money laundering

The increasing integration of the world’s financial systems and the reduction of barriers  

to the free movement of goods and capital mean that launderers can make use of these

 systems to conceal illicit wealth. Some of the international interventions include: the Basle Committee on Banking on Banking Regulations and Supervisory Practice;

United Nations[UN] Convention against Illicit Trafficking in Narcotic Drugs and Psychotropic Substances; Convention on laundering,search,seizure and confiscation of the proceeds from crime and the first Money Laundering Directive.

Whilst there is extensive legislation and regulations regarding money laundering, there remain accusations that money laundering is taking place on a fairly large scale.

The law, in U.K is mainly found in the Proceeds of Crime Act 2002, which created three principal laundering offences in sections 327, 328, 329.These sections combine and replace the previous law which dealt with laundering the proceeds of crime and drug money laundering in the Criminal Justice Act 1988 and The Drug Trafficking Act 1994 respectively. In addition there are two other statutes, the Terrorism Act 1992 Anti-terrorism, Crime and Security Act 2001,which together with the Terrorism[United Nations]Order 2001 [SI NO 3365] determine the position with relation to funds that are suspected of being used to further the ends of terrorism. The money laundering Regulations 1993[SI No 1993] (as amended) remain in force. Having such international legislation and regulations can pose a threat to money launderers as the more uniform international legislation becomes, and the more cooperation there is between international jurisdictions, the easier it will be both to track down the source of illegal money and to prosecute the perpetrators. Having such international legislation and regulations can pose a threat to money launderers as the more uniform international legislation becomes, and the more cooperation there is between international jurisdictions, the easier it will be both to track down the source of illegal money and to prosecute the perpetrators.        

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Anti-Money Laundering Legislations (U.K.)

It was previously thought that the legislation that sought to prevent money laundering of the proceeds of criminal activity was too limited in its scope. It was aimed at the regulation of professionals in the financial and investment sector. It has long since been recognised that those involved in criminal conduct were sophisticated in finding a wider range of business and professional activities that were vulnerable to being used in order to legitimise proceeds from criminal activity. Those businesses/professionals were seen as more vulnerable because they were not trained /regulated in systems designed to prevent the use of their services to launder the proceeds of crime.

Several laws and regulations have been passed to protect money laundering as criminal offence, such as:

Proceeds of Crime Act 2002

Criminal Justice Act 1988

Drug Trafficking Act 1994

Terrorism Act 2000

Anti-terrorism, Crime and Security Act 2001

Terrorism (United Nations) Order 2001 (SI No 3365)

The Money Laundering Regulations 1993 (SI No 1993)

Proceeds of Crime Act 2002 is one of the most important laws. It focuses on:

 the proceeds of crime: Under s 327 to conceal, disguise, convert, transfer or remove criminal property from the jurisdiction is an offence. This includes to concealing etc its nature, source, location, disposition, movement, ownership or any rights in relation to it. S 38 provides defences. It says that it is not an offence if the person concerned has made a protected disclosure, usually to the National Criminal Intelligence Service, and has been given consent to continue to act. S 340 (3) defines ‘Criminal property’ as being someone’s benefit from criminal conduct where the alleged offender knows or suspects that it represents such benefit.

: Under s 328 it is an offence to enter into or become concerned in an arrangement which that person knows, or suspects, facilitates the retention, use or control or criminal property. Available defences are as same as mentioned in the last paragraph.

Acquisition use and possession: Under s 329 it is an offence for someone to acquire, use or have possession of criminal property. Here, defences of provided by s327 is applicable.

Failure to disclose: As per s.330 it is an offence if someone knows or suspects (or reasonable grounds for so doing) that someone else is engaged in money laundering where the knowledge or suspicion came into that person’s possession in the course of their business in the in the regulated sector. That person must have failed to make a report as soon as it was practicable after they got the information concerned. There are some defences as such, if a person has a reasonable excuse for not making a report or that they are a professional legal advisor and the information came to them in privilege circumstances, and it was not so communicated for a criminal purpose. There is another defence that would apply where the person concerned had not been provided with money laundering training by their employer and that they had not suspected.

