KAYE TESLER SOLICITORS Tel: 020 8809 6756 Email: kt@uklaw.net Fax: 020 8802 0660

ARCHIVED MONEY LAUNDERING NEWS 2004

30/11/04 WINTER BREAK

Our news service is now taking a winter break.

Please bookmark this page. We shall be returning on 17th January next.

We wish all of our readers a good break and a happy new year.

29/11/04 CCBE SUBMISSION

The CCBE (The Council of Bars and Law Society of the European Union) has released the text of its submission on the third money laundering directive. They have submitted as follows;

The requirements on a lawyer to report suspicions regarding the activities of clients based upon information disclosed by clients in strictest confidence is in the view of the CCBE a violation of a fundamental human right. As a result, the essence of the lawyer/client relationship has in our view now been infringed upon as a result of the 2001 EU money laundering directive..

The submission, if accepted, would not exempt lawyers from the offences which are contained in Proceeds of Crime Act, neither would these submissions release them from the know your client etc regulations. The submissions are merely to do with the obligation to report. It is very hard to see how the system as designed could be effective if the obligation to report were removed and in any event the submission appears to fly in the face of the objective and in our view has little chance of being accepted.

26/11/04 GOVERNMENT STRATEGY ON MONEY LAUNDERING

The Government has issued a report which provides an overview of its plans for money laundering in what it describes as the medium term (probably the next five years).

The report states that the intention is to strike, “the right balance between effective crime prevention and detection and avoiding an excessive burden on industry.”

Within commenting on the forthcoming third EC directive on money laundering it stated that the FSA is working to find a proportionate approach “know your customer” requirements at the same time NCIS is said to be looking at ways to improve the speed and efficiency in which it looks at dealing with suspicious activity reports.

All of the above indicate that the Government is probably looking at the implementation of some type of di minimis rule but practitioners within the regulated sector should not believe that the administrative burden on them will necessarily fall as the third EC directive looks like making it compulsory to report all transactions over 15,000 euros in cash, whether they are suspicious or not!

25/11/04 MORE ON PHISHING

Beware of messages entitled “work from home: prepare to succeed.” E-mails with this message have been sent to tens of thousands of people by phishing gangs. They are looking for people to innocently help them wash dirty money.

Those recruited will receive money into their personal bank accounts and then transfer the funds, believing those funds to be clean, to the phishing gang.

With the world anti-money laundering regime constantly tightening it isn’t surprising to see that criminals try ever more innovative methods to clean their money. We all must be on our guard.

24/11/04 CONFUSION

Gatekeepers such as accountants and lawyers are at the cutting edge of the anti-money laundering legislation. Having regard to the fact that the Regulations are intended to become a major weapon in the fight against crime it is surprising that the number of policemen specifically tasked to the area is small. The reason simply being that the financial sector itself is being forced to become the policeman on pain of severe penalty for non compliance.

By far and away the greatest number of reports to NCIS come from lawyers but now, at the Law Society annual conference lawyers were warned that they were making too many disclosures and were breaching confidentiality.

What should lawyers do? It seems that we are damned if we do not report and damned if we do. We are now being criticised if we are overly cautious and make reports to protect ourselves. We are not in the business nor are we paid to run the risk of falling foul of this legislation and, in our view, we must all err on the side of caution.

23/11/04 CASINOS

There has of course been a great deal of publicity about the proposed expansion of the number of casinos and, as a side issue the consequences on money laundering.

We certainly cannot say that we are in favour of expanding gambling but, in common with most lawyers, we are realists. It has been reliably reported that in excess of 37,000 British people play online poker for money EVERYDAY. A high proportion of that gambling is to unregulated bodies off-shore.

There is demand for gambling and the market place dictates that where there is demand there will be supply. If there is to be supply then better that it is controlled and properly regulated.

22/11/04 LONG QUEUES

The Financial Times has recently carried a report of the discontent of bank customers forced to wait a long time in queues while staff go through rigorous ID checks. This actually is not news. The problem lies initially with the regulations requiring two separate documents to establish identity. The importance is obvious as those of you are familiar with ‘phishing’ will know.

While the root of the problem is the requirement of the Regulation, the real reason for the unnecessary queues lies with bank staff. They, to avoid personal criticism, enforce the regulations far too rigidly. We can only hope that in due course common sense will come to bear on these matters.

19/11/04 CITI BANK – WARNING

We have recently received a series of e-mails purportedly emanating from Citi Bank warning us that their data base has been under attack and that they need all customers to confirm their details immediately to prevent them being suspended. The e-mail provides a link to a page at which your details can be entered to enable you easily to confirm your account.

All looks genuine and we are certain that many people will enter their account details. We had no trouble spotting the ‘phishing’ style scam as we do not bank with Citi Bank.

Don’t be fooled. Don’t give your banking details to anyone without being absolutely sure of whom you are dealing.

18/11/04 ANOTHER CRACK IN THE DAM

There are reports that David Blunkett, the Home Secretary is taking cognisance of complaints that he is receiving from professional advisers about the way that the money laundering legislation is working. Apparently he is also concerned to ease the burden on people going about their ordinary business and trying to open new bank and building society accounts.

As a result the Home Office has opened discussions, a spokesman said:

“the Home Office will be looking at account legislation to make sure we’ve got the right balance. We are looking at the money laundering reporting processes to make sure that they are as effective as possible.”

As we have warned previously, everyone within the regulated sector, must continue to act as they have in the past and deal with the law and the legislation as it is at present. It would be unwise to anticipate amendment.

17/11/04 REGULATION STIFLING BUSINESS

The Better Regulation Task Force (BRTF) has announced that, “over zealous interpretation of legislation means that unnecessary amount of red tape is stifling the UK economy.” The Government constantly announces that it is fighting to remove red tape yet we now have this report from BRTF and our own experience (see posting 1st November on Inland Revenue returns on small estates for Probate or Letters of Administration) shows that despite its ‘efforts’ the Government is failing miserably in any attempt that it says that it is making to stifle red tape.

16/11/04 SMUGGLING MONEY

The Financial Action Task Force (FAFT) has called upon all its members to tighten cash transfers across international boundaries. The wheels of terrorism are fueled by cash movements and apparently it is not unusual for carrier bags full of cash to be transported in car boots.

Our professional experience is that Customs & Excise in the UK are very vigilant. In the last few months we have represented clients in two separate matters where sums in excess of £5,000 were being carried in cash. Carrying cash of itself is not illegal but a sum greater than £5,000 may be seized and it then upon the owner to show that the money was legally held.

15/11/04 TOO COMPLEX AND ONEROUS

The Law Society president, Edward Nally in an important speech that was made at the solicitors 2004 conference in Birmingham, said “the Law Society will not ignore the growing uncertainty and concern being voiced by the profession and our clients about the impact of POCA and the Money Laundering Regulations of 2003. The current regime is too complex and onerous.”

It is believed that the Law Society is pressing for the introduction of a di minimis rule.

12/11/04 THE FEAR FACTOR

The FSA has recognised that fear has gripped financial institutions in general and solicitors in particular as each organisation from the biggest to the smallest wrestles with the requirements of the unbelievably strict money laundering rules. Philip Robinson who is the FSA’s sector leader dealing with crime has pledged that the FSA would focus only on the greatest money laundering risks and that only a small proportion of institutions would face enforcement action for breaking the regulations.

Those of us within the regulated sector should be wary of these words. Mr Robinson at best controls only one section of the FSA. Obligations to report are not to report to the FSA but to NCIS and there can be no doubt that if a crime, even relatively minor, is reported to NCIS then they will pass the information to the relevant prosecuting body be it the police, Customs & Excise, the Inland Revenue or even a trade description of licensing department.

11/11/04 LAWERS ACROSS EUROPE PROTEST

Delegations from the French, Spanish, Italian and Belgium bars and from the Counsel of the bars and laws societies of the European Union have appeared before the European parliaments committee on petitions. The purpose of their appearance was to protest the obligations imposed by the 2001 money laundering directive.

A groundswell of objections is building. Hopefully a di minimis rule, for which we have been pressing for a considerable time, is nearing. Be warned however the law remains the law until it is changed and everyone within the regulated sector should be weary of easing their vigilance.

10/11/04 MONEY LAUNDERING AT THE CITIZENS ADVISE BUREAU

It has been reported that one of the auditors to the citizens advise bureau, someone who wishes to remain anonymous, has expressed concern after being told that there were no money laundering procedures in place and no staff training. The auditor gave examples of the CAB making payments on behalf of refugee. Apparently they were given money in cash because the refugees did not have bank accounts and they then made those payments on their behalf through the CAB bank account.

The amounts in question probably were very small and this is a prime area where a di minimis rule may assist. On the other hand illegal immigrates or asylum seekers may be very short of money and there may just be a danger of cash in their possession which they are able to remit abroad may be the proceeds of crime. Whatever the position the report highlights the need for staff training. Clearly the CAB staff were/are totally oblivious to the risks they are taking.

09/11/04 MORE ON PHISHERS

We have constantly reported on alleged attempts at phishing. We are pleased to be able to report that four people, all Eastern Europeans, have now been charged in London. The charges are as conspiracy to defraud financial institutions.

Watch this space for more news as it develops.

08/11/04 FSA ISSUES PROGRESS REPORT

The FSA has been reviewing ID procedures. The keys issues that the FSA is going to raise with the joint money laundering steering group (JMLSG) are:

1. The need for increase reliance on a single document as identification

2. The benefits of electronic verification by way of a credit reference agency

3. Greater reliance on ID checks undertaken by other firms

4. A better approach to wholesale and institutional trade associations.

Watch this space for more news.

05/11/04 £8,500,000 EARMARKED IN SCOTLAND

The Scottish ARA, like their English counterparts, are increasingly becoming a vital tool in the fight against money laundering. It has been reported on Scottish TV that the Scottish drugs enforcement agency - which organisation also deals with money laundering - has earmarked some £8,500,000 of drug money for seizure. The report goes on to say that they are now switching their attention to ‘gatekeepers.’

Scottish solicitors, accountants and other financial and property professions should ever vigilant, as all of us, to ensure that their procedures are up-to-date.

