Chapter 4
UNITED KINGDOM’S (UK) FIGHT AGAINST MONEY LAUNDERING
United Kingdom (UK) – rich for its history of England and Wales, famous for its art and music, places and people is also facing a money laundering problem. All over the world, different countries are creating a task force on how to fight the money laundering problem.
In a speech of Ms. Carol Sergeant, Managing Director of Financial Services Authority last 15 July 2002 she stated that:[1]
“ …our aim is to help firms make sure they do what they are supposed to do- and for the most part have been obliged to do since the Money Laundering Regulations came into the force in 1994.
Our current priorities in our work with regulated firms are:
- to secure senior management acceptance and understanding of their responsibility for effective anti-money laundering systems and controls;
- to monitor compliance and encourage early identification and correction of any weaknesses through voluntary remedial work;
- to assess money laundering risk in the regulated industry and changes in the risks over time and to disseminate our analyses in order to promote effective risk mitigation by the industry;
- to provide training support for the industry – we are running several workshops and have also produced an audio CD.
This is a deliberately supportive and collaborative approach, but if a firm does not take its obligations seriously and ignores warnings, we will not hesitate to use our enforcement tools.”
With this kind of speech, Ms. Sergeant is seriously implementing the suggested approach on how to protect and monitor the UK from money laundering.
On the fight against terrorist-financing, the UK government is fully committed to freezing the assets of terrorists and has a range of powers enabling it to do so. The UK has fully met the commitments set out in the November 2001 IMFC Communique. [2]
1. The UK has fully implemented:
- UNSCR 1373 (Terrorism) and
- UNSCR 1267 (Taliban), UNSCR 1333 (Usama bin Laden) and 1390 (Taliban/UBL).
2. Acting under the Terrorism (UN Measures) Order 2001 and the Al-Qa’da and Taliban (UN Measures) Order 2002, the UK has frozen the assets of over 100 organizations and over 200 individuals. A complete list of all those listed can be found at the Bank of England;
3. The recently introduced Anti-terrorism, Crime and Security Act 2001 provides:
- police powers to seize terrorist cash anywhere in the UK and
- police powers to freeze funds at the outset of investigation;
- tougher obligations on people to report suspicions that funds are destined for terrorism.
- UK legislation
UK took effective action to freeze funds soon after UNSCRs 1267 and 1333 were adopted. Before 11 September, some million of Taliban assets had been frozen; since 11 September some million has been frozen. Efforts are now underway to return the bulk of these assets – around &85million – to the new legitimate Government in Kabul. Some million remains frozen.
4. A founder member of the Egmont Group, the UK established an Economic Crime Unit within its National Criminal Intelligence Service (NCIS) in 1992. A multi-agency Terrorist Finance team was set up in NCIS in November 2001. NCIS hosts the Egmont Secretariat.
5. The UK continues to support the provision of technical assistance and capacity building in a number of countries, funding programmes and initiatives designed to address a range of anti-money laundering, anti-terrorist financing and other counter terrorism issues. This funding is provided both literally, and through contributions to multi-lateral initiatives.
6. UK banks and financial institutions have cooperated fully, constructively and with dedication in seeking out sources of terrorist funding.
7. The UK has introduced a new domestic regulatory regime to ensure that money laundering regulations are implemented effectively by bureaux de change and money transmitters.
8. The UK plays a significant role in FATF and already complies with the great majority of the Special 8 FATF Recommendations, and will soon be fully compliant following the passage of new regulations dealing with wire transfers by money remitters. The UK strongly supports international cooperation, enhanced mutual understanding and effective means of tackling terrorist financing.
9. UK Overseas Territories and Crown Dependencies are fully committed to act in parallel with the UK in combating terrorist financing. They apply the UN Resolutions and are working to meet the Special 8 FATF Recommendations.
UNITED STATES (US) FIGHT AGAINST MONEY LAUNDERING
Fighting money laundering is a cat-and-mouse game. The dirty money tends to find the dark spots—the countries having lax regulations, weak institutions, or an inability to enforce laws. These are good places to bank if you’re a criminal. [3]
The American administration is seriously dealing with the country’s economy: it started “repairing” it by struggling with money laundering. The USA believes that the struggle with the money laundering is one of the most important directions of the anti-terrorist war. The White House administration developed another strategy (the word “strategy” is rather popular in the White House) and, this time, it is meant to put an end to money laundering.
The Bush administration has announced the creation of a task force to improve regulations dealing with drug trafficking, terrorist financing and other illegal activities involving money laundering. [4]
In September 19, 2002 testimony before the House of Representative’ Financial Services Committee, Deputy Treasury Secretary Kenneth Dam said the task force will work with financial regulators, law enforcement, consumers and others for more effective implementation of the broad anti-terrorism and anti-money laundering law known as the PATRIOT Act. [5]
These are the contents of the PATRIOT Act:
The proposed rules apply to banking institutions, securities brokers and dealers. Mutual funds, futures commission merchants, and futures introducing brokers. It seeks to make mandatory what many financial institutions are already doing – obtaining basic identifying information from customers at the time of account opening.