Failure to report:  Under s 331 it is an offence where a money laundering reporting officer who receives a report that gives them grounds to know or suspect that laundering is taking place does not then make a report to the National Criminal Intelligence Service. A defence is also available here that is if the person has a reasonable excuse (but unfortunately there is no guidance on what a ‘reasonable excuse’ amounts to) for not making the report. S 332 applies for the same offence and defence but to the nominated officers outside the ‘regulated sector’. Sch 9 defines it and covers virtually all financial services business.

Tipping off: Under s 333 it is an offence where someone knows or suspects that a report to the National Criminal Intelligence Service or other appropriate person along the lines set out above has been made and the person then makes a disclosure which is likely to prejudice an investigation which might follow. But, there are few defences as well; firstly, if the person who has done this did not know or suspect that the disclosure was likely to be prejudicial. Secondly, where the disclosure is made in carrying out a function that person has relating to the enforcement of the proceeds of Crime Act 2002 or a similar statute. Finally, it is a defence where the person who has tipped off is a professional legal adviser and the disclosure was to a client of the adviser in connection with giving legal advice or to anyone in connection with legal proceedings.

Penalties: Person who is convicted under sections 327 – 329 is liable on summary conviction to up to six months in prison and /or a fine but on indictment the penalty rises up to fourteen years. On the other hand a conviction under sections 330 – 333 is also liable for up to six months in prison and / or a fine on summary conviction but this rises to five years and/or a fine.

Terrorism Act 2000 creates a series of criminal offences relating to handling terrorist money. This is most relevant to those who are involved in the banking and financial services industries. Criminal offences are:

To receive money or property with the intention tat it be used, or where there is reasonable cause to believe it will be used for the purpose of terrorism

To become concerned in an arrangement which facilitates the retention or control of terrorist property by or on behalf of another whether this be done by concealment, removal from the jurisdiction, transfer to nominees or in any other way.

To fail to report to the police (in practice NCIS) as soon as is reasonably practicable a suspicion that someone has committed a financial offence in relation to laundering where this information has come into their possession as part of their trade, profession, business or employment. They must also report the information on which their suspicion is based. There is a defence of having a ‘reasonable excuse’ for not making the disclosure. Information obtained by a professional legal advisor is exempt if it is obtained in privileged circumstance.

To disclose information to another which is likely to prejudice an investigation or interfere with material which is relevant to such an investigation where there are reasonable grounds to suppose that the police are conducting, or proposing to conduct a terrorist investigation.

As penalty, there is fine or up to six months imprisonment on summary conviction and a fine or up to fourteen years imprisonment on indictment.

Anti–terrorism, Crime and Security Act 2000 provides a new disclosure requirement that is a firm must disclose to the Treasury of any knowledge or suspicion that a customer is in one of the categories of proscribed organisations.

However, everyone is not bound by the requirement to report suspicious transactions. “Essentially those who are caught are those carrying on “relevant financial business.” This covers:

Deposit taking business, carried on by a person who is for the time being authorised under the Banking Act 1987;

Acceptance by a building society of deposits made by any person (including the raising of money from members of the society by issue of shares);

Business of the National Savings Bank;

Business carried on by a credit union within the meaning of the Credit Unions Act 1979 or the Credit Unions (Northern Ireland) order 1985.

any home regulated activity carried on by a European institution in respect of which the requirements of paragraph 1 of Schedule 2 to the banking Co-ordination (Second Council Directive) Regulations 1992 have been complied with;

Investment business within the meaning of the Financial Service Act 1986;

Any activity carried on for the purpose of raising money, authorised to be raised under the National Loans Act 1968, under the auspices of the Director of National Savings;

Any of the activities in points 1 to 12, or 14 of the Annex to the Second Banking Directive… and

Insurance business carried on by a person who has received official authorisation under Article 6 or 27 of the First Directive.”

