I was lying in the bath with Rory Sutherland the other day – he’s a columnist for the Spectator, and I like a magazine while soaking – and something that he wrote has been playing on my mind ever since. The piece concerned is here; it’s about how, as we find solutions for more and more problems, any future problems are going to need even weirder solutions. As an example, he talks about how making cockpit doors impenetrable to terrorists has also made them impenetrable to cabin crew, and wonders whether a better solution might be to make half of cockpit doors impenetrable, so that no-one knows which are and which aren’t, “because uncertainty may be a better way to deter wrongdoing than unvarying rules (a lesson bank regulators have just begun to learn)”. You see – fascinating.
Taking this idea into the world of AML, would it make more sense to subject random clients to enhanced due diligence, rather than applying it to all high risk ones? Or would it be better to report for further enquiry (internally only, of course) all transactions for some random clients, rather than just the obviously unusual/suspicious ones? And for those institutions that apply thresholds for various things, it would almost certainly be better to have those thresholds vary unpredictably rather than be fixed at a certain point (which is often well-known if not actually publicised). After all, ever since I was showered head to foot in tonic water after opening one particularly explosive bottle last year, I have opened all subsequent bottles with great care – it’s the dreadful uncertainty that tempers my activity.