Private banks' Initiative Against Money Laundering
| Pages | 344-347 |
| Published date | 01 February 2001 |
| DOI | https://doi.org/10.1108/eb027284 |
| Date | 01 February 2001 |
| Author | Michael Brindle |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 4 No. 4
Private banks' Initiative Against Money Laundering
Michael Brindle
Until the late 1980s little had been heard of the topic
of money laundering. It was known in the USA, but
the subject only really gained prominence as a result
of the United Nations Convention Against Illicit
Traffic in Narcotic Drugs and Psychotropic Sub-
stances and the almost contemporaneous Statement
of Principles of 12th December, 1988 issued by the
Basel Committee on Banking Regulations and
Supervisory Practices. The UN Convention illus-
trates how far the profile of money laundering
has been associated with drug trafficking, but it is
the Basel Statement which has been of particular
importance in the development of safeguards
within the banking community against abuse by
money launderers.
In 1990 the Council of Europe passed its Conven-
tion on the Laundering, Search, Seizure and Confis-
cation of the Proceeds from Crime, soon after the
G7 had, at the 1989 Paris summit meeting, created
the FATF. Since then the FATF has been an engine
for the creation of an enforcement-ruled environ-
ment to hinder money-laundering activity on an
international basis. The FATF now includes some
26 OECD and financial centre jurisdictions, as
well as the European Commission and the Gulf
Cooperation Commission.
In its 1990 report the FATF set out 40 Recommen-
dations, designed to build on the foundations laid by
the 1988 UN Convention and the Basel Statement.
These were revised in 1995-96, and the process of
their incorporation into national legal systems is still
very incomplete. The FATF has, however, been the
only international body dedicated solely to the fight
against money laundering, and the importance of
its work cannot be overestimated.
As far as UK law is concerned, the principal source
of guidance and direction to bankers has come as a
result of the European Union's Money Laundering
Directive of June 1991 (91/308/EEC), enacted into
English law by the Money Laundering Regulations
1993 (SI 1993/1933). Opinions differ as to whether
or not this legislation goes as far as it should, but it
does impose significant restraint against banking
institutions, including private banks. Practical
guidance to bankers has been given in substantial
degree by the Joint Money Laundering Steering
Group, set up under the auspices of the Bank of
England, and the guidance notes which that group
has produced. The regulations will be amended if
the draft second EU directive of 1999 is adopted.
That draft directive makes several changes, although
none of them is particularly radical, to the existing
regulatory regime.
A new player has now emerged to join this
crowded scene. Transparency International is a
Berlin-based non-governmental organisation con-
cerned with increasing governmental activity in the
fight against international and national corruption.
It has combined with distinguished former members
of the FATF to persuade a significant number of lead-
ing private banks to consider the voluntary adoption
of further guidelines for private banking. This group
met, among other places, at Wolfsberg in Switzer-
land, and the guidelines agreed are sometimes
known as the Wolfsberg AML Principles. Member
banks include leading US corporations such as Citi-
bank NA and Chase Manhattan Corporation,
together with leading institutions such as Barclays
Bank, ABN AMRO and Deutsche Bank, and the
leading Swiss Banks, UBS AG and Credit Suisse
Group.
The banks which have subscribed to the
Wolfsberg AML Principles plainly believe that
they have advanced the fight against money laun-
dering and corruption, and gone beyond the legis-
lative requirements currently in force, including in
Europe. It is worth attempting a comparison
between the scope and extent of these principles
with those of the EU directive and UK regulations
based upon it. There are some interesting differ-
ences.
The European approach to bank regulation in this
area has been to concentrate on four particular points.
Those four are as follows:
(1) identification procedures (ie the identification of
the person with whom business is being trans-
acted);
(2) record-keeping procedures;
(3) internal reporting procedures; and
(4) other procedures of internal control and
communication.
Journal of Money Laundering Control
Vol.
4,
No.
4,
2001,
pp.
344-347
Henry Stewart Publications
ISSN 1368-5201
Page 344
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