Under reg. 4(2), specifically excluded from being “relevant financial business” are:

The issue of withdraw able share capital within the limit set by s6 of the Industrial and Provident Societies Act 1986 if within the limits set by ss6 and 7(3) respectively;

The issue of withdraw able share capital within the limit set by s6 of the Industrial and provident Societies Act (Northern Ireland) 1969 by a society registered under that Act;

Activity carried on by the Bank of England;

However, The Money Laundering Regulations 2003 replace the Money Laundering Regulations 1993 and 2001 with updated provisions which reflect Directive 2001/97/EC of the European Parliament and of the Council amending Council Directive 91/308/EEC on prevention of the use of financial systems for the purpose of money laundering.
Where business relationships are formed, or one-off transactions are carried out, in the course of relevant business (defined in regulation 2), the guys carrying out such relevant business are required to maintain certain identification procedures (regulation 4), record-keeping procedures (regulation 6) and internal reporting procedures (regulation 7) and to establish other appropriate procedures for the purpose of heading off or stopping money laundering (regulation 3(1)(b)). They are also required to train their employees in those procedures and, more generally, in being able to notice money laundering transactions and the law relating to money laundering (regulation 3(1) (c)). A person doesn’t follow the procedures or carry out the training is guilty of a criminal offence (regulation 3(2)).

Regulation 8 provides that casino operators must obtain decent evidence of the identity of all people using their gaming facilities. On the other hand
Regulation 9 requires the Commissioners of Customs and Excise to keep a register of money service operators and a register of high value dealers and regulations 10-11 state the registration requirements placed on such persons. Regulation 12 lists the grounds on which registration may be refused by the Commissioners, including where information which has been supplied is incomplete, false or misleading. Regulation 13 lists the circumstances in which registration may be cancelled by the Commissioners. Regulation 14 allows the Commissioners to charge fees.
Regulations 15 to 19 state the powers of the Commissioners in relation to money service operators and high value dealers, including a power to enter and inspect premises. Where there are reasonable grounds for believing that an offence under the Regulations is being, has been or is about to be committed by a money service operator or high value dealer, the Commissioners may seek a court order requiring any person in possession of certain information to allow them access to it. Regulation 19 allows the Commissioners to enter premises with a warrant, to search persons and to take away documents. Regulation 20 allows the Commissioners to impose a civil penalty in certain circumstances. Regulation 21 provides a mechanism for a formal review by the Commissioners of their decisions. Regulation 22 provides for appeals against the Commissioners' decisions to be heard by a VAT tribunal. Regulation 23 allows the Commissioners to prosecute offences under the Regulations. Regulation 24 allows fees and penalties to be recovered as a civil debt. Regulation 25 requires people who are authorised by the Financial Services Authority ("the FSA") to inform the FSA before they operate bureaux de change.

The Regulations make solicitors/other professionals obtain sufficient knowledge of new clients, to ensure record keeping of transactions, to have in place procedures in the partnership to report money laundering and to educate and train staff to know potential money laundering activities by clients and potential clients when they see it.

The regulations require that identity be checked by an approach that is reasonably capable of establishing that the applicant is the person he claims to be; this means seeing original documents that prove that the person is who he claims to be and also that they live at the address they have provided. This will generally mean seeing more than one document. Documents that are useful to prove identity are:

1) Passport

2) Driving licence

3) Identity card

4) Reference

To prove that the person is resident where they claim to be it is useful to see

1) Utility bill

2) Check the electoral roll or

3) Check the telephone directory

Once both of these have been carried out and a photocopy of the document concerned has been placed on file the identity checking requirements have been met. However, it should be borne in mind that any crook who wants to launder money will have no difficulty at all in satisfying the requirement that they produce such documents. They will either fake or real documents in the name they are using. This is not a reason for being careless about checking identity, but it does not mean that possession of proof is not a reason for lower a firm’s guard when it comes assessing the suspicious activity of a client.