04/11/04 OPERATION PAYBACK

The association of chief police officers recently announced the creation of four separate teams to be known by the acronym RARTs. This stands for Regional Assets Recovery Teams. Their job will be to help local police and Customs & Excise agencies to target the financial assets of criminals. Once these have been identified appropriate proceedings, which our own regular readers will recall, are based on the civil test of ‘balance of probability,’ will be brought.

Its is intended that the RARTs are self funded from the assets that they recover.

03/11/04 SOME GOOD ADVICE

MessageLabs, an email filtering company has issued a warning over ‘unsubscribed’ messages. Apparently these messages, in some instances, will not only do not ‘unsubscribe’ you from the database but they merely confirm the accuracy of your web address and the fact that somebody reads the email!

Our advice is do not unsubscribe these spammers – BLOCK THEM!

02/11/04 FSA TO EASE RULES?

Philip Robinson, the financial crime sector leader at the FSA has called for a simplification of the FSA’s rules on opening bank accounts. Currently banks, along with everyone else dealing with a new customer/client must require at lease two documents to verify identity but a working group, set up by the FSA has been looking at these requirements. Mr Robinson, who is the chairman of that group has announced that it supports simplification of the documentary requirements.

Let us hope that not only are matters simplified for banks but that they are also simplified for all parts of the regulated sector, especially low risk areas such as drawing a Will for a new client.

01/11/04 DEATH WILL NEVER BE THE SAME AGAIN

Today sees the introduction of immense changes to our system of obtaining Grants of Probate and Letters of Administration. Parts of the Tesco law come into effect so that solicitor’s monopoly of this work has been broken, but all you accountants don’t rub your hands in glee. At the very same time as breaking the monopoly it has now become necessary to complete a ‘RETURN OF ESTATE INFORMATION’ form IHT205 in every case – no matter the size of the estate.

As may be expected the form is long and complex and those undertaking the work will earn their money.

The need to file a breakdown of the assets in a small estate is totally new and at least a 400 fold increase in red tape. There must be a suspicion that requiring information on how a deceased came into his/her money, even in a small estate, is all to do with the increasing power of computers to analyse information and maybe link it to money laundering – who knows why this information is suddenly a pre-requisite to obtaining a Grant.

29/10/04 BOWMAN V FELS

The Court of Appeal is due to hear this case at the end of next month. It is the first challenge to Part 7 of The Proceeds of Crime Act and will consider the extent of legal advisers duties.

The importance of the case is that one of the base concerns is the interpretation given by Dame Elizabeth Butler-Sloss in her comments in the case of P -v- P when she said that once a report had been made to NCIS then no further steps can be taken on the matter until notice or consent or, under the provisions, deemed consent, was obtained. The Court of Appeal will consider whether work on a matter can continue after a report has been made.

Although not a party to the case the Law Society “is intervening in the case because it involves a legal issue of general importance to the profession. It is hoped the appeal will also clarify the circumstances in which disclosures need to be made to NCIS during the conduct of litigation.”

28/10/04 EASING REPORTING OBLIGATIONS - WARNING

Reports are beginning to appear about the increasing pressure to ease the reporting obligations of lawyers in particular.

While we all hope for the implemenataion of a di minimis rule we must remain on guard. Until the law is changed we are bound by the law as it exists at the moment. It would be foolish if anyone were to relax vigilance.

27/10/04 MLRO’s - A CAREER

Recently we reported that the demand for MLRO’s has resulted, not surprisingly, in the salaries that they command increasing substantially. A career opportunity as a money laundering officer has been recognised at the Robert Schuman University in Strasbourg. The university now includes a course in money laundering and the first group, 15 post graduate students, have begun taking classes in detecting money laundering.

26/10/04 JAPAN'S FSA GETS TOUGH

It has been announced that the Japanese Government’s FSA has shut down four key offices of Citibank, Japan. The FSA has charged Citibank with numerous violations of laws and regulations. Reuters report that the regulators charged the bank with, “failing to prevent suspected money laundering.” A New York spokesman for the FSA said that the likely reasons for the numerous breaches of regulations were the profit targets set by the New York head office of the bank being unrealistically high.

25/10/04 MONEY LAUNDERING MAIL SCAM

As we reported in previous news postings, there is a scam, first reported in Ireland, of companies receiving an official looking letter headed “Final Notice.” The letter refers to the Proceeds of Crime Act 2002. The letters which are in fact a fake demand for £75 and notwithstanding their appearance do not come from an official body. The latest Trading Standards Department to notice and to warn businesses in the area is in Warwick but the scam is slowly spreading across the whole country.

Be wary.

22/10/04 MORE ON PHISHING

Regular readers will know that we have previously defined and included items on ‘phishing’.

It appears that a new group has been targeted for phishing scams. The way it works apparently is that an email leads you to the account of a well known broker. The catch is that a pop-up then asks you for personal information which is used by the ‘phishers’.

You must be ever vigilant.

21/10/04 MONEY LAUNDERING REGULATION TENTACLES REACH OUT

The anti-money laundering regime which is implemented almost worldwide is intended to fight organised crime and terrorism. Articles on our own news pages have reported the way in which those Regulations are being used for other purposes that clearly were not intended.

The latest involves the proposed takeover of Abbey National by the Spanish bank, Santander. A New York consumer group has written to the FSA in the United Kingdom arguing that the transaction should not be permitted to go ahead as apparently following Spanish internal laws Bank Santander has refused to divulge certain information on money laundering in the US.

Once again we see the system being mis-applied and one may well ask what else can Bank Santander do if it is a Spanish bank complying in Spain with Spanish law.

20/10/04 ANNOUNCEMENT

The Institute of Chartered Accountants has issued a Notice which states:

The Institute is committed to helping members and others to address the significant obligations (money laundering). We are working with the Authorities to produce definitive guidance and have also produced a range of less formal guidance and sources of help for members.

We are also working with the Authorities to try and ensure that the legislation works well for accountants as well as for law enforcement.

We wonder why this announcement has recently appeared on the Institute of Chartered Accountants’ website. Surely all that they have said should have gone without saying. However as simple solicitors we admit to not really understanding accountants!

19/10/04 EMAIL ALERT

The Northern Ireland Department of Enterprise Trade and Investments Trading Standards Service has issued a warning over a new mail shot on money laundering law.

There have been various complaints made about an official looking mail shot that actually emanates from a private house in Crewe. The mail shot is headed ‘Final Notice’ and it refers both to the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2003. The aim of the mail shot is to try to get businesses to purchase an anti-money laundering training pack, aimed specifically at staff, at £35 per head. Apparently this is a bogus attempt to obtain money and a representative of Trading Standards Service has said, “this notice has not been sent by any official Government agency so you are not obliged to send any money.”

Why buy staff training from a fraudulent supplier at £35 per head when we offer a legitimate training pack on our website at prices starting from £35 per head but offer discounts when staff users number more than nine.

18/10/04 STRANGE BUT TRUE

It is accepted that professionals should base their procedures, at a minimum, on the guidelines provided by their professional bodies. It is very odd that the guidance of the Law Society to the legal profession has not been approved by the Treasury. The effect is that a solicitor might still be convicted of one of the offences under the legislation even if he does everything that the Law Society has recommended. It should never be forgotten that the first solicitor to be jailed under the legislation was acting under the guidance of a QC.

15/10/04 BE CAREFUL

We have recently received an e-mail from servicso@usbank.com . They ask us for details of our US bank account to check the details for security reasons.

WE DO NOT HAVE A US BANK ACCOUNT.

We strongly suspect that this is a case of 'phishing' - see our earlier posts. We strongly advise all of our readers to be VERY careful.

14/10/04 MAJOR RAID

Police have seven arrested 7 and have found what they describe as "substantial evidence" in a drugs and money laundering operation. In addition they have found 5 firearms. The arrests which were made last month were in Wiltshire and Somerset.

The news media, as reflected in our own news postings, is constantly full of compliance issues, so it is good to be able to report that, apart from everything else, the money laundering legislation is also used to fulfil its main function – we can only hope that the main function is not becoming an offshoot of the legislation – it is not for the tail to wag the dog

13/10/04 ARE BANKS PAYING THE PRICE?

The Scotsman newspaper has highlighted problems apparently facing banks in dealing with money laundering. Whichever way they turn, banks seem to be faced with vast expense. If they implement the Regulations properly then they have to invest in considerable high tech equipment, staff training and putting systems into operation. If they fail to implement properly then, as our regular readers will know, the FSA is quickly on their case and they receive massive fines.

The Scotsman newspaper appears to be commiserating with the banks over the problems they face. Our view is that these costs are not borne by the banks but are passed on to you and I, the customers, who have no choice other than to use their services. If commiseration is due anywhere then it is due to everyone who uses banking services.

12/10/04 ONE MILLION POUNDS FOR ARA

Further to yesterdays posting on the ARA, the Asset Recovery Agency (ARA) has announced that it hopes to confiscate £60m this year alone from criminals under the provisions of the anti-money laundering legislation. This figure was revealed by the Home Secretary after the High Court in Northern Ireland had made the first Order in the UK for a seizure in excess of £1m.

The Secretary of State for Northern Ireland welcoming the judgement confirmed that the activities of the Asset Recovery Agency were a major weapon in the fight against organised crime in the province.

11/10/04 DIRTY MONEY FIGHTS GUN CRIME

The Asset Recovery Agency’s (ARA) work is beginning to pay secondary dividends. Its prime function of course is to deprive criminals of the benefits of their crimes by seizure. Their work to date has recovered sufficient sums for the Home Office to be able to allocate large amounts to specific purposes. The Home Office has recently announced that it will specifically utilise some of the monies seized from money laundering activities to be used to fight gun crime.

08/10/04 DISPUTE DENIED

As our regular readers will be aware, accountants have been pressuring the Government to extend legal privilege to accountants in situations where they are in effect giving legal advice. The Government bowing to such pressure has put in hand an ‘informal’ consultation. Solicitors, Simmons & Simmons, representing the Institute of Chartered Accountants, have made it clear that accountants do not wish to start advising on legal issues. They merely wish the advice that they give at present to come under the veil of privilege.

