The wretched refuse of your teeming shore

When I was a little girl, I had one of those 3D plastic viewers; you put a circular cardboard plate of tiny transparencies in it, looked to the light, and pressed the trigger to change the picture.  Whenever he went on a business trip my father would buy me a new set of pictures, and after a visit to America he came back with “Great Monuments of the USA” or similar.  There they were in 3D spendo(u)r: the Grand Canyon, Mount Rushmore, the White House, Old Faithful – and the Statue of Limitations.  Yes: at some point in my early years – no doubt while earwigging on conversations that had nothing to do with me – I had concatenated two related ideas, and became convinced that the tall New York lady holding an ice-cream (well, those pictures were very small and lost some of the detail) was indeed the Statue of Limitations.

Now older and wiser, I dwell instead on the significance of the statute.  Of course, it is much more complicated than it first appears: there is not just one statute, and it can be varied depending on the circumstances.  And in the UK we call them “limitation periods” rather than statutes.  But the key point for those of us of an AML turn of mind is that, when it comes to money laundering offences, there is no time limit on either element: the crime which generated the money that is being laundered can be as old as the hills, and the money laundering can be prosecuted at any point in the future.  This sometimes gives MLROs a piercing headache, as at several points in a career they will be confronted with a variant of this question: “How far back do we have to go with this due diligence stuff?  After all, most of England’s stately homes were built on the proceeds of slavery.”

Such a tricky question.  We can discount some concerns pretty easily: what matters is whether the crime was a crime when it happened, so that’s eighteenth century slave-trading done and dusted (along with Leo Sayers’s hairdo and John Travolta’s disco trousers).  But other concerns are less easily assuaged.  I always opine that dirty money is never laundered – that it retains the stain of criminality no matter how clever and determined the laundering.  And as a principle I stand by that.  But we have to be realistic.  Financial services firms are not detective agencies, and are not expected to act as such.  You should conduct professional and diligent due diligence to a standard that enables you to say with confidence that – when viewed with the professional, diligent and dispassionate eye of someone doing your sort of job at your sort of level in your sort of firm – your client appears not to be a crook.  Moreover, we must also recognise that law enforcement agencies work under (sometimes quite severe) constraints of time and money.  As a consequence, much as hospitals perform triage in order to deal with the greatest dangers first, they prioritise their energies on cases where they have the best chance of a successful outcome (i.e. conviction and confiscation).  So although I would dearly love them to be able to winkle every last penny of criminal proceeds from the grasping hands of criminals, I know it’s not going to happen – and so should MLROs and their staff.  We must all accept our limitations – even Roman goddesses of freedom.

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5 Responses to The wretched refuse of your teeming shore

  1. Paul Coleman says:

    Hello Susan, Its a long time since I commented on your posts but I am always an avid reader.
    The fact that dirty money never becomes clean is a phrase i also use many times. I also acknowledge that in my area, financial services and DNFBP practitioners are not investigators and can only be suspicious of money laundering not necessarily the predicate crime. In that context when you say the MLRO asks him/herself “is my customer a crook” I tend to look at it from the angle of – “am I satisfied from my due diligence that my client/customer is entitled to the funds he has for the transaction requested” This really focuses on the CDD on the client rather than tracking a trail which as you say could be for centuries. (I well remember your blog a few years ago on the source of funds used by John F Kennedy!)
    If the explanation by the client does not appear plausible nor cannot be evidenced then it becomes suspicious. In effect the conclusion is about “unexplained wealth” (A phrase I use many times) A SAR is raised and law enforcement and the FIU take over using their network.

    Maybe I am looking at this too simplistically but I get many questions such as “how do I know that my customer is selling drugs, or human trafficking” etc. – and I spin it to say you can’t but you can be suspicious if his wealth is “unexplained’ –
    Interested to hear your thoughts.
    Regards
    Paul.

  2. Hello Paul – and welcome back!

    This is a very neat distinction, and one I might appropriate…! I like the idea of focussing on the CDD, which it is perfectly reasonable for the courts and investigators to expect regulated firms to do. The phrase “unexplained wealth/funds” is also a good one, as it reminds the member of staff that what they are seeking is an explanation that they would be happy to defend (in the general rather than the legal sense, although the latter might come into play…) when questioned. In a way, it is putting your professional status on the line with each decision, which is as it should be, in my opinion.

    You’re quite right: it is unfair to expect financial sector staff to be able to prove/disprove specific underlying criminality, but “unexplained wealth/funds” is entirely within their remit.

    Please do comment again – you are excellent value!

    Best wishes from Susan

  3. mscompliance says:

    Hi Susan, I think this is a major issue for a lot of Compliance Officers and Administrators and perhaps it is something that changes with experience. Personally ,I have as Elvis says, a suspicious mind. As far as I’m concerned everyone is a money launderer until proven otherwise. This frame of mind may have its benefits but in reality Its been a struggle to take a step back and accept as you say, the limitations inherent in the job. Trying to integrate compliance and all the wonderful regulations that come with it, into the every day workings of a company and its other departments/staff isn’t easy if its being seen as a barrier to business, so as it is with getting children to eat their greens, we need to find ways of making the ideas and procedures attractive to them. Sadly, the risk of imprisonment doesn’t seem to scare people the way it should, perhaps because they think it will never happen to them. I suppose in the end accepting our own limitations makes way for enabling business rather than being a barrier to it and perhaps that is the way to win the hearts of the office staff.

  4. Thank you for your comment, Mscompliance. Yes, I think it’s always a case of striking a balance – between compliance and commerce for the firm, and between what would we ideally do and what industry can actually achieve. There’s no point setting unrealistic standards, as everyone just loses heart. As you say, we need to be imaginative about finding ways to make AML attractive and palatable (like greens!) to our customers, our staff and the public. Onwards and upwards!
    Best wishes from Susan

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