Money laundering – chapter four
| DOI | https://doi.org/10.1108/13685200710721872 |
| Pages | 66-90 |
| Date | 09 January 2007 |
| Published date | 09 January 2007 |
| Author | Rowan Bosworth‐Davies |
| Subject Matter | Accounting & finance |
Money laundering – chapter four
Rowan Bosworth-Davies
SAS International, London, UK
Abstract
Purpose – This paper sets out to evaluate the financial security consequences of the terrorists attack
on the USA of 11 September 2001 with specific regard to money laundering.
Design/methodology/approach – The study itemises in minute detail the litany of actual and
potential financial legislation in the wake of 9/11 in both the USA and the UK.
Findings – Basically, the study finds the depriving criminals of the proceeds of their crimes is
illusory and ineffectual, since they never have sufficient funds available for confiscation in the first
place.
Originality/value – The paper arguably represents the most comprehensive evaluation to date of
the financial issues, both real and hypothetical, thrown up on both sides of the Atlantic by the events
of 9/11.
Keywords Money laundering,Terrorism, Laws, International finance,United States of America,
United Kingdom
Paper type Case study
On 11 September 2001, I was driving home from the International Economic Crime
Symposium which is held annually at Jesus College, Cambridge. Along with just about
everyone else in the country I listened on my car radio with mounting concern, and
then later watched on television the events unfolding in New York and Wash ington.
On 14 September 2001, I published the following paper in Money Laundering Bulletin:
...Before it becomes a cliche
´it is worth observing that the recent catastrophic events in the
USA have utterly changed the face of global geo-politics for ever. Those of us who watched
the unfolding horror on our tv screens should reflect that we have not only witnessed the
worst atrocity committed in peacetime in the history of the modern world, we also watched a
paradigm shift in the course of world events, literally history in the making. After 11
September 2001, the world will never be the same again.
America is now putting herself on a war footing. This war will be fought with many
different weapons, and while we may expect to witness selected retaliatory military attacks
upon those whom the US holds responsible for harbouring, servicing and supporting those
who carried out the terrorist offences, these will be as nothing compared to the intensive
economic, regulatory and financial warfare which the US will now wage against those whom
it sees as its enemies.
The fall of the Berlin Wall led to repeated US warnings of the many threats from the new
enemies of democratic freedoms. America has demonstrated on a number of occasions that
they are willing to reach out and protect their own financial systems, when they believe they
are being threatened by outside influences. Their actions against BCCI, when the rest of the
world was content to sit back and do nothing about the dirtiest bank in the world, should
have been an object lesson.
Now, the investigators will go after these terrorists. One US security specialist who had
attended the same International Economic Crime Conference in Cambridge said to me; “God
help any bank which we find to have harboured their money, and not disclosed the fact ...”
American law enforcement has sought cooperation in the past from those it sees as its
allies, in tightening up financial systems and creating better control strategies, to prevent
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
JMLC
10,1
66
Journal of Money Laundering Control
Vol. 10 No. 1, 2007
pp. 66-90
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685200710721872
drug criminals from gaining access to the commercial pathways of the free world. It has
done this to deny them the ability to finance their operations and to keep them constantly on
the run.
They have not always been successful in their efforts, even at home.
Many other countries and particularly, the large global financial institutions, many of them
US-controlled, have interpreted these regulatory efforts as mere attempts to cement American
geo-political hegemony in the control of global capital, and to some extent, they were right.
They have resented the “pushy” US approach to the seeking of investigative cooperation, and
they have resisted attempts to require compliance with draconian legislation, while on Capitol
Hill, US politicians have responded to industry lobbyists to obstruct legislative attempts to
identify the beneficial owners of finance, seeing these rules, as obstacles to business.
But money, in the wrong hands, is itself a weapon. It buys silence, it buys acquiescence, it
buys cooperation, it buys power. And now, the Americans will begin to introduce legislation
which will enable them to create and implement the level of economic security which they will
deem to be necessary for their well-being in the future.
We shall see new legislation introduced in Congress, which will require a level of KYC
client identification information, hitherto undreamed of. We shall see legislation which will
enable US bank regulators to immediately deny access to the US bank clearing system, to any
commercial entity, bank, financial institution, banking jurisdiction or even state, which is
deemed to be less than cooperative in sharing information about the activities of those who
seek to make use of its systems. We shall see legislation which will enable US federal law
enforcement to freeze and interdict financial proceeds, in circumstances where the predicate
acts from which these proceeds emanate would be deemed to be criminal within the meaning
of US law, regardless of its legitimacy in the country of origin. We shall see legislation which
will radically extend the definitions of terrorism and organised criminality, and which will be
aimed directly at those whom the US authorities perceive to be enemies of the US people.
Those institutions or countries who fail to cooperate with US efforts to enforce these laws,
will pay a heavy price for their lack of assistance. We shall even see new legislation requiring
enhanced levels of restriction to internet and information-exchange mechanisms.
At the same time, we shall observe a radical increase in the level of determined diplomacy,
leading to the encouragement for friendly nations to enter into mutual legal assistance
treaties and information-sharing initiatives. Those that already exist will be expected to be
enforced, and enhanced levels of compliance will be requested.
The age of the Liberal agenda is over. We may, in time, expect to see a radical tightening
up of the need for mandatory national identify requirements, which will put an end, once and
for all, to the problems associated with financial KYC provisions. Gone will be the arguments
about recognising and acknowledging regulatory pronouncements and the ways in which
they will be expected to be applied.
No national identity card, complete with digitally encoded DNA identification, fingerprint,
retinal definition, blood-group, and national identity number, then no bank account or
financial facilities; no internet access or “e”mail service supply.
For too long, those with an agenda to promote have sought to play down the influence of
those whom the democracies should have seen as the greatest threat to their freedoms. These
apologists have worked assiduously to dilute and undermine the effect of proposed
legislation which those with real experience of the difficulties of countering financial crime
deemed to be necessary. They have lobbied, and argued and lobbied again to whittle away
the effectiveness of these laws. They have worked on the regulatory agencies, encouraging
and cajoling them to tread lightly in whole areas of regulatory concern, for fear of causing
damage to the financial environment, and for too long, such pleas have been heeded.
No longer.
The Americans will legislate to protect themselves better in future. The laws that deal with
the protection of the financial environment and its ability to deny access to criminals and
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laundering –
chapter four
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