As we have stated in previous news postings, legal privilege is by no means as all encompassing as the public, including accountants, may believe and indeed is so complex that the accountants will need to be lawyers to understand the rules of privilege. It certainly is very far from shielding them from the main money laundering offences.

07/10/04 THE LONG ARM OF THE MONEY LAUNDERING LAW

It is inevitable that for every crime that involves money there will be a corresponding money laundering offence. There are constant complaints that the anti-money laundering regime is not catching the criminals that it was aiming at and that it is being used disproportionately. A typical example of money laundering legislation being used, not improperly, but for a purpose for which it is not intended, occurred in Spain where, it will be remembered, charges have already been laid against Argentinian General Pinochet. To those charges, the Investigating Judge has now added a charge of money laundering.

One would have thought that if it was possible to bring General Pinochet to trial then there would be sufficient evidence on other, more serious, charges than money laundering and that in the particular circumstances of that case bringing money laundering charges might be considered not so much to be an abuse of the process but an abuse of the system.

06/10/04 A VERY INTERESTING ARTICLE

We recommend that our readers read a very well written article on Money Laundering which has been published on the internet. The article can be found on Mondaq’s Article Service at:

http://www.mondaq.com/i_article.asp_Q_articleid_E_28253

05/10/04 SOLICITOR JAILED

A Belfast solicitor has been jailed for failing to report suspicion of laundering drug money. The solicitor, acting on a conveyancing matter received a £70,250 deposit on a property. The mortgage broker "became concerned" that his client could pay such a large deposit and reported his suspicion.

The solicitor when questioned told police he had never met his client as he could not come to his office because of a serious road accident. An "associate" of the client had acted as a go-between in delivering papers etc, and the solicitor accepted that he had authenticated some documents even though he was not really a witness. Further, and most importantly, the "third party" had come to the solicitors office with a bag containing the deposit and without enquiry the solicitor "filled out a lodgement slip and gave it to the associate to bank for him".

The money was the proceeds of drug trading.

04/10/04 PHISHING PROTECTION

Regular readers will know that we have defined ‘phishing’ as the use of email to lure people to bogus websites disguised to look like the websites of reputable companies. ActivCard, an American NASDAQ quoted company, has released a new program which, it claims, solves the problem of phishing. The program apparently prevents a bank’s customer’s password being stolen or used without that customer’s knowledge. Phishing is considered to be one of the most troublesome of the innumerable internet scams.

01/10/04 OUR COMMERCIAL PLUG

Every professional will from time to time come across a problem relating to money laundering but does not wish to go to the expense of seeking Counsel’s advice. Help is now at hand. As our readers, we are certain, are aware, your editor has lectured extensively on money laundering and in his first published CD talk covers the basic principles of law. In the time since the implementation of the new anti-money laundering regime an enormous variety of questions have arisen.

The experience gained has enabled us to publish a further CD which lists numerous scenarios. The CD talk offering three hours CPD is available at a cost of £75 plus VAT from our office and if it does not deal specifically with any question that you may wish to raise, we are certain that the factual scenarios which are related are broad enough to give a sufficient knowledge of principles that you will almost certainly find the answer to the question that you raise.

30/09/04 LETTING AGENTS BEWARE

The Association of Residential Letting Agents publishes a buy to let guide. It recognises that investor landlords may well find themselves falling foul of Anti-Money Laundering Regulations. The guide which was published on 1 September updates investor landlords on the new Regulations and deals with areas that are as different as electrical safety, general insurance and most importantly for the purposes of this news page, the question of how they are to deal with the Money Laundering Regulations.

29/09/04 SALARIES GROW

In this age of non-productive paper pushing it will be no surprise to learn that the anti-money laundering regime has brought about the creation of an entirely new profession, that of the professional MLRO (Money Laundering Reporting Officer). The offences and the regulations are so detailed that in any reasonably large sized firm or company within the regulated sphere, staff constantly needs both training and guidance. Like a housewife, an MLRO’s work is never done.

The problem facing the regulated sector is that there are too few properly trained people able to properly do the job and more than that even fewer, once they are properly trained, who are willing to undertake the personal risk that goes with the job. Good MLRO’s are therefore in short supply and simple rules of economics - supply and demand - mean that good MLRO’s are commanding ever increasing salaries.

Anybody entering the profession however must wonder how long the job will last, as surely common sense must ultimately be applied.

28/09/04 TWO FURTHER BANKS CRITICISED

Banco Santander and HSBC have been the subject of a highly critical report by a US Senate sub-committee. The criticism is upon the basis of apparently lax money laundering procedures.

Banco Santander are bidding for the Abbey National at the present and HSBC is one of the world’s biggest banks. If they cannot get their procedures right what hope is there for everyone else? Extending legal privilege, as has been suggested by the accountancy profession, will do little to solve administrative problems but a de minimis rule will act as a major sorter of the wheat from the chaff.

27/09/04 LAWYERS REVOLT

We all know that the majority of reports made to NCIS emanate from lawyers’ offices who, in order to protect themselves, report every suspicion. It is equally well known that NCIS are becoming swamped with reports notwithstanding the fact that they now sift reports to attempt to separate the wheat from the chaff. However, the problems caused to lawyers are such that in Canada, starting in 2002 lawyers began to challenge the legitimacy of the reporting regime with the result that the Canadian Government ultimately dropped lawyers from the ambit of its legislation. There is now growing speculation that the Law Society is looking for a suitable test case to challenge the principle whereby the common understanding of legal privilege has been overridden.

The Law Society’s Gazette recently stated, “criminals cleaning their dirty money must be fought, but not at the expense of hamstringing legitimate lawyers acting for their honest clients.”

24/09/04 AN INFORMAL CONSULTATION

When the Money Laundering Regulations 2003 were discussed in Parliament there was a howl of protest from accountants who, under the Regulations, face potential prison terms for their breach. Apparently there is a difference between European and UK law and this relates to circumstances where legal privilege applies. The Government has therefore instituted an informal consultation about changes in the law and regular readers will be aware that we have commented previously on this consultation and we would not wish accountants to run away with the idea that extending legal privilege to them would be a panacea for the problems that they now face almost every day in ordinary practice.

Debate however on problems thrown up by the legislation must be a good thing and hopefully the pendulum will start to swing back from its current extreme position and allow common sense and a de minimis rule to be applied.

23/09/04 FSA AGAIN SHOWS ITS TEETH

Our regular readers will know that we have reported stringent fines imposed by the FSA on some of the most respected banking institutions in the UK. The latest to join this ‘elite’ club is the Bank of Ireland. They have been fined £375,000 for failing to have in place appropriate systems necessary to detect high risk cash transactions which, in the incidents under investigation, have totalled approximately £2m.

Cases such as this reach the headlines but readers would be unwise to consider that the FSA spends all of its time investigating major financial institutions. Like a housewife, their work is never done and they have teams constantly inspecting.

22/09/04 WARNING WARNING WARNING

We have just received an e-mail purporting to be from Citibank anti-fraud asking us as existing customers to visit their website via a link to confirm our details.

The e-mail was very dangerous in that while it appeared as text its entirety was infact a graphic and a click anywhere would have linked us to the website.

All appears normal and perfectly proper and were in not for the fact that we are not Citibank customers we might have been fooled - BE VERY CAREFUL.

21/09/04 ACCOUNTANTS INCENSED

Since the coming into force earlier this year of the Money Laundering Regulations, accountants have been incensed that they are not covered by legal privilege even when in their capacity as tax experts they are giving legal advice. As a result of pressure the Home Office has published on its website a document entitled “Obligations of Accountants to Report Money Laundering”. This is referred to, within the title, as “an informal consultation”.

Everyone considers that his neighbour’s grass is always greener and accountants appear to consider that the extension of legal privilege to them will be a panacea to many, if not all, of their complaints about the money laundering regime.

Accountants do not seem to appreciate that legal privilege is not only complex but very restricted in its nature and as lawyers we suggest that they study the subject in a little greater detail before wasting any influence that they, as a profession, may have with the Government in buying a ‘pig in a poke’

20/09/04 IDENTITY THEFT

We all know that a key element to operating within the regulated sector is the KYC (know your client) procedure. This contains two basic areas. Identify your client and ascertain the provenance of the money.

Statistics show that ID fraud affects more than 100,000 people a year in the UK and that the cost is more than £1.3billion to the country. Terrorists invariably will look for false identities.

To help combat identity theft the Government has created a new website at www.identity-theft.org.uk. There is nothing particularly clever about the website. All of the advice and information that it gives is basically common sense but it is useful to have it in one place.

17/09/04 IMPLEMENTATION BECOMING RIDICULOUS

A day or so ago the editor of this news page was in his bank. He was in a queue and the first person in the queue was an elderly gentleman. He did not know how to get money from a hole in the wall and didn’t want to try. He went to an ordinary counter and asked the clerk to cash his cheque. She asked him for identification. He responded that he had been banking with the same branch for the last 50 years and the teller knew him. She confirmed that she did but still requested identification. He demanded that she speak with the manager (if such a thing still exists). After a wait of 10 minutes she returned to the till and cashed his cheque.

The next person in the queue wanted to open an account for her son starting at university. She had brought his passport. She was asked that evidence be supplied of her son living in his new university accommodation. Of course he hadn’t yet moved in and there was nothing. The queue waited a further 10 minutes and ultimately the lady and her son disappeared into the bowels of the bank.

Everyone else in the queue by then having waited 20 minutes over non-productive officious red tape would happily have changed banks were it not for the fact that any other bank would have been as bad.

The third EEC directive on money laundering is intended to bring some degree of common sense. Let’s hope so. We can only wait and see.

16/09/04 A NEW RULER IN LIECHTENSTEIN

Liechtenstein is probably the best known tax and secrecy haven and as a result must, in the past, have been a paradise for money laundering. The ruling Prince has now handed over the day to day responsibility for running the country to his 36 year old son, Alois. The new Ruler has pledged to continue with his father’s policies that have resulted in Liechtenstein being removed from the international blacklist. However it remains on the OECD’s list of low tax countries which believe in tax competition.

