Just like police officers, customs officers and passport officers, MLROs find themselves doing a certain amount of profiling when it comes to looking for high risk clients. We know about certain high risk occupations and high risk nationalities and even – although few dare to codify it in their AML procedures, except perhaps in casinos – high risk personalities. But these are only generalisations, and it is vital to remember that the most benign, the most inoffensive, the most well-respected client can turn out to be a complete and utter s**t. And here – as ever – the monitoring of transactions and other behaviour within the relationship is going to be the key to uncovering that s**titude.
I am thinking this week of septuagenarian Patrick McLarry. He was the chief executive of a charity called Yateley Industries for the Disabled, which was set up in 1963 and – quoting from its website – “works to sustain and increase the opportunities for people with disabilities in rewarding employment, both in its internal employment opportunities and mainstream work, with an occupation that enables a disabled person to contribute to society”. He was described by many as a pillar of his local community in Devon and was awarded an MBE for his charitable services to disabled people. Low risk, right? But – and you know where I’m going with this – his activity was anything but.
He stole £256,000 from the charity’s pension scheme by setting up a new company to manage the pension fund, making himself one of only two directors and establishing himself as the director who authorised the decisions. He used some of the money to buy a flat in Hampshire and to repay a debt related to the purchase of a pub lease in Portsmouth. He then set up a company claiming to trade in antiques to explain the transfer of money to France, where he bought a house and a small warehouse. By my calculation, we’re looking at multiple company formation agents in the UK and banks and estate agents in the UK and France, all of which should have asked questions (and I’m sure that’s where this investigation is headed next). So no matter how twinkly and lovely and ennobled a client may be, keep your eye on them: Mr McLarry may be heading inside for five years, but the bankers and estate agents and perhaps lawyers who helped him might not be far behind.
“… but the bankers and estate agents and perhaps lawyers who helped him might not be far behind.”
I wish I shared your optimism on this point, but with all the premier property in London brought with hot foreign money over the last decade, how many Estate agents are actually in prison for Money Laundering? All the fake companies and limited partnerships that have funnelled illicit funds into the City for how long and how many solicitors or company agents are lounging at her Majesty’s Pleasure?
From my experience these sectors barely submit any SAR’s compared to say the actual banking industry, let alone get prosecuted.
You’re certainly right about the past, Robert, but I think the worm may be turning. With all the talk of professional enablers, and the FATF’s report on professional money launderers (including those working in the regulated sector but for the benefit of criminal clients), I think we may be calling time on complicit lawyers, accountants and estate agents. The more often and loudly we call them out, the harder it will be for them to hide.
Brilliant, and I learned a new word!
Welcome to the blog, and thank you for your comment – I’m quite fond of creating new AML-ish vocabulary (there’s “AML-ish”, right there!).