However, Harjit Sandhu   in his article The Global Detection and Deterrence of Money Laundering raises some problems with the international regulation of money laundering. He argues that too many countries have not criminalized all forms of money laundering, and that banks are not sufficiently regulated. It is also argued that too many countries still refuse to share information regarding financial transactions. This will certainly impede investigations into money laundering and hinder the tracing of the origins funds. Other matters of concern are underground Banking where some countries are being investigated by the government. This would obviously allow the money launderer to escape, as they would have prior warning. Voluntary reporting is also the norm in some banking systems. This is not sufficient to deter and help uncover cases of money laundering.

Under the current legislation, suspicious transaction reports are made where there is a requirement that a report be made. For instances, section 52 of the Drug Trafficking Act 1994 [now replaced by 2002 Act] makes it an  offence to fail to report knowledge of all suspicions of drug money laundering gained in the case of a trade, profession, business or employment.But it is a defence to a charge under section 50 of the same Act if one can prove that they did not know or suspect that the arrangement related to any persons proceeds of drug trafficking.

By virtue of the coverage of part vii of the P O C A 2002, possession of criminal assets

 is now a money laundering offence and sub sections 330, 331, 332, 333 and 336 introduce a negligence test for reporting money laundering suspicions. It is no longer a defence to claim that you were not suspicious; the question now is, should you have been? This will inevitably lead to defensive reporting. These provisions are intended to facilitate the denial of the commercial and commercial and banking system to would - be money launderers.

The basis tenet of all anti money laundering legislation and regulations the world over is the need for customer identification. In essence this means that at the beginning of any financial relationship, the accepting business must be satisfied that the new customer, client or business partner is who they say they are and there are grounds for suspecting any involvement in money laundering or criminal activities. Usually this system of control involves taking identification of some sort.Typically, documents such as the passport, identity cards and/or driving licence are suggested to be taken and the details contained on them recorded.

Applicable legislation always specifies what period of time internal documents and records must be kept for so that an audit trail of the dealings and involvement with any particular customer can be established. The Financial Action Task Force (FATF)  recommends that records on customer identification account files and correspondence should be kept for a minimum of five years after the account is closed or the relationship ended. The importance of record keeping is twofold. Not only can transactions and relationship be reconstructed by official investigations but, and more importantly for the organisation, it can be show that they acted in a wholly legitimate fashion and there was no reason for authorities to be in any way suspicious.

Similarly, one of the major ways the authorities and financial institutions have tried to tackle money laundering on a domestic level is through the implementation of regulations for banks and other relevant financial institutions. These regulations are based on trying to make sure the banks know who they are dealing with and become aware of any suspicious money transfer that may take place. Making the banking system more open and accessible to checks is thought to be a crucial step in the fight against money laundering.

Many of the major regulations are to be found in the Proceeds of Crime Act 2002 and the Money Laundering Regulations1993, The legislation makes it an offence to conceal convert, transfer or remove criminal property from the jurisdiction. This means that the financial institutions are fully aware of the seriousness of money laundering, and know what actions will constitute offences. The Act also makes it an offence to not disclose to the authorities when someone suspects money laundering is in operation and involving their business. This part of the legislation will pose a treat to the money launderers because it will lead to an increase in reporting of suspicious activities, which in turn will result in more investigations and an increased chance of being caught. Also financial institutions would be less likely to be corruptible in terms of turning a blind eye to potential money laundering, as they will be held accountable under the regulations for not exercising those due suspicions. As well as disclosing the information when a bank believes money laundering is going on, they must also make a report on the matter as soon as reasonably possible. It would be an offence not to do this. The bank must also do nothing that may tip off the possible offences to the offenders or give them any suspicion that they are being investigated. The financial institutions must also carry out full identification procedure in certain circumstances such as when money transfer exceeds the given limit. This makes it more difficult for the money launderers as they will attract more attention to themselves when they attempt to launder their money, as it is almost always significicantly large amounts. Also in order to get items such as passport and driving licences, there will be a need for faked addresses and identities and further efforts to produce fake bills.

