Windows of opportunity

As I design, prepare and deliver AML training, I often find that unexpected themes appear in what I am saying.  Nearly every training session I do has some revised basic information – what money laundering is, what the local legislation is, and so on – but I try to ensure that the majority of the material (and this is particularly important for repeat clients) is new and current, enabling staff to build and develop their understanding of money laundering and AML.  And it is in this new material that I find themes will emerge.

This season, the theme I am seeing is that of “windows of opportunity”.  For example, the UK’s first National Risk Assessment (published in October 2015) showed us that the most popular laundering destination for known UK criminal assets is the United Arab Emirates.  Why, I wondered – and I think it’s because it is a jurisdiction where the financial sector is growing and becoming more sophisticated at a rate that is outstripping local legislation and indeed local compliance/AML expertise.  And so it forms a window of opportunity for launderers: the jurisdiction works for what they want, while the AML efforts are failing to keep up.  And then there’s Bitcoin, and other virtual currencies.  They work: enough jurisdictions are recognising and accepting them to make them an option for moving money, while regulation and legislation are struggling to catch up.  Arguments are still raging about whether virtual currencies are actually currencies or whether they are in fact commodities, and until we sort out the basics, there’s not a hope that the correct legislation, regulation and guidance can be written.  Another window of opportunity for criminals: the virtual currency system works, and is woefully under- or even completely unregulated.

Criminals are the consummate opportunists: unshackled by concerns about legislation or even morals, they can turn on a sixpence and divert energy and resources to taking full advantage of any window of opportunity that may open.  And as soon as it closes, they’re off to the next one.

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2 Responses to Windows of opportunity

  1. Gábor Szalavetz says:

    Dear Susan, what is your opinion, what are the concrete steps, that should have been done regarding Bitcoin and other virtual currencies? Banning them, or making them illegal – I believe, too late. Does it matter if we consider, that they are currencies or commodities? They are like gold for now, except you cannot make necklaces of them…

  2. Dear Gabor
    I tend to think that we should regularise these new developments as much as possible – virtual currencies, crowdfunding, hawala banking, all of them. My reasoning is that if they are regulated, we can do much better checks on who is using them, and on the flows of money. Of course, the difficulties are many, not least finding enough regulators who understand the new technologies enough to be able to supervise them effectively. And yes, it does matter whether they are currencies or commodities, as that will dictate the laws that apply to the thing itself, and to those who trade in it. Until we get some sort of consensus on this, we end up with terrible confusion (see https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country ), and criminals are experts at taking advantage of regulatory and investigative confusion.
    Best wishes from Susan

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