The global anti-money laundering regime is in crisis, not from lack of resources but from lack of understanding. We need to get back to basics, right back to Eve, the first woman (in the Christian tradition) and the first thief and money launderer. Eve was the one who took the Fruit of the Forbidden Tree and gave it to Adam. When she took the fruit, she committed the crime of money laundering, as this article will explain.
Prevention versus enforcement
Preventing money entering the global financial system is obviously not working as numerous recent scandals and massive regulatory fines have repeatedly shown. Unless the authorities confiscate money from launderers, thereby altering their behaviour, the AML regime will never really work. One of the key reasons that authorities fail to confiscate the proceeds of crime both domestically and internationally is because they don’t recognise that Eve was the first money launderer. If the authorities could accept this as true, we might manage to make the European Union’s 5th Anti Money Laundering Directive will work AND reduce crime around the world, as this article will also explain.
The Financial Action Task Force Strategic Review
Every year hundreds of thousands of people in the worldwide financial sector generate information about money they suspect to be the proceeds of crime, they do this so that law enforcement can identify and recover it. Every year they assume that courts confiscate at least some of the money. The courts could do this, in most countries, but they don’t.
The World Economic Forum noted that fraud and financial crime was a trillion-dollar industry, reporting that private companies spent approximately $8.2 billion on anti–money laundering (AML) controls alone in 2017. Source.
This year the Financial Action Task Force, the global guardian of the AML regime, is undertaking a strategic review. The time is right to take a look at the endgame of the AML regime, the confiscation of the proceeds of crime. Critics say that not enough is confiscated from criminals compared to the amount of suspect money in circulation. This article says the problem is far worse than that, the regime has no clear idea of what confiscation even is. Subsequent articles will examine why confiscation is perceived to be difficult, how these difficulties have been overcome and how to measure its impact on crime.
A decade of funding cuts and now the need to police a public health emergency means an ever-increasing need to do more with less. In the mid-nineties the gap between resources and demand led to innovative solutions like computerisation and intelligence-led policing. We need to innovate again. One way to focus stretched resources would be to focus them on the people causing the most harm in society, the ‘real’ criminals. Unfortunately, despite seemingly endless discussion, we have never been able to settle on a working definition that the public understands and yet is operationally and legally robust. A definition which would allow us to really focus our resources on criminals and assess the results.
Strangely the UK did come up with a brilliant, legally robust definition, that fits what an ordinary member of the public would think of as ‘being a criminal’, but it was overlooked. It had been wrongly named and therefore misunderstood. It’s time to look again at Section 75 of the Proceeds of Crime Act and understand what it means to ‘be a criminal’.
One of the main hurdles to fighting crime in the UK is that we have not agreed who are the real criminals. One person’s criminal is another person’s climate warrior. A persistent parking nuisance might well be a criminal if they keep blocking your drive. Even dabbling your finger in some water may be a crime, it depends where you do it.
On 17th March 2020 France went into lockdown. As a policing consultant, I was interested to experience how this worked. How do you train a population to protect itself? How do you police the fringes who need policing?
On the 16th March, I was free to go where I wanted; on the 17th of March I was still free, provided I carried a Certificate with me. The new requirement was well broadcast on the TV and radio, but I picked it up on the internet.
Long before I joined the Metropolitan Police Fraud Squad I has fascinated by the concept of deception. How did apparently clever, even street-wise people get caught out by deceivers? Deception takes many forms, of course, this article is about the one-off deception, the sort that ruins lives, where the loss is the life savings, sometimes more, as I will explain. I want to start this tale at the end, the anguish of the victim.
The victim’s choice
My experience of hundreds of cases boils down to one common thread. At the point where the victim gets to choose, the choice made by the victim is irrelevant. This is because the deceiver has created an environment in which the victim believes they have to make a choice, they are so distracted by that choice that they fail to see the environment that the deceiver has created. In fact, whichever card they choose the Queen is no longer there at all. The choice feels wrong and risky but the victim is so ensnared that they focus, wrongly, on the detail, not the bigger picture. If you are reading this and it sounds all too familiar, including pressure to make a choice you are not happy with, get some third-party advice right now, don’t make the choice alone.
The crime rate in England rose year on year for forty years from 1955 to 1995. Then it fell steadily for twenty years until 2015. Something happened, but what was it? This short paper is focuses on the acquisitive crime rate (theft, burglary, robbery, etc.). Acquisitive crime is on the rise again, will we learn from history?
A changing society had increased crime, plus the inability of traditional controls to work. Major factors included: increased dealing in illegal drugs; stealing to support addiction to new drugs; localised poverty and inequality; unemployment in traditional occupations; increasing availability of small, expensive, desirable, electronic items and the temptations of consumerism. Policing failed to keep pace with the changes and struggled with the ever-increasing crime wave.
Then, in a few short years, the steady increase in crime was stalled and then reversed by a perfect storm of policing in the late 1990s.
This post explains the difference between confiscation, forfeiture, restraint, sequestration, seizing, freezing, civil recovery and asset recovery. This is to help you understand what is in the news, whichever country you are in.
These terms are all lawful ways to deprive people of the proceeds of crime in litigation against criminals or criminal assets. They are all English words with everyday meanings but also technical terms which are frequently used wrongly by journalists, lawmakers and commentators. Unfortunately they have also been wrongly used in English translations of foreign legislation and technical papers.
It is a crime, the crime of handling the proceeds of other crimes. National criminal offence definitions must conform to the United Nations’ Conventions (UNCAC, UNTOC and Narcotics) which all have identical wording to describe money laundering. None of the definitions use the words “money” or “laundering”. Athough the criminal offence is new, the activity is as old as crime itself. The first money launderer was Eve, Adam’s wife, when she took the fruit from the forbidden tree.
Modern confiscation in the UK can be divided into three main phases lasting about 15 years each. From 1971 to 1986 (instrumentalities only), 1986 to 2002 (direct proceeds), 2003 to 2017 (direct, indirect and criminal lifestyle proceeds).