dealers.

At the time, I felt that there were still some gaps left unplugged – although I can see the logic of introducing obligations gradually, so as not to frighten the horses.  Bookmakers, I’ve often said, seem to create something of a vulnerability.  And high value dealers in services, not just goods – that’s under discussion this time round, with the Fourth Directive.  But one that hadn’t really occurred to me – perhaps because I don’t move in those circles, what with mistrusting the water (well, it’s the tides – it’s plain creepy the way they go in and out, slightly differently every day) and coming over queasy while watching the title sequence of “The Onedin Line” – is yacht brokers.  And then on 23 May 2014 this story appeared, subtitled “A £3 billion industry saved”.  Well, that doesn’t happen every day, so I read on.

In short, a yacht broker had applied to HSBC to open a client account – such accounts “allow brokers to offer a secure third-party banking facility during a yacht purchase [and are] a remarkably efficient way of keeping what can be a complicated and fraught transaction as straightforward and professional as possible” – and been turned down because “all the big banks [had] initiated a clamp-down on creating client accounts, unless the customer was another bank or financial institution”.  Trade body the Association of Brokers & Yacht Agents sought clarification from the FCA, and has now been given a ruling stating that yacht brokers do not need to be FCA accredited in order to open client accounts.  (I cannot find the actual ruling, although the ABYA says that it is on the members’ only area of their website – if anyone has it, I would be grateful for the link.)

We already know that money launderers salivate at the thought of a client account – where their money can swill around with everyone else’s – and the idea of such accounts being offered by businesses that are not required to do even the most basic AML checks (unless they accept lots of cash and so have registered themselves as high value dealers) is rather worrying.  The yacht brokers may come to regret having brought themselves to the attention of the AML community in this way – I will certainly be adding them to my own list of causes for concern.

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