To read Reuter's describe Britain's anti-money laundering regime as being “woefully inadequate” is worrying; to read that it is wide open to receiving funds derived from corruption and terrorism is alarming. The UK is one of the centerpieces of the worldwide fight against organised crime and terrorism, and it is being portrayed as being inept when it comes to financial regulation.
According to Transparency International (“TI”), “billions of pounds of dirty money” are passing through the UK monetary system, due to what TI describes as a fragmented approach. When a well-respected organisation such as TI claims that UK compliance systems are not fit for purpose, then the powers that be need to at least take heed that perhaps not all in their garden is rosy. I agree with the TI-UK Head of Advocacy, Nick Maxwell's, take on the situation, that penalties for compliant enablers such as lawyers and estate agents, do not fit the crimes they are committing. I would however stop short of condemning the UK's anti-money laundering systems completely. Everything has to be considered in context, and although the UK is not perfect, it is much better and more efficient than others. Let's be honest- name me a country that has compliance systems capable of detecting the majority of shady transactions? The truth is there are none.
As each country develops a new counter money laundering strategy, as it applies a new layer of regulation; the unscrupulous facilitators will invent a work-around solution that bypasses the regulations being implemented. Although a dynamic approach of increased regulation is important to combat organised crime and terrorism, it is equally important to cultivate a business space that encourages investment and speculation; too much regulation runs the risk of stifling the global economy at a time when we are desperate for it to grow; so what is the answer?
As I said above, I agree with Nick Maxwell's observation that professional enablers are not being punished enough to deter their antics; heavier sentences, allied with the imposition of a duty of care on all financial institutions to the victims of fraud or corruption to answer in damages, if they are failing in their duty to know their customer; will make most facilitators think twice. At the moment there is no realistic deterrent. Yes, the legislation is in place and the court can give transgressors a punitive fine or a term of imprisonment……but it very rarely happens. Therefore bent-professionals will run the risk of detection as the money to be made makes the risk of that detection worth taking, but only when the punishments are weak.
White collar crime is notorious when it comes to punishment; perpetrators receive slaps on the wrists, and very rarely are they imprisoned; and when they are, they quickly migrate into the Open Prison regime. The point I am making is that we are in serious danger of over-regulation, stifling business, when all we really need is for the enablers to understand that if they get caught, not only are the individuals going to prison, but a negligence claim may follow against the institution from victims.