The varied legislation, regulation and best practice documents issued across the world on money laundering agree on one thing: the importance of training all managers and staff to identify and combat money laundering, above all the exercise that important suspicion and caution. The organisation can not expect and need employees to be suspicious if it does not explain to them what they must be suspicious of. Bad or ineffective training can cause havoc. The Royal Canadian Mounted Police booklet entitled Money laundering: a Preventive Guide for Small Business and Currency Exchanges in Canada is a good example of what can be used as basic training for business anywhere in the world. Effective written policies for all staff should be created, and effective briefing of staff on the reasons behind procedures undertaken.

There are also regulations given out by the Financial Services Authority (FSA), implemented in the Financial Services and Markets Act 2000.One of the major regulations imposed is that any financial institute must have a money laundering reporting officer who will oversee the operation of anti money laundering techniques used by financial institutions. This will impede money launderers because financial institutions will be more organised in respect of money laundering as they employ a person whose sole job, and professional responsibility, is to monitor aspects of the prevention of money laundering within their business. These regulations also increase the responsibility on the financial institutions to properly and securely identify their customers. They must also be aware of how money laundering could be carried in their particular line of business so that any suspicious transactions are more readily identified and reported. This will make banks and other financial institutions more efficient in uncovering money laundering. The FSA regulations also require that reporting and record keeping be actively and accurately are done. Also it is for the financial institutions to make sure that their staff are fully trained, and aware of aspects concerning money laundering.

Brian Volkman in his article Six Steps to Better Know Your Customer Procedure lays out the steps that will allow a bank to better identify and know their customers. Step one is to supply the customer with a notice that their identity will be checked. Step two is to obtain an address from the customer that is a physical location, and not just a mailing address. Any person giving just a mailing address should perhaps be treated as risky. Step three is to take any available and reliable government lists to check the identity of people or businesses, as for instance in the United States where a list of prohibited people or organizations is available. Step four is an intensive verification of identity procedure. Step Five is to ensure that the bank and all its employees are well prepared and ready should they encounter a suspicious customer. Therefore there will be no panic, as everyone will be aware of what to do in that situation. Also this will ensure that the correct procedures dealing with suspicious customers are adhered to. Step six is to keep detailed and accurate records, because monitoring customers’ activities properly is impossible without accurate and up-to-date information.

More recommendations for banks come from the Basle Agreement that was formed by the Committee on Banking Regulations and Supervisory Practices. It states that banks should try, as far as is reasonably possible, to find out the true identity of all its customers. They are also required to make sure that they comply with the laws and regulations in their area and that all that banks co-operate will the enforcement authorities fighting money laundering.

Josephine Carr in her article How to Recognise a Money Launderer acknowledges the difficulties associated with the banks identifying customers who appear legitimate but who are actually criminals. She states a drug trafficker does not come in rags with his pockets stuffed with cocaine. He can afford the best in Saville Row suits, and his money looks just like any others. She argues that the banks are caught between their duty of confidentiality to their customer and doing their bit to uncover money launderers. The bank also may risk losing customers to banks who do not employ such rigorous checks. She also argues that the banks themselves do not see themselves as being investigators of money laundering.

 

Many of the world’s banks have adopted a set of regulations and regulations with the aim of preventing money laundering practices in those organisations. These regulations were devised by a group of twelve of the world’s leading banks that called themselves the Wolfsburg Group. The Wolfsburg Group was originally set up in 2000 at the Chateau Wolfsburg in Switzerland, and their  principle were later published in October of that year. The major principles are based around identifying customers to a higher standard, recognising suspicious activity, identifying, monitoring and reporting it, and a high level of training and education of staff members.