15/09/04 TOO MUCH SECRECY?

Business Week Europe has reported that one of the great mercantile fortunes of Europe, a name that’s a byword for intelligent investing and who has sunk very large amounts into hedge funds managed by US based investments over many years, are not making investments this year. The reason? The ‘know your client’ requirements of the US Patriot Act.

The United States was considered the ultimate safe haven for the world’s assets but apparently this mercantile family believe that if it became known that they were making certain investments then that knowledge alone would affect the market, so they insist on secrecy. They were refused. Business Week complains that the demand for ‘know your client’ robs the US of one of its sources of funds - an unforeseen consequence of the Act?

14/09/04 CHAPS TRANSFERS.

The case of Tayeb -v- HSBC (2004) EWHC 1529 (COMM) involved a situation where money was sent by CHAPS in relation to a perfectly legal and proper transaction. The bank however had a suspicion. The bank returned the money to the remitter. They were successfully sued by the person to whose account the money was sent.

The Judge said that the bank would not have been guilty of a money laundering offence “merely by accepting a transfer suspecting that it emanated from fraud or other unlawfulness or that it was part of a money laundering operation. The bank ought to have implemented its reporting procedures (under the Money Laundering Regime) and awaited the outcome. By simply sending the money back the bank failed in its obligations both to its client and to report.

13/09/04 COMPUTERISED RISK MANAGEMENT.

The editors of this news page have noted that those involved in risk management constantly refer to ‘attributes’ of typical money laundering circumstances. The greater the number of ‘attributes’ then the higher the risk of money laundering. A recent article gave an example of a property transaction involving a large sum of money, an offshore bearer share company and instructions received from a Russian in his late 20’s. This case would be said to have three of the warning attributes, namely, large amount of money, bearer share company, young Russian.

While of course a transaction with those attributes gives cause for enquiry they do not mean, of themselves, that something is wrong. They simply emphasise the need for full investigation. Over-use of ‘attributes’ de-personalises the ‘know your client’ system and places over-reliance on the type of systems that are IT controlled.

10/09/04 DO YOU NEED A MONEY LAUNDERING OFFICER?

Regulation 7 of the Money Laundering Regulations 2003 requires solicitors’ firms to have a nominated person, frequently referred to as the MLRO. Members of staff must report suspicious circumstances to the MLRO and it is he who ultimately decides on whether to report something to NCIS or not.

The only exception to this rule is in relation to a sole practitioner. Sole practitioners are not required to establish an internal reporting system and therefore, if they do not have to have a system, then they do not have to have a nominated officer to whom reports must be made. This however does not exempt a sole practitioner from all of the other duties imposed by the Regulations.

09/09/04 THE ASSETS RECOVERY AGENCY

The Assets Recovery Agency has the to capacity to become a major player in the fight against organised crime. As yet there has been little publicity over the extent of its work with the result that few if any criminals as yet realise that there is a full armoury available to strip them of their ill gotten gains. Perhaps a few high profile seizures may have the desired effect, not only of depriving criminals of their ‘profits’ but also of such loss becoming a deterrent.

At the same time we should heed the warning contained in a well written article that recently appeared in The Law Society Gazette. The article discusses a growing tendency laws to range from being too liberal to too repressive and only after a period of reform do we seem to settle to a happy medium.

The assets recovery agency deals with the proceeds of crime yet rather than have to prove its case on the criminal test, it only has to prove its case on the balance of probabilities – the civil test. This gives rise to the possibility of a seizure from someone who may not have been proved to be a criminal.

Laws are only as good as those applying them. The laws empowering the ARA are well intended and are understandable – let us hope that those who implement the powers maintain a sense of justice, otherwise the whole system may be thrown into disrepute.

08/09/04 LAW SOCIETY ETHICS TEAM

Regular readers will know that on 2nd September we gave details of The Law Society’s professional ethics guidance team. The provides free advice to solicitors on ethical issues. The impact of the anti-money laundering legislation has resulted in 17% of queries this year being about that subject. This is up from 10% in 2003.

07/09/04 FSA UNDER ATTACK

The FSA is coming under attack from many sources. A recent article in The Scotsman is typical, we quote:


While we are certainly not supporters of a system that results in thousands of hours of non-productive paper pushing, why blame the FSA? They are only enforcing the law of the land. IT IS THE LAW THAT NEEDS AMENDMENT AND THE INTRODUCTION OF A DI MINIMIS RULE

06/09/04 ADVANCE FEE FRAUD

Have you or one of your clients received a letter or an e-mail asking you for help in recovering a massive sum of money held in an African Account? The chances are that you have received such a communication as tens of thousands of them have been are continue to be sent. Often couched in the most flattering and flowery language they tell of an injustice whereby a VERY large sum of money has unjustifiably been withheld from the true owner and offering a VERY large sum in return for your assisting to procure the release of the funds.

Don’t be taken in. They are frauds. Soon you will be asked to contribute a relatively small but still significant sum towards the expenses of the project and the deeper you go the more that will be asked. You will have been snared by the fraud.

NCIS has a special area on its website to deal with these ‘advance fee’ or ‘419’ frauds, see http://www.ncis.co.uk/waocu.asp.

03/09/04 LAW SOCIETY GUIDANCE

The Law Society Gazette has recently run an article reminding us of its guidance on identification. It makes it clear that if the solicitor is unable to obtain satisfactory evidence of identity not only does that fact become suspicious for the purpose of reporting to NCIS, but the solicitormust not proceed in the matter.

This guidance of course does not only apply to solicitors but to everyone within the Regulated Sector.

Remember, checking ID alone does not necessarily fulfil KYC obligations. The risk in each case must be assessed individually.

02/09/04 HELP FROM THE LAW SOCIETY

The Law Society's professional ethics team provides a confidential guidance service for solicitors and their staff about professional conduct rules including money laundering (tel: 0870 606 2577, from 11am to 1pm and from 2pm to 4pm).

01/09/04 KAYE TESLER TRAINING PRODUCTS

MONEY LAUNDERING

Web-based staff training Failure to train staff makes an employer liable to up to 2 years imprisonment and an unlimited fine. Training can be expensive and is highly disruptive and problems arise where someone was away or new staff joined after the trainer’s visit. Our web based training system fulfils all your training obligations, costs only £35 per head plus VAT with discounts available for 9 or more trainees. A free demo can be found at www.mlts.uklaw.net

Qualified staff or your MLRO need comprehensive training. We have 2 different lectures on audio CD. Both contain full talks written by our Mr. Michael Kaye and Mr. Jonathan Fisher QC. The first is a comprehensive talk on the law. The second deals with questions that have arisen since implementation. The cost is only £75 plus VAT per practice. Each talk carries a possible 3hrs CPD.

THE NEW LAW OF BUSINESS TENANCIES

On 1^st June 2004 everything changed. Part II of the Landlord and Tenant Act 1954 was not been repealed but amended. Out go all the old forms and time limits. Our talk on double audio CD is a full lecture written by our Mr. Michael Kaye, and Mr. Simon Brilliant, a barrister. The cost is only £75 plus VAT per practice. The talk carries a possible 3hrs CPD.

COMMONHOLD

A totally new form of title. Our lecture gives an overview of the subject. The cost is only £35 plus VAT per practice. The talk carries 1hr CPD.

THE FUTURE OF ESTATE AGENCY

The OFT has issued a report recommending the imposition of a new regulatory regime for estate agents. Not only has the Government accepted the report, it has said that the recommendations do not go far enough! Our lecture gives an overview of the position. The cost is only £35 plus VAT per practice. The talk carries 1hr CPD.

EQUITY RELEASE

This subject is hardly ever out of the news. It is a growth area of legal business and an excellent tool for your clients provided they receive proper advice protecting them avaricious brokers. Our talk gives you all the knowledge you need to help your clients in a burgeoning area of business. The cost is only £35 plus VAT per practice. The talk carries 1hr CPD.

02/08/04 SUMMER BREAK

THE EDITORS OF OUR NEWS SERVICE ARE TAKING A SUMMER BREAK THROUGH AUGUST.

WE WILL RESUME NORMAL SERVICE IN SEPTEMBER.

WE WISH ALL OF OUR READERS A GOOD SUMMER BREAK.

30/07/04 SWISS BANKS TIGHTEN THEIR ‘KYC’ REQUIREMENTS

As yet a further tightening of procedures, the Swiss Federal Banking Commission (SFBCSwiss) has passed an ordinance under which banks are required to have an electronic monitoring system to identify high-risk transactions and accounts. The provision in the ordinance which came into effect on July 1, 2003, requires banks to set up “effective procedures for monitoring transactions” and “computer systems to facilitate the detection of higher risk transactions.”

The ordinance was actually passed last year and the banks were given one year to comply. The electronic systems that must be used will monitor every transactions, not only those that have been identified as higher risk.

29/07/04 NO MORE NUMBERED ACCOUNTS

The day of the famous numbered Swiss account has gone. As from the 1 July Swiss banks ceased offering anonymous accounts. This is a direct result of a specific recommendation contained in the Third EU Money Laundering Directive. The Swiss are not waiting for the Directive to be passed and adopted. They clearly have taken the view that this element will certainly be adopted so they have acted promptly and unilaterally to implement the requirement before they would have been forced to do so in any event.

Sick of being labelled as the most famous money launderers in the world, the gnomes of Zurich have recognised that they have a duty that goes beyond the safe care of money. From now on, anyone opening an account will be subject to bank’s usual ‘know your client’ procedures.

28/07/04 CASINO SUES

Aspinalls Club, a London casino, is suing Westpac Bank, an Australian bank. The case is over a fraud masterminded by a Singaporean businessman who has been convicted of stealing. The damages claimed is reported as being for a sum in excess of 70 million US dollars. In its action Aspinalls are seeking to force Westpac to honour two cheques the businessman wrote from his Sydney-based Westpac account. Of course gaming debts are unenforceable but Aspinalls are trying to rely on the dishonour of the cheques. The Bank counters by saying that the businessman was not a signatory of the account. This has been countered by arguments on delay of the bank on clearing were such that the cheques were considered as cleared.

