Anti Money Laundering: A View from the Industry
| Pages | 132-134 |
| Date | 01 April 1999 |
| DOI | https://doi.org/10.1108/eb027223 |
| Published date | 01 April 1999 |
| Author | Richard Collins |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 3 No. 2
Anti Money Laundering: A View from the Industry
Richard Collins
Much has been written and spoken about the
theory of designing and implementing anti money-
laundering procedures in financial institutions in the
UK. Such analysis, it has to be said, while valuable,
is generally made by those who inhabit the groves
of academia and by learned friends from the legal
profession from the safety of solicitors' offices. This
article puts another viewpoint: that of the humble
money laundering reporting officer (MLRO) in a
financial institution, faced with the task of imple-
menting the requirements of the legislation, the
task of persuading his management that there
needs to be a proper awareness campaign, the task
of creating interest in that campaign and getting
everybody along to the video and finally the task
of establishing a culture of reporting of suspicions
sensibly.
Simply considering the scale of black money in the
world means that there will always be a market for
the laundry of it. And the pressures for businesses to
turn a blind eye can be enormous. As Machiavelli
wrote:
'. . . taking everything into account, [a prince] will
find that some of the things that appear to be
virtues will, if he practises them, ruin him, and
some of the things that appear to be vices will
bring him security and
prosperity'.1
For the hard-pressed businessman of today, turning a
blind eye to money laundering may indeed bring him
prosperity. Further, given that there has been only
one conviction for money laundering in the UK in
1993—96,2 while it may not bring him security, it
may be that currently he does not need to worry
too much about a lack of security! And this is part
of the problem these days — that the whole topic
is not taken sufficiently seriously by the industry
and that the message is not being got across effec-
tively. Because the reality today in many firms is
that nobody in the front line really cares. Dealers
and traders (ie the 'practitioners') troop in to see the
video and sign that they have seen it, but it is never
very clear as to exactly how much the internal after-
market in terms of suspicious reporting has been
enhanced through the training. In some respects,
however, it has made a difference, given that practi-
tioners are certainly more aware, if indeed not too
aware, of the term 'suspicious' and there are some
approaches by counterparties where even the most
eager salesperson will know that they should be
reported. But between those at that dark end of the
spectrum and those which are clearly legitimate lies
a host of greyness where judgment is needed —
those where the practitioner weaves his way towards
the MLRO and says something along the lines of 'I'm
not "suspicious" at present, I'm only wary'. And this
is fine with the MLRO, who does not want to
devalue his reputation with practitioners and regula-
tors alike through cither reporting everything, in
which case he becomes seen as merely a postbox or
messenger, or reporting nothing, in which case the
authorities might soon wonder whether he is up to
the job. For all organisations, however well regarded
from without and well organised from within, must
have something to report — it belies common sense
that they never, ever get any sort of suspicious
approach.
But this can result in a form of lowest common
denominator approach dependent upon the type of
MLRO. At one end of the scale we will find
MLROs who will report simply everything and
not make any judgments themselves and at the
other end we will find MLROs who do not get
anything reported to them. The problem with both
these extremeties is that we are getting away from
the nirvana of practitioners thinking for themselves
about what is suspicious or not. A characteristic of
life in any financial services organisation is that
practitioners will do all that is possible to have
other functions within the firm take responsibility
for non-core activities which they, the practitioners,
feel are better performed by others than themselves.
Compliance and anti money-laundering checks are
no exception to this modus operandi. And there is a
further danger — the risk that we move towards,
dare one say, a more legalistic style of ticking boxes
and checking forms so that provided the paperwork
is all in order, everybody is content, notwithstanding
whether any real thought has gone into the com-
pletion of all of this. In support of this, under the
US system it is sufficient to ensure verification of
Journal of Money Laundering Control
Vol.
3,
No.
2, 1999, pp. 132-134
Henry Stewart Publications
ISSN 1368-5201
Page 132
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