In recent weeks there has been a huge amount of soul-searching and hand-wringing about money. Much of it has concerned the slippery distinctions between tax evasion, tax avoidance and aggressive tax avoidance, with phrases like “morally repugnant” being bandied about (followed swiftly by accusations of hypocrisy and elitism). We all – barring perhaps a few hermits and maybe the Dalai Lama – have a vexed relationship with money, with our attitudes forged early in life as we either mirror or rebel against the attitudes of our parents. My parents were both poor as children and made good later, but always retained a care with and great respect for money. Brought up in an affluent household, I nonetheless imbibed their concern that it might all disappear one day, and as a result I am a saver of epic proportions and am rather sniffy about people who are profligate with money. In her excellent “Point of View” a couple of Sundays ago, the author Sarah Dunant explained her own “conflicted” relationship with money.
But interesting though this all is – and personally I’m fascinated to see what anti-avoidance measures will look like (it’s a bit like trying do something about those big holes that some people create in their earlobes: most people don’t like them, and indeed they can make you feel a bit squeamish when you look at them, but as they’re not actually illegal, it’s live and let live) – we in the AML community must not lose sight of the simple definition at the heart of all that we do. Money laundering is perpetrated on – and confined to – the proceeds of crime. And proceeds of crime are generated by criminal acts. So we might find the sale of fur coats or abortions or sexual favours to be morally repugnant, but that’s nothing to do with our job. Our job is to look out for, prevent and react to money laundering – we are slaves to the legislation. We can campaign and activate and vote for change as we wish, but our AML duties are (mercifully) clear.
I hate money laundering 
I found it easier to be snippy about people who did not save when I wasn’t living in London! It’s very hard to save with burgeoning costs, before I consider how most macro-economic policies are designed to encourage us to spend rather than save. Rainy day funds attract almost no interest I might as well have my savings account locked in my basement.
Even if you are just “slaves to legislation” (personally I would prefer to say “servants of“ rather than “slaves to” if only because I hope Parliament was hoping to avoid the implication of forced compliance) I imagine AML can be difficult for the reasons highlighted in your last post, activity can be perfectly legal in one country, somewhat shady in another and outright unquestionable illegal in a third!
It’s a murky interconnected world out there, even before I depress myself by reading the Transparency International Report on my desk…
You speak a lot of sense, Robert – I have young adult nephews and nieces, and wonder how they will manage their finances. As for the word I chose, I was channelling Grace Jones…
Best wishes from Susan
Susan, one quick question: is tax evasion a ‘crime’ in the UK and in the Channel Islands, and therefore the ‘proceeds of crime’ including that money gained from evading tax? It is in some jurisdictions around the world. If so, and money being fungible, that would mean the bankers holding the accounts of tax evaders are engaged in money laundering, yes?
Hello erskinomics
I sense a bear trap, but I’ll go with it! Yes, tax evasion is a criminal offence in both the UK and the Channel Islands (the difference between them being the nature of the taxes). And yes, the proceeds of tax evasion is the proceeds of crime. With money being fungible, yes, it would be hard to tell which dollar in the account is “clean” and which is the proceeds of crime. As for that final deduction – bankers holding the accounts of tax evaders are engaged in money laundering – I would tiptoe on the edge of your bear trap. I think it would come down to whether the bank could demonstrate that they took all reasonable measures to guard against accepting the proceeds of crime, which would be quite hard to do if their client was widely known for evading taxes…
Best wishes from Susan
Don’t forget the necessary mental element – the bank (via its employees) would have to know or suspect, or ought to have known or suspected, that the money was criminal property.
Absolutely, David – thank you. I was very nervous of that bear trap…