It’s all very messy but one thing is certain – the lawyers will definitely win!

27/07/04 ELDERLY COUPLE SOUGHT

A 44-year-old bank account set up in 1960 in the names of a couple living in Leeds at an address now demolished has resulted in a police search for what can only now be an elderly couple. It is their account, dormant for 30 years until the mid-1990s, which lies at the root of a money laundering investigation. After 30 years of total inactivity it appears that substantial amounts of cash started to pass through it during the 1990s. Police have made it clear that they do not think the couple were involved in any crime.

Det Sgt Martin Thatcher, of South Yorkshire Police, who is leading the investigation, said: "At this stage of the inquiry, officers believe the couple's identities have been used fraudulently and would like to speak to the real Donald and Paula or anyone who knows of them."

The ingenuity of fraudsters and money launderers should never be underestimated

26/07/04 The Third EC Money Laundering Directive

Last week we published a series of articles on the Third EC Money Laundering Directive. The full text of the consultation document is available at:

http://www.hm-treasury.gov.uk/consultations_and_legislation/money_laundering_directive/consult_moneylaundering_index.c

Simply cut and paste this long web address into your browser for access.

23/07/04 THIRD MONEY LAUNDERING DIRECTIVE - 5

To conclude, for the time being at least, our short series on the Third Money Laundering Directive, we in the UK can be ‘proud,’ if that is the correct word, that we at least are bringing some sense of proportion to the regime. Recognising that the absence of a di minimis rule will inevitably result in their being inundated, NCIS, have divided suspicious activity reporting into categories.

Firstly there are two types of disclosure report forms, Standard and Limited Intelligence Value. By employing the appropriate form MLRO’s help NCIS to sift information. Standard Report forms ask you to identify the disclosure reason and ask whether consent is required. Ticking the consent required box accelerates procedures.

22/07/04 THIRD MONEY LAUNDERING DIRECTIVE - 4

It goes without saying that the Third Money Laundering Directive is designed to strengthen EU defences against terrorist financing and criminal activity related to money laundering. It is also intended to correct some of the problems that have resulted from a rigid and somewhat draconian system

While its intentions are wholly laudable the effect is what unfortunately has become the standard EU fudge, binding us in ever more non-productive red tape. They have totally missed the opportunity of bringing common sense to bear by creating a di minimis rule. They are seeking to extend anti-money laundering obligations to providers of services to companies and trusts, as well as life insurance intermediaries. They are seeking to extend reporting anti-money laundering obligations to every transaction over 15,000 euros in cash even if not suspicious - what is the point?.

21/07/04 THIRD MONEY LAUNDERING DIRECTIVE - 3

It will surprise no-one, least of all lawyers that both the Councils of the Bars and Law Societies of the European Union (CCBE) have strongly criticised the introduction of a third European money laundering directive.

They argue that it is only three years since the introduction of the second directive and that many EU countries, including France, Luxembourg and Portugal, and not least our own have been slow to implement the 2001 directive. Peter McNamee, a legal adviser for the CCBE, is reported to have said: “We believe insufficient time has passed between the second… directive and this proposal. This directive would have been an opportunity to iron out problems with the second directive.”

Unsurprisingly, the blanket reporting of all cash transactions, whether suspicious or not, has given rise to the most vociferous opposition but the imposition of another layer of totally unproductive paper work and damage to the question of legal privilege are not far behind.

20/07/04 THIRD MONEY LAUNDERING DIRECTIVE - 2

An area mentioned within the proposed directive relates to cash reporting. It is proposed that countries should adopt cash transaction reporting in all cases where the amount involved is greater that 15,000 Euros, whether the transaction is suspicious or not. Further the EU is suggesting an additional reporting obligation affecting businesses that would not ordinarily accept substantial amounts of cash be reported, they too, it is proposed will have to report.

These proposals are causing problems in Canada where they have already been implemented as they drive a coach and horse through any privacy rules – why should lawyers have to break privilege where there is no suspicious cash transaction, even if they are over 15,000 euros.

19/07/04 THIRD MONEY LAUNDERING DIRECTIVE - 1

The European Union has published a first draft of the Third Money Laundering Directive. The intention is to correct problems that have been found in the current overly restrictive regime. Unfortunately the attempts to enact a measures to properly deal with the failings in national laws for countering money laundering and in their respective regulatory regimes are more wide ranging than predicted and may even cause greater problems.

Over the next few days we shall publish some views which hopefully clarify some of the ‘problems.’

16/07/04 THIRD MONEY LAUNDERING DIRECTIVE

On 22 March the European Commission issued preliminary draft articles for a Third Money Laundering Directive. The aim of this directive is to consolidate and revise the previous EU money laundering directives. The European Commission has now published its formal proposal for the directive and has now commenced a full regulatory impact assessment.

Next week, subject to any important breaking news, we intend to publish some of the draft details and mention their effect and representations that have been made so far.

15/07/04 FRIGHTENED OF REPORTING?

The threat to bank and finance staff who may report suspicious transactions has been recognised by European finance trade unions. They are demanding that the European Commission gives bank staff and their families greater protection from money launderers. This follows a Commission survey of banks which found problems with threats to staff from money launderers in eight countries - Austria, Belgium, Denmark, Germany, Italy, Spain, Sweden and Norway.

No one is rushing to solve the problem. A meeting between the Commission and finance unions is scheduled to be held on November 10 to discuss what action needs to be taken.

14/07/04 MEN CHARGED IN STUDENT VISA SCAM

The snakeheads verdict – see yesterday’s news post – has in no way deterred police operations and three men from south London have been charged with immigration and money laundering offences. Similar charges to those in the snakeheads case.

About 120 officers raided 12 addresses across London and Essex, including two alleged bogus colleges in Tooting. Scotland Yard said 13 of the arrested men had been released on police bail, two were cautioned for immigration offences and three more were released without charge. This operation is reported as being the largest of its type as yet carried out by the Metropolitan Police.

We hope in everyone’s interest, not least the public and the defendants, that the comments of Judge Burr made in the snakeheads case, are heeded.

13/07/04 SNAKEHEADS NOT GUILTY

Many of our readers will recall the publicity concerning the arrests of the ‘snakehead gang’ on charges relating to people-smuggling and money-laundering based at a Chinese takeaway in Aberystwyth, Wales. The operation was international and run by two Chinese illegal immigrants. They were accused at Swansea crown court of being ringleaders of an operation run by gangs known as snakeheads.

They walked free after the case against them collapsed and one defence QC claimed the whole affair had been a huge waste of taxpayers' money, with one unofficial estimate for the investigation and trial being put at £6.5m. Richard Benson QC said it was "regrettable" that the claims against Xing Cheng, 22, and Guo Chen, 36, were not properly tested before the trial. The Defendants claimed that they were merely operating a free banking service for Chinese immigrants and that such schemes were common in the US. Judge Burr said the jury had no option but to bring in not guilty verdicts.

12/07/04 THE WRONG TRAP

The anti money laundering regulations designed to catch terrorists, drug barons and big-time criminals laundering money is catching mice not rats. The Guardian recently carried a report of a divorce case where financial wrong doings resulted in a wife, who had signed a document for the husband that she was divorcing, being arrested in the middle of the night for fraud.

The lady in question is one of the first divorcing spouses to walk straight into the practical fallout of the new legislation against money laundering. Once mentioned, any kind of wrongdoing affecting family assets must be reported by lawyers to the National Criminal Intelligence Service (NCIS) and lawyers in the case, following the judgment last October from England's top family judge, Dame Elizabeth Butler-Sloss, made the appropriate report.

The law is straight forward. The legislation applies to all assets suspected to have been gained as a result of crime, however small the amount.

Help may be on the way. Watch these pages for reports that we will be making on the Third Money Laundering Directive.

09/07/04 DI MINIMIS

It is well known that the major problem that is being encountered in relation to the application of the new anti money laundering regime is that fact that it contains no di minimis rule. In a recent article the Law Society Gazette reminded our profession that the Proceeds Of Crime Act contains no de minimis level, so everything is caught. Louise Delahunty the chairwoman of the Law Society's money laundering task force, said the Society had lobbied for a de minimis rule, but the government wanted the wider test.

The problem has however, been alleviated to an extent by NCIS who, overwhelmed with reports, have introduced an abbreviated reporting system for matters of limited intelligence value. NCIS confirm that reporting doubled to 60,000 in the year to 2002, and kept growing last year. A spokesman for NCIS said, 'The sheer volume of reporting has posed significant challenges for the financial institutions, NCIS, and investigators alike.'

08/07/04 YAKUZA – JAPAN'S EQUIVALENT OF THE MAFIA – IN ‘ML’ INVESTIGATION

Credit Suisse, the famous Swiss bank, is ‘co-operating’ with authorities both in Switzerland and Japan in an investigation into money laundering involving Japan's biggest "yakuza" crime syndicate. Reports are that a "yakuza" account was frozen last December and that recently Japanese police raided an office of Yamaguchi-gumi, Japan's biggest crime ring, in what it said was a money laundering investigation.

Martin Somogyi, a spokesman for Credit Suisse said that he could not comment on reports citing banking privacy laws.

07/07/04 UK ACCOUNTANTS FINED BY FSA

The FSA has fined accountants Scotts Private Client Services Ltd, £25,000 for introducing $9.7 million of investors' funds into an unauthorised investment scheme.

The FSA has also fined Hargreaves Lansdown Asset Management Limited £300,000 for breaches of rules relating to its Secure Growth Portfolio (SGP).

We all need to understand that we live in a totally new world where regulation and control are no longer something to which professions could in the past merely pay lip service. There are now effective measures digging into and enquiring into every aspect of professional life. The Regulators are there and they are applying BIG sticks.

06/07/04 A WARNING PASSED ON

Watch out for the bogus invoice man - By Tim Richardson originally published on The Register

UK businesses are being warned to be on their guard against bogus invoices for Internet-related services as fraudsters target understaffed firms during the summer.

According to the European Advertising Standards Alliance (EASA), rogue traders take advantage of senior staff taking leave in the summer to trick more-junior employees into paying what looks like an urgent invoice. In many cases, by paying these invoices, the company actually signs up to a contract which forces it to continue paying for years.

