Some while ago I wrote about a draft of the Fourth Money Laundering Directive that had sneaked in a much-extended definition of “high value dealers”. What this earlier draft said was that HVDs would be “other natural or legal persons trading in goods or services, only to the extent that payments are made or received in cash in an amount of €7,500 or more”, and the point I made was that although we were all familiar with art auction houses and fancy car showrooms, no-one had said much about those who trade in services for cash – which could include universities (selling education services), clinics (selling medical services) and brothels (you get the picture – but do try not to).
But perusing the now-all-but-final version of MLD4 – we’re waiting for the final signature, which I am given to understand is merely a formality, and all the horse-trading is over – I see that HVDs are back to their original (i.e. MLD3) form: “Natural and legal persons trading in goods should be covered by this Directive to the extent that they make or receive cash payments of €10,000 or more.” So out go the universities, clinics and brothels – which is a shame from a theoretical perspective (as I was looking forward to seeing which regulator would be tasked with overseeing our houses of ill repute) and from the crime prevention perspective (as I am sure criminals do launder money through such unregulated and therefore naïve places) but I can understand why the legislators backed away from it. They do allow individual governments to adopt, if you will, an alternative position: “Member States should be able to adopt lower thresholds, additional general limitations to the usage of cash and further stricter provisions.” But I think we must accept that it is a rare parliamentarian who will vote for legislation requiring CDD checks to be done on their clients by the very establishments of which he and his colleagues might be enthusiastic patrons. I mean clinics and universities, of course.
I hate money laundering 
None of this fine new legislation has the tiniest relevance for the many, many thousands of trafficked human beings whose lives are effectively ended by being sold into slavery Susan. Are we even scratching the surface of money laundering after 16 years of legislation, countless financial watchdogs, monitoring, training initiatives etc?
Really I’d like to hear from any AML professionals who think that we are winning the battle.
I know I’m not the AML professional you want to hear from, Roy, as I’m not at the coal-face, but I just wanted to say my little bit, as I get this question – in one form or another – quite often. No, I don’t think we’re winning the battle, not yet, but it’s a battle we must fight. The alternative – throwing up our hands and saying, fine, you criminals and terrorists move your money however you wish through our financial system and we won’t interrupt you – simply cannot be entertained. I do actually think we are scratching the surface of it, and I hope to spend the rest of my working life being even more of a scratchy irritant to criminals and terrorists. That’s my view, anyway.
Best wishes from Susan
Its a battle we increasingly try to fight more effectively because its actually pretty good method of preventing crime from happening(if no one is getting paid then no commodities are brought to be smuggled in, if no benefits are realised).
It’s a difficult area and many traditional Law enforcement professionals struggle with it, but there is sufficient will and interest to do more on a AML front. That’s about as optimistic as I can be!
I’ll take whatever evidence of optimism that I can, Robert! Like you, I’m very keen on the preventive potential of AML work, and I am delighted to hear that law enforcement officers are powerless to resist the siren call of interesting AML work.
Best wishes from Susan
Thanks both. I’m pretty passionate on the subject and I suppose get correspondingly downhearted when I see that all of our efforts result in so little. Yes we have some successes but even the eye-watering corporate fines, for example, seem to be built in to institutions’ operating costs. Robert you are of course right – stop the profit and you will stop the crime. But there are simply too many jurisdictions where the link between legislation, policing and the judiciary just doesn’t work – usually because of corruption or simple lack of resources. There are no votes in providing resources to fight this sort of crime.
All I see is are increases in human trafficking, the drugs trade, terrorism.
But of course Susan it’s no answer to throw one’s hands in the air and give up. I’m beginning to believe though that it’s a good fight that we won’t win.
Hi Susan, I hope you’re well and enjoying the bank holiday.
Apologies for the late post on this subject, but I was just catching up on my emails and noticed that the European Commission has released communication European in support of the MLD4:
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=COM:2015:188:FIN&qid=1378484867646&from=EN
The interesting bit is in section three, bullet point three, that states:
“considering the need for consistency of the EU framework applicable to cash, the
Commission supports that the threshold applying to natural or legal persons trading
in goods or services is raised from EUR 7 500 to EUR 10 000”
Also after the first reading by the European Parliament on 11 March, their amendment 50 states that ‘services’ are back in the for the second reading:
http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2014-0191
I suppose we’ll have to wait for the final txt!
Whoops, missed a bit, second paragraph should read:
Apologies for the late post on this subject, but I was just catching up on my emails and noticed that the European Commission has released communication to the European Parliament in support of the MLD4:
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=COM:2015:188:FIN&qid=1378484867646&from=EN
Many thanks indeed for spotting this, Lord Gidds – they certainly like to keep us on our toes! As you say, it will all hang on the final text…. Any minute now – although I felt sure that they would wait until I was on holiday and rush it out then!
Best wishes from Susan
Hello again Lord Gidds and others
Well, it seems that “services” did not make it to the final, adopted, approved text for MLD4 (issued on 20 May 2015): http://register.consilium.europa.eu/doc/srv?l=EN&f=ST%205933%202015%20INIT. Article 2(1)(3)(e): “other persons trading in goods to the extent that payments are made or received
in cash in an amount of EUR 10,000 or more, whether the transaction is carried
out in a single operation or in several operations which appear to be linked”. University chancellors, clinic managers and brothel madams can rest easy. So to speak.
Best wishes from Susan
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