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World Money Laundering Report

This article was first published by Nigel Morris-Cotterill in June 2003
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The financial services industry is getting only part of the risk management and anti-money laundering point. And modern business models in banking and insurance militate against effective know-your- customer procedures says Nigel Morris-Cotterill of The Anti Money Laundering Network.

A Bill passed by the House of Representatives, part of the US Congress, in September has far reaching implications for the Inland Revenue Service (IRS) specifically to prevent, in some circumstances, seizure and forfeiture of moneys relating to Bank Secrecy Act offences.

A jeweller and his wife have been charged with conspiracy to engage in illegal financing and debt collection practices in which it is alleged that they targeted US Marines at various bases in California.

As China continues is increasingly effective "Operation Fox Hunt" against corrupt officials who have left China with their spoils, or sent their money abroad in the hope of hiding it, there is growing co-operation between Chinese authorities and those in the countries where people and/or assets are located. Australia is one country that has been helping. But a thorny old question remains.

For much of the past 25 years, Nigel Morris-Cotterill has argued that any corporate structure that goes is more than three layers deep should be regarded as prima facie suspicious unless a good commercial and legal reason can be established. Incredible India, which is turning from a sink hole for dirty money into a leader in developing structures and policies to combat financial crime has just announced that Indian groups will not be permitted to have more than two layers of subsidiaries. That's going to cause major consternation amongst Indian corporates which use complex structures to minimise tax revenues and to avoid exchange control measures, as well as to hide proceeds of fraud and other offences.

The grand-daddy of the current crop of electronic currencies is, of course, Bitcoin. In recent months, its value has appreciated exponentially until it reached more than 5,000 dollars. But it's just the most famous so-called "cryptocurrency" and now the technology is "in the wild," anyone with the necessary, apparently not very advanced, IT skills can make one. China says "enough is enough" and is taking steps to more or less outlaw cryptocurrencies or, at least, to make their use difficult. China has explained its reasoning - and it makes a huge amount of sense. The questions are whether the horse has already bolted, can access to cryptocurrencies outside China be banned and just how much use is it really for money laundering, a main plank of the Chinese objection.

Habib Bank of Pakistan has one office in the USA and it's in New York where the Department of Financial Services has determined that there are "serious and persistent" failings in its counter-money laundering policies and procedures. The DFS said that it plans to fine the bank an amount of "up to USD630 million" and the bank's response is to say that it will close its US operations. It will, the bank said, not consent and will challenge the proposed fine in the US Courts. Fighting talk. But as of yesterday, something changed. If nothing else, the penalty, when levied, did not come close to that headline figure - and the bank did consent. But what also changed was that it became more widely known that the bank had a poor history.

A purported mailing list broker is marketing a list of users of money laundering, etc. risk management software. There are clear security implications for officers in sensitive functions, if the list is what it claims to be and money laundering risk officers, etc. should therefore be aware that information relating to them and their employers and suppliers is being indiscriminately touted for sale.

Adriana Pinnisi of California has been charged with theft from her employer by using her corporate credit card. The case raises a number of fascinating money laundering related issues.

When the Commonwealth Bank of Australia (CBA) story first appeared, I instructed World Money Laundering Report that we should not become involved in what would inevitably become a frenzy of speculation and ill-informed comment as consultants (of which I am, obviously, one) and media outlets vied to benefit their own profile, and to get website visits, while the story was hot. I wrote what amounted to a placeholder article .

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