Most of these so-called invoices are subscriptions to print or Internet business directories. Many of the fraudsters identified by the EASA originate in Switzerland, Austria and the Czech Republic.

Robert Hilty, head of EASA's taskforce tackling rogue traders, said: "Over the last ten years we have noticed a marked increase in fraudulent direct mailings over the summer months. We want to put a stop to this kind of activity and to ensure that from now on those behind it don't profit from it. It is vital that SMEs across Europe are aware of these scams and know how to deal with them."

Firms are advised to watch out for dodgy invoices and to check each one carefully - especially if they're from overseas or from an unknown supplier.

05/07/04 LAW SOCIETY E-MAIL GUIDELINES

The Law Society has published guidelines on the use of email by law firms. The guidelines can be found on the Law Society’s web site at www.lawsociety.org.uk and those guidelines while of course of interest to solicitors should be of interest to all professions as uncontrolled use of email can lead to all sorts of problems at places where they are least expected, e.g. Industrial Tribunals.

02/07/04 ACCOUNTANTS ARE NOT CO-OPERATING AND BECOMING INFORMERS

The National Criminal Intelligence Service have reported that accountants have failed to respond to their obligation to report money laundering suspicions.

The report states that accountants have filed just 100 'short form' reports each month since the changes in March, in contrast to a 60% increase in submissions across all sectors. A NCIS spokesman confirmed that there had been 'no significant increase.'

Accountants need to be very careful. The new anti-money laundering regime has penal sanctions. Solicitors have been jailed under the legislation and there can be little doubt that the authorities would like to make an example of an accountant to ‘encourage’ the accountancy profession.

BE CAREFUL.

01/07/04 NOT ONLY RUSSIA IS STEPPING UP ACTIVITY

The US Federal Reserve Bank is reported as having announced that the central bank has expanded its anti-money laundering program greatly over the past decade. Its Governor in giving evidence to a Senate banking committee, also said banks need to be more involved in monitoring suspicious activity and that the Federal Reserve believes that banking organizations should take reasonable and prudent steps to combat illicit financial activities such as money laundering and terrorist financing and to minimize their vulnerability to risks associated with such activity.

The Fed has now established a department specifically dedicated to supervising compliance with laws to combat money laundering.

We have previously commented on the size of fines being imposed by US regulators.

30/06/04 IS THIS BECOMING A NEW FORM OF TAXATION?

CitiFinancial, an American bank has been fined fined USD70 million. Extracts from the Court order appear below:

"Specifically, the Reserve Bank alleges the following violations and deficiencies. First, CitiFinancial is alleged to have failed to comply with Section 202.7(d)(I) of Regulation B of the Board of Governors (“Regulation B”), 12 C.F.R. 5 202.7(d)(I) (implementing the requirements of the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. $ 1691 et seq.), which prohibits a creditor from requiring the signature of a spouse or other person (“co-applicant”) on a credit instrument if the applicant qualifies based on his or her own creditworthiness. These alleged violations occurred in connection with attempts to increase joint insurance sales through an increased volume of co-applicant loans. Second, CitiFinancial is alleged to have engaged in unsafe and unsound practices under 12 U.S.C.$l818(i)(2)(B) in connection with CitiFinancial’s underwriting and lending practices with respect to certain loans subject to the Home Ownership and Equity Protection Act of 1994, I5 U.S.C. 6 1639 et seq. (“HOEPA”) and Regulation 2 of the Board of Governors (“Regulation Z”), 12 C.F.R. Part 228. Third, CitiFinancial is alleged to have engaged in unsafe and unsound practices under 12 U.S.C. $1818(i)(2)(B) relating to CitiFinancial’s actions to mislead examiners in connection with interviews of CitiFinancial employees conducted by examiners" …."the civil money penalty assessed by this Order is in the amount of USD70,000,000, and this amount may be reduced by an amount of up to USD20,000,000 to the extent that actual restitution payments are made;"

Fines being imposed in America are now so high that they may be forming an element of back door taxation.

29/06/04 BEWARE THE FALSE MOTLEY FOOL

Motley Fool is a well known website that provides an excellent service relating to stocks and shares. Unscrupulous book sellers are spamming under the guise of the Motley Fool name to lure them to their website.

We wonder how many other respectable names are being stolen and misused – it must be thousands!

28/06/04 A PREFERENTIAL CODE OR JUST COMMON SENSE?

Several solicitors have recently been subject to raids and arrest on charges of money laundering. Describing the arrest one person said, ‘In each case the police arrived at the solicitor’s home around 7am with Black Marias and riot police.’

It goes without saying that raids and arrests carried out in this way will have caused distress and disruption and in each case the raids followed the solicitors co-operating with police.

Law Society chief executive Janet Paraskeva replying to a suggestion that if solicitors are to be arrested or raided it should only be on evidence that they are complicit in money laundering, said: ‘The Law Society believes the police should take a proportionate approach when carrying out all of their duties. But the Society certainly does not believe it would be in the public interest to have preferential procedures for solicitors who are suspected of criminality.’

Anyone with any experience in acting in criminal cases will tell you that the mode of raid and arrest is a constant basis of complaint from clients.

25/06/04 CRIME STILL PAYS

The following is taken from remarks made by by Agustín Carstens the Deputy Managing Director, International Monetary Fund. They were made at the IMF Seminar on Current Developments in Monetary and Financial Law Washington DC, on 4th June.

Although progress has been made, let us be clear on one point: crime still pays. The history of the fight against money laundering and the financing of terrorism has illustrated that the bad guys are quick to engage in criminal arbitrage. Money launderers will exploit any weakness in legislative and institutional frameworks, both domestic and international. They will take advantage of any failure of international cooperation, and particularly in informal, unregulated and unsupervised sectors. Loopholes will be found wherever they exist.

First, consider how, as controls have been tightened in the formal financial system, the attorney-client privilege has made lawyers a particularly attractive means for disguising the money trail. After all, isn't this privilege just another form of secrecy, which can cleverly substitute for bank secrecy to improperly cloak transactions and sources of funds? At the same time, isn't the attorney-client privilege an important building block for a fair legal system?

To respond to the risk that lawyers will be used to commit financial crimes, the FATF 40 Recommendations were revised in June 2003 to mandate that countries apply a set of anti-money laundering measures to the so-called "designated non-financial businesses and professions." This category includes not only the legal profession, but also accountants, real estate agents, dealers in precious metals and precious stones, casinos, and trust and company service providers. Predictably, these new measures have raised a great deal of opposition from the legal profession on the grounds that such requirements breach attorney-client confidentiality. And, understandably, the biggest legislative and judicial obstacles have arisen in countries known for a strong adherence to the concept of the rule of law. It is clear that implementing these new rules will require careful balancing between hallowed privileges, on the one hand, and crime prevention, on the other.

24/06/04 ‘TESCO LAW’ IS UP AND RUNNING

Complacent lawyers sit up and take notice. There’s a totally new form of competition out there. Tesco have launched their own on line legal store. Products on sale include a special offer divorce kit for £7.49, flat rental forms for £4.49 and they even offer triple clubcard points with their last will and testament kit.

One cannot help but wonder why they are doing it. Realistically the market is not very big and its not as if you will need a new will with every week’s shopping. Anyhow, they are not offering very much more than the books and forms that you can buy in most stationers. Our experience of home made wills is that so high a proportion are invalid or badly drawn that the result is lawyers work and fees are increased by having to sort the messes.

23/06/04 ANOTHER OPPORTUNITY FOR THE ASSETS RECOVERY AGENCY?

George Reynolds a convicted criminal and a former chairman of Darlington FC was arrested, questioned then bailed after police officers found hundreds of thousands of pounds in cash in his car. The first step taken against him is a Magistrates Court Order that the cash may be retained. The police asked the Court for a 3 month initial order, but hearing that Mr. Reynolds claimed the money was from the sale of his house, only allowed a 21day initial order. The burden of proof will then fall to Mr. Reynolds to establish that the money is ‘clean’ and that it was properly in his possession. If he is telling the truth about the money he should have no real difficulty in proving its origin.

Within the EEC police/customs are authorised to seize sums in excess of €15,000. There is a lower limit with the UK. Sums of £5000 or more may be seized and thereafter the burden of proof that the money is ‘clean’ falls on the person from whom it was seized.

22/06/04 SUCCESS FOR THE ASSETS RECOVERY AGENCY

The father of two convicted drug dealers has had to pay £165,000 to the Crown Office. The facts were straightforward, Alexander Allison’s two sons were convicted of drug offences. Alexander Allison was not a party to the criminal proceedings but the Crown brought civil proceedings against him as they were able to prove – on the civil test – that monies in his hands were the proceeds of his sons crimes. That was enough. Alexander Allison was not charged with money laundering but the Crown was still able to recover from him.

21/06/04 WHO SAYS THAT BRUSSELS IS WITHOUT HUMOUR.

For those of our unfortunate readers who do not see and avidly read the Law Society’s Gazette every week we set out below an article that may just show a sprout of humour from Brussels.

At the plenary in Brussels in May, the traditional dinner was enlivened by a variety of lawyers, CCBE staff and other key figures in the Brussels legal firmament putting on 'Blanche Neige [Snow White] and the seven dwarves in CCBE Land'.

It told the sad story of Blanche Neige, who lived with her wicked step-mother Maria Monti (a thinly veiled swipe at CCBE nemesis, EU competition commissioner Mario Monti). One day, Maria discovered that Blanche Neige had been secretly training as a lawyer, and in a rage accused her of money laundering and banished her from Lawland.

Poor Blanche Neige then wandered aimlessly through the internal market until reaching CCBE Land, where she met the dwarves - such as the competition dwarf (the Law Society's head of EU and WTO affairs, June O'Keeffe, who also co-wrote the script), the ADR dwarf and the deontology (ethics) dwarf. Suffice it to say that, after the wolf from Red Riding Hood made a surprise appearance (in the guise of former CCBE president and leading Austrian lawyer Rupert Wolff), things turned out well for Blanche Neige, and Europe's lawyers united in a way that would warm the heart of Romano Prodi for a rousing final song to the tune of 'YMCA' - 'We are all members of the CCBE'..

