I ride a tandem and I sit on the back (that’s the stoker – the one on the front is the pilot). And every – but every – time we go out, someone will yell at my pilot husband, “She’s not pedalling!”. Having worked in AML for an awfully long time, I can report a similar pattern of familiar humour: regularly someone will suggest that with all my knowledge, I should retire from the AML game and become a money launderer to make some serious dosh. “I bet you know all the tricks,” they say – and to a certain extent, they’re right. After all, isn’t that the driving force behind the phenomenon of the professional enabler – the person who works within the regulated sector but serves the forces of evil by facilitating money laundering for clients? If someone knows all the AML measures put in place, they also know how to sidestep them and avoid triggering any undue interest or – heaven forfend – actual suspicion.
And so it is with great sadness but a sense of inevitability that I read of the conviction of Dominic Thorncroft for money laundering. Mr Thorncroft was for many years the Chair of the Association of UK Payment Institutions, which “represents Payment Institutions [e.g. money remitters, bureaux de change] regulated by the Financial Conduct Authority”. One of his responsibilities in that role was AML on behalf of the members: to make sure that AML obligations were clearly explained to members by the authorities, with appropriate guidance offered, and then to make sure that members took advantage of all available services to do their AML stuff properly. And in this he seemed to do well; when that huge laundering case involving bureaux de change and a black cab repair firm in Paddington hit the headlines, Mr Thorncroft held the feet of HMRC to the fire, saying that they had not served their regulated community well or been tough enough on them: “The money laundering regulations are not as precise as they should be. We highlighted this case to HMRC a year ago but they have not changed or amended their guidance at all. We think you should be able to document every penny, regardless of your status. There should be some obligation to understand what the money relates to.”
It is all the more surprising, then, that Mr Thorncroft should now be caught in a web of his own devising. On 23 June 2021 he was found guilty of laundering £850,000 of fraudulent proceeds through his own money service bureau, to recipients in Hong Kong and China. He did not commit the fraud himself, but “despite his substantial knowledge and expertise of money laundering, [he] failed to alert the authorities to the suspicious activity and allowed it to continue”. It’s that pesky objective test of suspicion again: if you “hold [your]self out as a money laundering expert”, you can expect the court to take the view that you would and should spot suspicious transfers. When I am training MLROs, I always warn them that they will be held to the very highest standards when it comes to the objective test of suspicion, but I’m wrong – it’s me! We AML smartypants will be judged most harshly. To go all Biblical again, if you live by the AML sword, you can die by it too.