ISSUES CONCERNING COMPLIANCE
| Pages | 190-202 |
| Published date | 01 April 2000 |
| DOI | https://doi.org/10.1108/eb027273 |
| Date | 01 April 2000 |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 4 No. 2
Chapter Six
ISSUES CONCERNING COMPLIANCE
Introduction
97 The aims of this report
97.1 In preparing this report, the compliance sub-
group has set out to (a) summarise the current
compliance regime as a matter of law and practice,
(b) identify particular problem areas within that
regime concerning public sector officials (PSOs),
and (c) suggest recommendations for change. The
result may be seen as providing features of a
'model' compliance structure designed to cause
difficulties for corrupt PSOs seeking to launder the
proceeds of their corruption; UK law and practice
has formed the springboard for the model, but it
should be stressed that in order to be of any utility
any suggested changes would have to be adopted
(effectively) universally throughout the financial
world. Piecemeal adoption by one or a few states
would merely be likely to drive the tainted monies
elsewhere, and would not serve the desired purpose
of reducing the extent/profitability of corruption.
97.2 The introduction of workable and rigorous
compliance requirements concerning PSOs would
possibly amount to the single most effective (and
cost-effective) weapon against the laundering of
corruptly obtained funds. The implementation of
changes in 'coalface' practice is logically the first
step to be taken in a concerted effort to combat
corruption. It is of course essential that any additional
requirements imposed on financial institutions are
seen by them as practicable; cooperation as opposed
to coercion is necessary for any regulatory regime
to achieve its potential. It is hoped that the sugges-
tions made in this paper, which only propose to
introduce a further significant layer of obligations
once a customer has been identified as a PSO, do
not raise the prospect of undue administrative
burdens.
97.3 For present purposes we have proceeded on
the basis that:
— the compliance provisions we propose would, to
be of effect, need to be imposed on the full range
of institutions that might be used for laundering,
to include eg investment banks, security houses
etc;
for the sake of convenience, this report uses
'banks'
as an umbrella term; and
— a working definition of the term 'PSO' is that it
includes: (i) any senior employee of, or person
engaged by, a state; (ii) any elected official; (iii)
any person with direct or indirect responsibility
for public funds; (iv) any person who has in the
past occupied any such position; and (v) persons
connected to any of the above (eg relatives).
97.4 Appendix E to this report contains case studies
based upon actual cases of corruption, which provide
illustrations of the proposals made (see original SALS
report for appendices).
98 The law
98.1 UK law contains certain offence-specific anti
money-laundering provisions (particularly in relation
to drug trafficking and terrorism) which are unlikely
to impinge upon the laundering of the proceeds of
corruption. Those aside, the law is principally con-
tained in ss 93A, 93B and 93C of the Criminal Justice
Act 1988 (CJA 1988) (inserted by the CJA 1993) and
in the Money Laundering Regulations 1993 ('the
Regulations').
98.2 In summary, the effect of the material provi-
sions of the CJA 1988 is to make it an offence for
any person to provide assistance to another to
obtain, conceal, retain or invest funds knowing or
suspecting that those funds are the proceeds of
criminal conduct. 'Criminal conduct' is defined so
as to include conduct which constitutes an indictable
offence, or which would constitute such an offence if
it occurred in England and Wales. As to reporting
obligations, in the case of drug trafficking or terrorist
activity, it is an offence for any person who acquires
any knowledge or suspicion of money laundering in
the course of their trade, profession, business or
employment, not to report that knowledge or suspi-
cion as soon as is reasonably practicable. In respect of
all other indictable offences, it is not an offence to fail
to report, but it is a defence against a possible later
Journal of Money Laundering Control
Vol. 4 No. 2, 2000,
pp.190-196
Henry Stewart Publications
ISSN 1368-5201
Page 190
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