17/06/04 ABSURD BOX TICKING

Too high a proportion of the workforce and too much time is spent these days by officious unproductive people chasing paper, thinking that they are working hard but in reality producing nothing. We take the liberty of quoting just a few examples brought about by anti money laundering legislation that were given recently in an article in the FT:

A NatWest bank manager and account holder for the past 47 years - was asked to produce a gas bill and other forms of ID so that NatWest staff could transfer the proceeds from a share sale (through NatWest stockbrokers) to another NatWest account.

Next there is the irritating Abbey habit of asking customers to bring a copy of their passports, signed by a lawyer, before changing the address on account documents.

There is also the curious case of the NatWest branch staff who refused to let a customer pay a NatWest Visa bill from his NatWest current account until a handwritten form had been signed and countersigned by the manager. The same branch staff also refused to let a customer with more than 30 years loyalty to the bank withdraw £1,000 cash from his account using the bank's card and chequebook. Extra photo ID was not enough - he had to return with passport the next day, and the manager had to countersign the order.

All of these stories, and there are many more like them, are anecdotal but a level of anger and dissatisfaction among customers must be growing. Surely paper pushers should apply common sense and be given some degree of protection so that they can turn their heads forward and stop watching their backs. The anti-money laundering regime is crying out for a di minimis rule.

16/06/04 FORMER PRIME MINISTER OF UKRAINE CONVICTED

Pavlo Lazarenko, the former Prime Minister of the Ukraine, has been convicted of money-laundering. The trial was a test of how far the US Courts can exercise jurisdiction over corrupt foreign officials who put their money in US banks.

Mr Lazarenko was found guilty of 29 charges in all including laundering $100m obtained through bribery when he was a regional governor, deputy prime minister and then prime minister of Ukraine from 1992 to 1997.

It took 5 years to prepare the case in the first instance. We wonder how long the appeals will take.

16/06/04 RUSSIAN BANKS IN CRISIS

Fear of a banking crisis has gripped Russia's financial markets as banks continue to have their licences withdrawn. The crisis is worsening in the face of rumours that a number of pending investigations will result in the loss of even more licences causing banks to close – see earlier news posts over the last few weeks.

The more that the Central Bank denies the rumours, the more they deepen and the wider they spread.

15/06/04 YET ANOTHER RUSSIAN BANK LOSES ITS LICENSE

The Central Bank of Russia announced that it has revoked the general banking license of Novocherkassk City Bank a privately-owned commercial bank located in the southern Rostov region of Russia. The license was actually revoked on 29th May. The reason for the revocation was because of violations of the “law on Counteraction of Money Laundering and Sponsorship of Terrorism”. The bank’s management is also accused of falsifying returns’ data and of failing to comply with a number of laws which regulate banking activities.

Anyone doing business in Russia must be very careful in choosing a bank. Who knows, the bank may just cease to exist.

This is yet a further example of the degree of importance that Russia is applying to ensuring that it is far removed from the money that fuels terrorism. Dirty money is the life blood of terrorism, without it, it cannot exist.

14/06/04 BEWARE THE DANGERS WITHIN

A recent case has highlighted the fact the clients may be subject to more rigorous ID checks than staff. A former law student began a training contract that was conditional upon her passing the Legal Practice Course – she failed, but due to a mistake she received a certificate saying that she had passed. The error was discovered and she was informed and asked to returned the incorrect letter. She did but had it copied and certified as a true copy first. She then proceeded to obtain employment and her employers only discovered the truth when they applied for a renewal of a non-existent practicing certificate!

11/06/04 BEWARE THE TRAP

Recently a major spam attack started with an e-mail containing the following line, or something much like it.

"Your application to the XXX mailing list has been received. To confirm your membership, simply reply. If you are not interested, just ignore this mail"

It seems innocuous enough and the flawed reasoning behind the spammers is that they think that they can avoid the anti-spamming legislation using these words or something like them.

09/06/04 REINVENTING THE WHEEL

The Law Society Gazette reports that ‘City firm Lovells is spearheading a consortium of 14 City firms developing on-line anti-money laundering training.’

"Why? Some firms have more money than sense. Developing a programme is time consuming and VERY expensive. Their undertaking such a project would be understandable if there was no alternative but in this instance there is!

We have developed our own web based training scheme intended for staff training and in conjunction with Legalease have developed a similar but more comprehensive scheme for qualified staff. Having regard to the size of the ‘14 City firms’ these systems could easily and cheaply have been adapted.

08/06/04 THE PROBLEM WITH ‘INTELLIGENT’ SEARCH ENGINES

We constantly use search engines while looking for information for articles to post in this news page. It may amuse you to read the result of one of our searches of BBC news on the question of money laundering. The search produced the following:

"My wife and I were thinking about having an expensive extension built to serve as a laundry room. But my brother pointed out that we could restructure the front porch at a fraction of the cost and still fit the washing machine and tumble drier in it. It was one of those slap-forehead moments, so obvious once it was pointed out. So we got the builders in and I was able to pay them with the money I made from selling ………….

We were confused at first as to why the results of the BBC news search revealed this strange entry. We then realised that there was mention of a ‘laundry’ as well as including the word ‘money’ hence the BBC search engine concluded that the article was to do with ‘money laundering!’

08/06/04 VIRUS WARNING

Our regular readers know that we always pass on virus warnings sent by Lawrence McNulty. We do so again:


British software and services company Sophos reported that infections by the three month old "P" variant of Netsky have risen dramatically over the past week, thanks to the worm's ability to disguise itself as a Harry Potter game or book. The heavily promoted movie Harry Potter and the Prisoner of Azkaban opened earlier this week in Britain and premiers Friday in North America."Netsky-P targets young computer users by sometimes posing as content connected with the Harry Potter books and movie franchise," Graham Cluley, senior technology consultant at Sophos, said in a statement. "Parents need to educate their children against the threats of viruses, to ensure the popularity of Potter doesn't cast a nasty spell on their computer systems."

The original Netsky worm started spreading in February and quickly spawned more flavours than a Bertie Bott's Every Flavor Beans package. The P variant has been particularly successful, though, thanks to engineering that disguises the worm's payload as one of dozens of potentially tempting files, from Harry Potter content to X-rated photos of Britney Spears.

Such spoofing is a popular social engineering technique to get recipients to open malicious files. Previous pests have disguised themselves as naked photos of actress Jennifer Lopez, match-making software and a memo from the recipient's IT administrator. Like most Netsky versions, the P variant spreads mainly through file-sharing networks, making it a potential threat to services such as Kazaa.

07/06/04 RISK ASSESSMENT

A New York jeweller was shot recently as he was simply walking on the sidewalk. Apparently just another New York gun crime – but was it? The jeweller was involved in criminal proceedings and was denying charges against him. He had been approached by under cover police who had offered him two bags of money that they said were proceeds of crime, they were offering to buy gold. He had entered a plea of ‘not guilty.’

The prosecution allege that he sold them the gold which they then took to other jewellers known to or recommended by the first for the gold to be made into belt buckles, watch straps, even screws that would then be shipped to Columbia.

It is thought that the jeweller was murdered to prevent details of all the other jewellers etc becoming known through the evidence to come out at trial.

Risk assessment goes very deep!

04/06/04 RUSSIAN VIGILANCE

We have recently run articles indicating the apparent care now being exercised by the Central Bank of Russia and its Federal Financial Monitoring Service on the question of money laundering. They have now signed an agreement on information exchange. The agreement encompasses a flow of information the Russian Central Bank and the US Federal Financial Monitoring Service and its purpose is the fight against money laundering. It also has provisions relating to joint training programs and consulting.

03/06/04 ANOTHER STAGGERING FINE

Reuters has reported that U.S. Senate bank panel chair Richard Shelby ‘has lingering concerns about U.S. officials handling of allegations that Swiss bank UBS transferred dollars to countries subject to U.S. sanctions.’ It was reported that major Swiss Bank UBS has agreed to pay a $100 million fine to settle allegations of illegal transfers of $4 billion to $5 billion to Iran, Libya, Cuba, and the former Yugoslavia.

A fine of $100,000,000.00 puts the FSA’s fines on Abbey Bank and Bank of Scotland, thought to be massive, into perspective.

01/06/04 RUSSIAN VIGILANCE

We have recently run articles indicating the apparent care now being exercised by the Central Bank of Russia and its Federal Financial Monitoring Service on the question of money laundering. They have recently entered an agreement on information exchange. The agreement encompasses a flow of information the Russian Central Bank and the US Federal Financial Monitoring Service and its purpose is the fight against money laundering. It also has provisions relating to joint training programs and consulting.

01/06/04 ID CARDS

There has been much in the press recently about ID cards and the way that they will help prevent crime, especially terrorism. Such cards will undoubtedly stop some crime but it will be low level, unsophisticated and opportunist crime and anyone who has been the victim of fraud on their credit cards, or unlawful withdrawals from their bank accounts will have a degree of greater protection.

In our view however ID cards, while creating a hurdle, will have little success in combating sophisticated and well financed criminals and terrorists. It is a fact of life that technology always advances. A new defence technology is soon met with a new attack technology.

28/05/04 SIGNATURE AUTHENTICATION

Checking ID is a key component to the ‘know your client’ (KYC) element of the anti money laundering regulations. The task may be simple when you client is in your room before you but what happens when the client is not local? Verify is a service that will protect solicitors from forged signatures. Created by legal support company Your Solicitor, it enables clients signing legal documents for a fee of £5 to have their identity and signature authenticated at rural sub post offices by postmasters. They will witness the signing of a document and check the client's passport or driving licence.

27/05/04 A RISK FOR MLRO’s.

A problem for MLRO s has been highlighted by the case of a company called Spotlight Media LLC. There are infact 2 companies with identical names set up in different jurisdictions. How is the MLRO to know which he is dealing with? Especially where one of the companies has been established purposely to deceive.

We don’t know the answer, but MLRO’s need to be ever vigilant.