        Undoubtedly the Wolfsburg Principles make it more difficult to launder money in an institution that has adopted them. As financial institutions are at the core of money laundering attempts, increased application of these principles would be a bad sign for money launderers, as one of the major facilities in their scheme will be made harder to breach. With the existing regulations applied to banks through legislation, and the Wolfsburg principles on top of these, banks are becoming increasingly resilient to money launderers.

        The disadvantages of the Wolfsburg principles are that they are not mandatory. Also some of the principles appear difficult to implement, particularly those which seek to identify the beneficial owner of all accounts.

        When an institution is involved in money laundering, it may well face civil proceedings in order to get back any money that has been taken from legitimate source. In order for such proceedings to occur, there needs to be away of linking the institution involved to the party wanting to get their money back. This is done through the doctrine of constructive trusts. This will therefore create liability and allow an action to follow.

Nicholas Clark discusses the implications of civil liability in his article The Impact of Recent Money laundering Legislation on Financial Intermediaries.He states “Intermediaries are today caught on both sides; a rapidly developing but uncertain civil law obligation, labelled constructive trusteeship on one side and a plethora of wholly new criminal penalties on the other”.

        

Bell, in his article Prosecuting the Money Launderers Who Act for Organised Crime argues that the current legislation does not go far enough in prosecuting the people who carry out the laundering of the money. He argues that the vast majority of the prosecutions heve been minor ones, not  involving or threatening the major players in the money laundering schemes. The highly detailed  money laundering campaigns make investigations into them very difficult, with bank secrecy jurisdiction and shell banks or corporations at the heart of many of them. Another identified problem is that money from various criminal activities is often lumped together, and sometimes mixed with legitimate money. This makes it hard to tell what property is from illegal funds and which is not. Also the fact that legislation differentiates between laundered funds coming from drug money and laundered money not coming from drugs make things more complicated. This makes prosecutions increasingly difficult, especially when trying to find the exact source of the funds and those responsible for the money-laundering schemes. It would appear that greater global co-operation is required in order to generate and more significant prosecution, alongside greater sophistication in the investigation of apparently respectable financial institutions and managements.

        As society changes, new ways of laundering will evolve, which could give money launderers ways around the legislation and regulations. An example of this is the Internet. Jones and Keasey in their article Money Laundering and the Internet discussed how the Internet could be a successful tool for criminals in order to aid with laundering money. One of the main ways in which this could occur is through the development of ‘digital cash’. Because e-commerce users are concerned over security, access to their systems will likely include encryption packages in order to increase security and alleviate the security fears surrounding e-commerce. Another problem is the banks may find themselves not in full control of these type of  payment systems, which will make it significantly harder to enforce the associated regulation on money  trnasfers involving banks. Also ‘smurfing’ could potentially be more safety conducted over the internet. Smurfing is when a number of people make small deposits, so as not to alert the authorities to the large amounts of money being transferred. Due to the high volume of money transfer that could be produced, it could make it extremely difficult to follow the trail and find the source of the funds. If such developments were made in e-commerce they would pose difficult questions to current legislation and regulation.

Pressures to expand and strengthen UK anti-money laundering

regulation

In March 2001, the FSA published the general findings of its investigation into the

handling of accounts which were linked to General Sani Abacha, the former

president of Nigeria, and used to illegally extract state funds from the Government of

Nigeria. The investigation focused on the anti-money laundering controls at 23

banks in the UK where accounts linked to Abacha family members and close

associates were identified. The investigation also found that 15 of the banks had

significant control weaknesses. Eight of these banks had corrected the weaknesses

since the accounts were opened and a further seven banks were ordered to rectify

their failings.

The extent of the weaknesses in the anti-money laundering systems and controls at

the banks was said by Phillip Thorpe (FSA Managing Director at the time) to be

“disappointing”. The reviewed current practices across a number of banks and building societies in the retail banking sector confirmed that the main issues found during the FSA’s  investigation into Abacha were not confined to those involved in that investigation.