A broad definition of “correspondent account” was appropriate for the record-keeping provisions of section 319(b). These record-keeping provisions apply to correspondent accounts maintained by any foreign bank, regardless of the jurisdiction in which the foreign bank is licensed. Obtaining the basic information required by this section from all foreign banks, namely, the names of the owners of the foreign bank and the name of a U.S. agent for service of process, serves a valuable law enforcement purpose and will assist U.S. banks and securities brokers with their anti-money laundering efforts.
3. Expanding the Anti-Money Laundering Regime to All Facets of the U.S.
Financial System
A basic tenet of our anti-money laundering regime is that tainted funds will
follow the path of at least resistance to enter the legitimate financial
system. Therefore, a comprehensive approach to minimizing money
laundering and terrorist financing risks within the United States
necessarily involves extending controls to the full range of financial
services industries that may be susceptible to abuse.
A final rule was issued pursuant to section 314(a) seeking to establish FinCEN as an information conduit between law enforcement and financial institutions to facilitate the sharing and dissemination of information relating to suspected terrorists and money launderers. The system builds upon FinCEN’s ongoing relationships with law enforcement, the regulators, and the financial community. It is also a pledged to work going forward to provide the financial sector with additional information, such as typologies of money laundering or terrorist financing schemes and updates on the latest criminal trends.
ARGENTINA’S FIGHT AGAINST MONEY LAUNDERING
Given it’s now stable and large economy, and its proximity to countries which are exposed to drugs, Argentina can be seen as having a risk of money laundering. The Argentine Republic is considered a transit country for narcotic drugs, due to its location close to the major production centres. This situation has led the Government to consider measures to control the area of the “triple frontier” (Argentine, Paraguay and Brazil), where there is evidence of a significant increase in the smuggling of narcotic drugs and their entry into the country. Recent high-profile investigations have shown evidence that drug cartels are active in Argentina, and underlined fears that it could become a growing international money laundering centre. While there was no indication of other sources of illegal proceeds, it is believed that bribery and contraband could also contribute to the money laundering which occurs in Argentina.[6]
The provisions of the new Law 25.246 will clearly reinforce the fight against anti-money laundering in Argentina. A strong political commitment with that aim was repeatedly and forcefully stated during the on-site evaluation. However, it seems extremely important for that political will to attain its practical purpose, to give the new key element in the fight against money laundering, the Financial Information Unit (UIF), an adequate legal framework and the necessary material resources in keeping with its ambitions role, either directly or indirectly through co-operation with other institutions.
Identification of the crime
Art. 2 of law 25246 modifies art 278 of the Penal Code, which is now as follows: A prison sentence of two to ten years and a fine of two to ten times the amount of the operation will be imposed on the person that converts, transfers, administers, sells encumbers or applies in any other manner money or other types of goods applying them to an operation that will give them the appearance of having a legal service.
Financial Information Unit
The Financial Information Unit (FIU) will be responsible for the analysis, processing and transmission of information in order to prevent the laundering of assets deriving from: [7]
- Crimes related to the traffic and illegal sales of drugs
- Crimes resulting from the contraband of an illicit association as defined in art 201 bis of the Penal code (military type organization, with arms, in different parts of the country, so long as they jeopardize the National Constitution).
- Illicit acts carried out by unlawful associations organized to commit crimes for political or racial reasons.
- Crimes resulting from fraud to the public administration
- Crimes against the Public Administration
The FIU will be formed by 11 members (Functionaries of the Public Administration), and its attributes include the following:
- To receive, request and file information from those obliged to report “suspicious operations” (when they result to be unusual activities, without economic justification, or with unusual or unexpected difficulties).
- Direct the analysis of the abovementioned operations
- Cooperate with judicial organisms.
With the new Law No. 25246, Argentina has given a step forward in
matters referring to the prevention and identification of money laundering, and has set standards that follow the guidelines set by other countries. At the present time, projects are being carried out that will lead to the legal constitution of the Financial Information Unit and later, this entity will carry out the regulation of this law.
Bibliography
Borisov, Sergey. The USA is Fighting with Money Laundering, 01 July 2002. Website: http://www.pravda.ru/main/2002/07/31/44986.html
Dam, Kenneth. New U.S. Task Force to Fight Money Laundering, Terror. 19 September2002.Website:
:http://www.useu.be/Terrorism/ECONNews/Sep. DamMoneyLaunderingTaskForce.html
Deloitte & Touche of Argentina Executive Summary. Money Laundering. October 2000. Website: http://www.deloitte.com/ingles/publications/money.asp IA, The World Factbook. Summary of the FATF Mutual Evaluation (Extract from
FATF-XI Annual Report (1999-200). 22 June 2000, pp. 8-9. Website: http://www.fatf-gafi.org/Ctry-orgpages/ctry-ar_en.htm
Myers, Joseph. International Standards and Cooperation in the Fight Against Money Laundering. Website: http://www.usa.or.th/services/does/work39.htm
Sergeant, Carol 2002. ‘Money Laundering – A Joined-Up Approach’ Website: http://www.isa.gov.uk
Statements and Events from Britain. The Treasury, 12 April 2002. Website: http://www.britain-info.org
Credit:ivythesis.typepad.com
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