Tales of the unexplained

“When did you stop beating your wife?”  Famous as the question to which there is no right answer, this is now joined by “Don’t you support civil liberties?”.  Of course we all agree that there should be civil liberties, but I think most people can recognise that because over the millennia we have chosen to gather into communities (so that some of us can concentrate on being teachers and butchers and lorry drivers while others of us fritter our time away bleating on about AML), those liberties have to be tempered by the needs of everyone else as well.  In most communities, therefore, the rights of the individual are balanced with the rights of the group – to extremes, in some places, but sort of middling in most countries, including the UK.  I don’t particularly want to be tracked around town by dozens of CCTV cameras, but I do recognise that when it comes to crime prevention and investigation, such footage has proved valuable – as well as revealing just how often I pop into Hotel Chocolat (what do they expect, when they give away free samples).  Likewise, I don’t really want to carry a photographic ID card, mainly because I’m not used to the idea, but if it comes in in the UK, am I bovvered?  Not really.  I suppose my rationale is that, as I have nothing to hide, I don’t really mind people checking up on me.  Into this comes Transparency International’s thought-provoking suggestion of the Unexplained Wealth Order.

Background: last week, TI-UK published a paper called “Empowering the UK to recover corrupt assets: Unexplained Wealth Orders and other new approaches to illicit enrichment and asset recovery”.  It has been much in the press, thanks to its revelation that “in 2014, UK law enforcement agencies were only able to take action on 7 individual reports of suspicious financial transactions that were identified as the possible proceeds of international corruption” (remember that TI’s bag is corruption, not any other predicate crime).  They also say (correctly) that “under current legal powers in the UK, there is very limited prospect of restraining suspicious transactions, unless there is already a pre-existing conviction against the individual”.  And so they propose the Unexplained Wealth Order.

UWOs already exist in Australia, Colombia and Ireland.  They do not rely on a criminal conviction, as does our current forfeiture regime.  And – this bit’s really interesting – they shift the burden of proof to the asset owner, who must prove a legitimate source for his wealth.  Of course there are a gazillion questions to address – who decides what is proof of source? what level of suspicion would be needed for the granting of an UWO? what if the asset holder says that the source is legitimate but can’t prove it and his assets are forfeited, and then later he finds proof? should I be keeping all of my financial records for longer than the taxman-advised seven years that I apply at the moment? – but surely it’s worth having the debate.  Desperate times, etc.

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4 Responses to Tales of the unexplained

  1. Robert James Long says:

    I remember a quote attributed to Cardinal Richelieu “If you give me six lines by an innocent man I would find you a reason to hang him.” . I don’t think he was just being a supremely draconian grammar pedant. I am nto sure he ever actually said “there is not such thing as Innocence, only degrees of gulit.” but it si a good line…
    Anyway, here we have found a point of divergence between Robert the Law enforcement fellow and Robert the private citizen. The former might welcome the introduction for of a UWO as a useful tool, the later, well the later thinks it is an exceptionally dangerous idea. Generally I tend to oppose what I see as misusing civil law procedures to obtain criminal results, so for example I am not a fan of ASBO’s and the like. They seem to me to be just a way to criminally penalise someone under a civil law (obviously lower) burden of evidence. It feels like the state “cheating” the system to make its (and indeed in my capacity as an instrument of the state, my) job much easier. Citizen Robert is of the general opinion that anything that results in a criminal sanction should be to the criminal standard of proof.
    The UWO though looks like a way of returning a very Morton’s fork approach to wealth collection, and a small a part of me is amused by using it in this fashion against your classic tax avoider (avoidance may be legal but It might be harder if you could arbitrarily present a UWO and ask them where the wealth came from then?), shifting the burden of evidence on to the asset holder you are already getting round what should be his protection from undue state interference. It’s a power that would be just too easy to abuse, to target political opponents or dissidents while protecting others. It’s not even a case of judicial overview, if recent events in the world of international sport have taught us anything is that it is all too easy for governments, even developed world governments, to turn a blind eye to corruption/bribery/malfeasance as long as they think it can benefit from them!
    I tend to oppose the photo ID card too, but here Law enforcement Robert joins me. ID cards did not prevent the Madrid train bombing and I feel they would be of limited value to police unless your where legally required to produce it on demand, even then I feel it would cause more resentment than help (I believe the court case that saw the UK abandon ID cards came to a similar finding). Citizen Rob feels ID cards change the nature of the relationship between the state and its people. It is after all the former who should justify themselves to the later, not viscera versa.
    It’s not that I have something to hide per se (well not form this government) but I think a bit of distrust in governments is a very good thing (they do tend to be a bit poor at keeping information secure). And you never know what a future government might become. Richelieu was I think voicing a sentiment held by more than a few ministers, let alone policemen.
    I dragged that off money laundering a bit so I’ll bring it back. I honestly think that if we’re not winning the fight yet it is not because we need more excessive or other legal powers. I believe current suites of powers are, perhaps, not used as well as they should be and that the relevant enforcement bodies are sometimes too timid or too distracted (give the average constable a choice of following drugs or following the money they will conclude the latter is a bit too complex and go for the drugs).

  2. Thanks, as ever, Robert, for your very interesting contribution. I had to look up the reference to Morton’s fork, and here’s what Wikipedia says: “A Morton’s Fork is a specious piece of reasoning in which contradictory arguments lead to the same (unpleasant) conclusion. It is said to originate with the collecting of taxes by John Morton, Archbishop of Canterbury in the late 15th century, who held that a man living modestly must be saving money and could therefore afford taxes, whereas if he was living extravagantly then he was obviously rich and could still afford them.” Well, you learn something new every day – not least that they were already debating tax evasion back in the fifteenth century!
    Best wishes from Susan

  3. Susanne Shaw says:

    I find the topic of your latest post fascinating and I would love to read about you exploring this further. In my little office we discuss this quite a bit as it has become a big issue in the world of corporate services providers in Singapore as of recently, as our regulator requires us to prod our customers for further explanations as to where their money originates from. Quite a challenge in this part of the world where most clients do not understand why this needs clarification. Family wealth, lah! As you quite rightly point out what is adequate proof of source? A question I ponder daily and still find hard to satisfy with a good enough answer.
    PS – I new to the world of AML and have found your posts enormously helpful in thinking about AML issues. I would really like to hear about any of your thoughts re AML in South East Asia. This is where I am starting my journey and it is very challenging, yet fascinating faced with all the different cultural approaches to and views on AML.

    • Welcome to the blog, Susanne – and I know Singapore well, having grown up there. I can imagine all the anguished cries of, “Aiya, lah – why so many questions? Enough to say money from father, isn’t it?” Although you are new to the world of AML, you can take comfort from knowing that proof of source of funds/wealth is new to all of us. In the past, it was the “sniff test” – ask the question and see whether the answer smells right. Now we’re moving into the realms of getting proof of source, and that’s much more tricky. You can be sure that we will be debating it much more in this blog, and I hope you stick with us.
      Best wishes from Susan

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