On 15 July 2002, the six major UK retail banks(“the big six”) issued a statement of

principles for fighting crime and the financing of terrorism. Their statement referred

to a commitment to work together to counter money laundering and acknowledged

their support for a partnership between government, regulators, law enforcement

authorities, banks and the general public, to work together to prevent the laundering

of the proceeds of serious criminal activity and terrorism financing.

The big six recognised that the foundation stone of their future KYC controls was to

ensure the integrity of their existing customer base in relation to identification. In

their statement of principles the big six committed to undertaking a major antimony

laundering initiative to reconfirm the identity of existing customers,

Irrespective of when they had become a customer. All of the big six have committed to and/or have started to undertake the verification of their existing customer base. As their statement of principles confirms they have also invested heavily in transaction monitoring systems and operational processes and are committed to continuing to do so.

The big six stated that a partnership approach was essential between HM Treasury,

the FSA and other agencies to:

_ Consult with the banks on the practicalities of regulatory changes;

_ Take account of the costs and benefits of proposed changes, in particular

those involving changes of systems and processes;

_ Recognise the potential impact on customer service; and

_ Crucially, the likely impact of proposals on the prevention or detection of

money laundering or terrorism financing.

The FSA welcomed the big six initiative and in a speech at a major anti-money

laundering conference on the same day, Carol Sergeant (Managing Director,

Regulatory Processes and Risk Directorate, the FSA) stressed that it was important

for the big six example to be followed more generally in the financial sector and

referred to introducing a regulatory rule to ensure this issue was “gripped by all

firms” to create a “level playing field” for the regulated community in the UK.

Taking the fight to the launderers:

1) Assessment of reports of suspected money laundering

According to the IMF, STR assessment by NCIS takes an average of three months. This is significantly longer than its published target, and it may enable launderers to avoid capture as they will already have left the jurisdiction before an assessment has even begun. Even more worrying, if the transaction is related to the financing terrorism, the terrorist itself may have occurred before the assessment is comp aired.

Whilst NCIS does conduct an initial review on all reports within 20 hours and is able to first track those it considers most urgent, the three-month overall average is clearly unacceptable and needs urgent resolution.

This observation is not a criticism of NCIS, which has been faced with a more than threefold increase in reports over the past two years. It is, however a reflection on the need to further increases its resources and enhance its systems.

The director general of NCIS recognizes this will be and trust that the resourses forthcoming.

Criminal prosecutions and regulatory action

It is also important t that NCIS only provides an intelligence service and that the police and other law enforcement bodies are the ones which undertake the actual investigations of suspected money laundering. Therefore, regardless of the speed with which NCIS operates, unless sufficient resources and priority are given to the actual investigations, it is inevitable that the number of prosecutions will remain at a worryingly low level. Given the international dimension of much money laundering(particularly where its relates corruption) such investigations are inevitably time- consuming, complex and expensive.

Therefore, if the UK Government wishes to see a marked increase in the effectiveness of the Uk AML regime, it must, in addiction to the proper and accurately uses to the laws and powers, provide the resources for actual investigations and prosecutions. In this context, the formation of a national agency specifically charged with the investigation and prosecution of major economic crime including complex money laundering cases.

It could be appropriate for such an agency to subsume the Serious Fraud Office in its activities.

Asset recovery:

As NCIS has observed the simplest way to launder criminal cash to buy assets or spend it on a lavish lifestyle. The recent introduction ARA, with the power to seek the civil recovery of the proceeds of unlawful conduct, to be potentially the most important recent initiative in the fight against money launders and other criminals.

Feedback on Suspicious Reports

It is important that reporting institutions are given adequate feedback on the reports they make. Whilst feedback that might imperil an ongoing investigation is clearly appropriate, that to facilitate continuous improvement in the quality of STRS and SARs, NCIS commit to providing regular feedback both to the finance sector as a whole and to specific institution, on the quality of reports  make.

