Working in Guernsey this week, I was talking to a client about the concept of the High Value Dealer (under local legislation, those who “[trade] in goods where there is received… a payment or payments in cash of at least £7,500 in total”. When the benefits (or otherwise) of including HVDs in the AML family are discussed, and in related debates about whether to extend this category to payments received in non-cash form, attention is always focused on the method of payment. What is addressed less frequently (as I have commented before) is whether to include the sale of services as well as goods.
Services on which people spend significant amounts of cash include, for instance, treatments at clinics and spas, interior design consultancy, and fees at schools, colleges and universities. And coincidentally, this very example was raised in the Financial Times last week, when it reported that “Donald Toon, head of the National Crime Agency’s economic crime unit, said only a handful of suspicious activity reports, or SARs, had been filed by British private schools and not enough was being done to check the source of funds’ legitimacy”.
Speaking to the same paper, Robert Barrington of Transparency International UK said: “School and university fees have for a long time been a glaring loophole in the UK’s anti-money laundering system – fees can amount to hundreds of thousands of pounds, there are few if any checks and an increasing number of the students come from high-risk countries. Using the proceeds of corruption to buy a good education is not just about money laundering – it also launders the family’s reputation and gives the next generation an entry card into the global elite.”
This ties in neatly with the views expressed by TI back in April 2017, in their report on “Tainted Treasures: Money Laundering Risks in Luxury Markets”. In this, the point is made that “the behaviour of kleptocrats who amass millions in properties, sports cars, and art in a short period of time shows that the desire to own luxury can in fact be one of the drivers of corrupt behaviour”.
It seems that by allowing stolen money to be spent at a high level on luxury living – whether it is cash or not, and whether it is spent on goods or services – without being subjected to the AML checks that attend high-level spending in other arenas, we are not only allowing laundering to flourish, but also encouraging the criminality in the first place and giving the criminals the polish they need to burnish their own reputations. Surely it is time to bring purveyors of luxury of all stripes into the AML family.
I hate money laundering 