Money‐Laundering Prevention: A 21st‐Century Spanish Inquisition
| Pages | 309-316 |
| DOI | https://doi.org/10.1108/eb027244 |
| Published date | 01 February 2000 |
| Date | 01 February 2000 |
| Author | David Kirk |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 3 No. 4
Money-Laundering Prevention:
A 21st-Century Spanish Inquisition
David Kirk
The fight against financial crime, as we enter the
21st century, becomes daily more complex.
Crime is said to be big, international, capable of
destabilising small countries and bringing down
large companies. It affects us all. At the same time,
police powers are being eroded by bleeding-heart
liberal do-gooders who introduce civil liberties into
every argument and rely on the Human Rights
Convention at every turn.
Such is the perception of law enforcers facing
unparalleled challenges and uncharted territory.
What is being done to overcome these problems?
'Money laundering countermeasures' is the answer
on every crime fighter's lips: if you can prevent an
organised criminal from benefiting from and using
his ill-gotten gains, (a) you will defeat him, and (b)
you will discourage him, and others, from trying it
again.
The law and order authorities in almost every
country, led, inevitably, by the world's policemen
in the USA, are vying with each other to introduce
ever more draconian measures that will defeat
financial crime. They are joining forces and
cooperating with each other in tracking funds
across borders, and reporting on the activities of
known criminals. They are said to be chasing
USS200bn a year, of which one-third comes from
behind the old Iron Curtain.
The resources currently being invested in this
sphere of activity by governments around the
world appear to be considerable. Intelligence squads
within police forces, locally, nationally and inter-
nationally, are springing up alongside intelligence
networks set up by regulators, government
departments and private interests. They regularly
hold international conventions, and spend most of
their time travelling the world to spread the
good word about the merits of squashing money
laundering.
The market for holding symposia and seminars and
week-long conferences where academics and pro-
fessionals pick over the latest developments, and
debate such details as the differences of approach
between the authorities in Antigua and those in
Afghanistan, is vast.
In framing all this legislation, the law makers have
hit on a very convenient ploy: get the general public
involved in rooting out money laundering, and
punish them if they don't comply.
It is proposed to deal with two questions that arise
from all this righteous activity: first, how does the
law work in practice in the UK; and second, where
is it all leading? Issues arising out of this discussion
will include the extent to which the legislators can
really force people to be policemen, the effect of
the burden of regulation, and the consequences of
the reversal of the role of the professional on client
relationships, confidentiality and privilege.
THE UK LAW
The legislative framework
There are currently three (about to be four) main
planks to the authorities' assault on money launder-
ing.
1. International law
The statutory basis of much of the legislation intro-
duced by most countries during the 1990s is EC
Directive 91/308, which required all member states
to criminalise money laundering. When introduced
in 1991 it was in effect limited to the drug-trafficking
end of the market and financial services providers,
but it has been proposed (in July 1998) that this
should be widened to include all criminal activity.
The United States had been beating this particular
drum for many years, having introduced into its own
legislation the Organised Crime Control Act in 1970,
part of the RICO statutes (Racketeering Influence
and Corrupt Organisations) dating from the 1960s.
As a result of the 1991 directive, the UK intro-
duced the Money Laundering Regulations 1993
(operative from April 1994), about which more
below. The scope of these regulations can only be
widened if the directive itself is amended.
Journal of Money Laundering Control
Vol.
3,
No.
4,
2000,
pp.
309-316
© Henry Stewart Publications
ISSN 1368-5201
Page 309
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