Training of investigators

 The FSA in respect of money laundering investigations, a number of initiatives in this area and note that a Center of Excellence in Financial Investigation. is already operation as part of the ARA designed to address the issue, there is a need  to ensure that its center adequately covers the issue of corruption in money laundering. That the ARA adequately the issue of corruption in money laundering in the Center of Excellence In Financial Investigation.

Gate keeping Provisions:

Over that past year, one of the more controversial topics in money laundering enforcement has been the question of how countries should treat professionals such as lawyers, accountants and financier advisors who facilitate transactions and otherwise ac as gatekeepers to the financial and business system within nations and throughout the global economy. These professionals are believed to be in a unique position to observe transaction and possibly identify potential suspicious activities that may indicate money laundering, terrorist financing or other unlawful conduct.However,these gatekeeper professionals are often subject to confidentiality commitment or legal privilege which underlie the professional relationship that allow them to perform these necessary gate keeping roles.

Prior to September11, 2001,the United Kingdom had adopted laws imposing gatekeeper requirements on lawyers in their jurisdiction In October Of 2001;the Proceeds Of Crime (Money Laundering) Act went into effect in Canada, imposing gatekeeper requirements on the legal profession that country.

Successful Canadian Opposition to Gatekeeper Statutes

In Canada, the Government of Canada (GOC) respond to opposition by members of Canadian legal profession to suspicious transaction reporting requirements contained in the Proceeds of Crime (Money Laundering) Act, and announced in March of 2003 that it was rescinding controversial regulations implementing these requirements. The statute at issue was passed in 200 over the objections of the legal profession and went into effect in October of 2001, followed by implementing regulations in November of 2001

 

Effect of the New Money Laundering Regulations 2003

Regulations to control the laundering of money need to have powerful features if they are to succeed. In order to give some disincentive to crime and to aid in its discovery and prosecution, regulations need to be robust and powerful, though it is clear that, by its very nature, monitoring the strength and effectiveness of any such regulations cannot be easy. Above all, however, the essential nature of the UK’s reputation for honest dealing, a major asset in the maintenance of the UK’s prime position in the financial markets and structures of the world, must be uncompromised. Nonetheless, the impact of such regulations and check must be taken into account. To impose systems which grossly burden institutions and individuals may so skew the system as to disadvantage people disproportionately.

There are major features of the present system, with the regulations which are the subject of this paper at their core. Strategy suggests the following features provide strengths.

.A clear structure of controls and systems

.The fullest possible compliance with international standards

.A careful cost benefit analysis of the controls

.Flexibility

.Joined-up agency approach between law enforcement, government and other bodies.

This means the provision of full cooperation between all who are involved, and particular importance to the role of the FSA. In addition, the UK has worked closely with developments in the FATF, whose mandate to monitor and guide this work was extended by the United Nations for a further eight years until 2012. By its very nature, money laundering is an international activity in many situations and international cooperation is essential if progress is to be made. This factor, of course, makes an academic assessment of the effectiveness of individual national regulations difficult to arrive at. Is a successful deterrence to any money laundering in the UK which places the ill-gotten gains in another, and less scrupulous, jurisdiction to be counted as a success?

Nonetheless, there has been some assessment of the effectiveness of the work which agencies in the UK are doing to combat these problems. The International Monetary Fund has reviewed the UK’s system and concluded ‘the UK has a comprehensive legal, institutional and supervisory regime for Anti-Money Laundering’. At the moment however, most assessments of the effectiveness appear to note only that the systems are in an early stage of development and need time to bed down. Further detailed assessment will be needed to ensure that what appear to be comprehensive, and possibly burdensome, regulations are working to maximum effect. Interim comments, such as those from the KPMG review of Suspicious Activity Reporting suggest that there will be challenges to the system caused by overstretching of internal forms of administration. It has yet to be seen whether the establishment of organisations such as the new Serious Organised Crime Agency (2006) have any effect in this area. Much work remains to be done.

 

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