26/05/04 RUSSIA IS TREATING MONEY LAUNDERING SERIOUSLY

Reuters reports that the Russian central bank has announced it will put Sodbusinessbank into liquidation and that the bank would consequently miss an interest payment on a Rouble Bond. Missing such a payment will cause its customers considerable loss and potentially result in a run on the bank resulting in turn to customers losing their savings.

The actions of the Russian Central Bank therefore demonstrate how seriously they are taking the question of money laundering as the Reuters report makes it clear that their action is being taken because the bank is merely suspected of money laundering.

24/05/04 SYRIA DENIES US CHARGES

We recently reported that the US had branded Syria for its connections with terrorism and money laundering. In fairness it is right that we report that, "The Commercial Bank of Syria categorically denies all of these unjustified US accusations."

Time will tell.

23/05/04 KYC

Know your client (KYC) is becoming more and more automated. OneSource Information Services have launched a service under which you simply put in a name and the system will search over 1.7m companies and 6m executives and the search then produces a report on the client.

This would be wonderful if your client falls within the companies or executives within the database but if the client isn’t found on the database you will find yourself back at square one having incurred an expense.

21/05/04 A MASSIVE FINE

In January we reported the large fines imposed by the FSA on Abbey and Bank of Scotland plc (BoS). The FSA is not the only regulator with teeth. U.S. bank regulators have fined Riggs, a unit of Riggs National Corp., $25 million for failing to put safeguards against money laundering in place. The regulator said it had found "a number of problems with the bank's handling of accounts with foreign governments, including Saudi Arabia and Equatorial Guinea. Riggs failed to properly monitor, and report as suspicious, transactions involving tens of millions of dollars in cash withdrawals, international drafts that were returned to the bank, and numerous sequentially numbered cashier's checks."

19/05/04 LETTERS CHIEF IS PARCELED UP

The parcels division of Royal Mail has a new boss. The former executive deputy chairman of Royal Mail lost his job and has been transferred to parcels apparently as a result of a recent Channel Four documentary that showed Royal Mail staff allegedly stealing money.

Consumer group Postwatch, has reported 14 million letters are "misdelivered" each year.

It isn’t only money that goes missing. The writer’s daughter works for an International Organisation. Certain visa’s were urgently needed. Letters with applications and passports were collected by some-one FROM THE POST OFFICE. He, and the passports have never been seen again.

18/05/04 HAVE THE BLUES SOMETHING TO WORRY ABOUT

John Bourn, the head of Britain’s National Audit Office, has been reported in the Moscow news media as having said Britain was concerned about Russian oligarchs transferring money here as a way of laundering it, particularly through purchasing property and that the U.K. Audit Office intends to probe Russian capital flowing into the country for “cleanliness.”

Russia’s top auditor Sergey Stepashin, in London for the ’Auditing in the 21st Century’ international seminar apparently confirmed that Russia is also concerned with oligarch money in England, telling RIA Novosti that the Audit Chamber has many questions for Roman Abramovich about the Chukotka administration.

The above was gleaned from web sources - we make no personal comment.

18/05/04 AN AMBIGUITY

Lebanon Central Bank Governor Riad Salameh announced that Lebanon has become a role model for other countries in the region, following the successful implementation of its laws against money laundering.

This piece of information was published on the same day that US President George W. Bush imposed new sanctions on Syria, he accused Syria of "supporting terrorism, continuing its occupation of Lebanon, pursuing weapons of mass destruction and missile programs, and undermining United States and international efforts with respect to the stabilization and reconstruction of Iraq."

The ambiguity lies in the fact of Syria’s occupation of Lebanon.

16/05/04 NEW WARNING – WALLON

Regular readers will know that we have no hesitation in passing on warnings from Lawrence McNulty. His latest warning is as follows:


Traditionally, mass-mailing viruses such as Netsky and Bagle are spread as attachments. When an unsuspecting user opens the infected attachment, it executes a piece of code that usually attempts to steal the user's address book and often opens a back door to give hackers easy access to the system's resources.

Maikel Albrecht, product manager at Finnish security company F-Secure, said that because of recent virus outbreaks, users are less willing to open email attachments, which is why Wallon's author is counting on users clicking on an email link instead. "The link in the email points to the actual virus, so if you click the link you download the virus," said Albrecht. However, once the PC is infected, Wallon remains dormant until the user tries to run a media file such as an MP3 or a video. If by default the system uses Windows Media Player, the virus is activated and attempts to send HTML emails, each with a link to the virus file, to any email addresses in the computer's address book.

"If you try and play media content, the worm will activate and start spreading but the user will not see the media player," said Albrecht.

So beware, don't click on links in e-mails that you were not expecting or if you are unclear where the link will take you.

13/05/04 A GOOD POINT

The Times recently carried a letter from Charles Smith, a partner with Law Brand Solicitors. He makes the point that the days must be numbered for call-centre conveyancers. In doing so he points to the ‘know your client’ procedures required under the Money Laundering Regulations 2003. A solicitor must operate proper KYC procedures if he does not want to run the real risk of breaching the new regulations. The impersonal ‘over the phone’ type service run by call centre factories at a price that is hardly competitive with high street firms, have a real problem.

oh dear, what a shame!

12/05/04 BRAZIL BANS BINGO

Reuters reports that Brazilian President, Luiz Inacio Lula da Silva is making a new bid to ban bingo. This is his 2nd attempt to ban the game. The first was rejected by the Brazilian Senate. The Brazilian President has nothing against the game itself, the attempted ban apparently is ‘ to try to restore the anti-corruption image of Brazil's centre-left government which claims bingo halls are a front for money laundering and organised crime.’

No wonder Ronny Biggs came home.

It has also been reported that a US journalist has been expelled from Brazil after commenting on their President’s drinking habits.

Ho - hum, check your calendar, it isn't 1st April,

11/05/04 PHISHING

As we explained on this page on 14th January last, "Phishing" is a new term to describe a process of which we should all be aware and wary. It is the use of e-mail, to lure people to bogus Web sites disguised to look like the websites of reputable companies. The purpose is to deceive the unwary into divulging personal data, especially credit card information, which can then be used to empty accounts. The term comes from the practise of computer thieves "fishing" for private data.

Just a few days ago in SE England the National Hi-Tech Crime Unit (NHTCU) arrested 12 eastern Europeans for phishing scams. They allegedly used UK-based bank accounts which they are opened then used to transfer the ‘phished’ money overseas.

We had warned of this scam in January.

10/05/04 A SUPERIOR WEAPON

An example of the efficacy of the anti money laundering laws was seen recently in a court in the East of England when the gangmasters of more than two dozen illegal immigrants were sentenced for money laundering. The money that the gangmasters ‘earned’ was the proceeds of crime and so was caught by The Proceeds of Crime Act 2002.

The offence of employing illegal labour is not considered to be a serious offence and carries a small penalty but the offence remains an offence and the proceeds of that offence constitute ‘dirty money’ and the primary money laundering offence offered the Court the opportunity to impose a more severe penalty.

10/05/04 SASSER WORM

Notwithstanding the arrest in Germany of the person considered to be responsible for the Sasser Worm, Microsoft are so concerned about it that they have created a page on their website containing a clean-up tool to rid infected computers of the worm. The page can be found at www.microsoft.com/security/incident/sasser.asp

Reuters reports that the virulent Sasser worm could possibly merge with the two-month-old Netsky worm, forming a more evolved threat. The Sasser worm has so far hit an estimated 1 million computers, forcing them to repeatedly shut down.

07/05/04 IDENTITY

Checking identity is a major element of KYC (know your client). While a client may not mind being asked details of the finance involved in the matter on which he is asking you to act, he may find that having to prove his identity when he considers that he is well known to you to be a nuisance. Jell Group provide a simple solution, for as little as £20 plus vat they will check ID and report within 24 hours.

The Jell Group website can be found at http://www.jellgroup.com/identity.htm

Remember, checking ID alone does not necessarily fulfil KYC obligations. The risk in each case must be assessed individually.

06/05/04 OOOPPS

It is of course common knowledge that political donations must be declared by the receiving party. Indeed failure makes a political party treasurer liable to a fine. While that is straight forward it surely must be embarrassing to our Prime Minister and Treasurer that, New Labour apparently persistently fails to file comprehensive returns on time.

It has ben reported that the Commissioner to whom returns must be made, has written to New Labour demanding an explanation!

A case of ‘do as we say’ not ‘do as we do!’

05/05/04 CAN NCIS COPE?

Many have argued that as a result of the increase in size of the regulated sector, NCIS will not be able to cope with the volume of reports that it is receiving. In rebuttal a spokeswoman for NCIS said that NCIS ‘is continuing to cope' and that NCIS was 'very well resourced' after increasing its financial intelligence staff last year.

The spokeswoman added that large numbers of firms had already submitted reports before the new rules came out, although some firms were only coming to terms with the changes now. In 2003 the NCIS received 94,000 suspicious activity reports, up significantly from 56,000 in 2002.

04/05/04 TSB WARNING

LloydsTSB has issued a warning to its internet banking customers of a scheme to launder dirty money. The scheme involves foreign cheques being paid into an account and account holders are allowed to draw against them on a recourse basis. The scheme is too complex to be discussed in our news page. Suffice it to say that you should avoid taking foreign cheques on a recourse basis.

If you are approached contact Lloyds TSB and ask their compliance department for guidance and advice on the basis that you have heard of a scam.

30/04/04 NOT READY

According to research firm Coleman Parkes, which questioned 150 chief executives from top UK firms in January, 67 per cent admitted that they were not prepared, leaving them liable to legal action and a jail sentence. The survey also showed that 40 per cent of firms believe they have acceptable identity authentication processes in place, and 53 per cent fear that money laundering will rise over the next two years.

If the executives are not ready then one must question the readiness of their staff, who probably will comfort themselves in the knowledge that they may well be able to take advantage of the special defence of not having been trained open to employees.

28/04/04 FSA WARNING

Yesterday we reported on an automated compliance system and commented on the dangers of automisation. Yet another system, produced by Zarion, was launched yesterday. We note that the FSA has taken a similar view to our own on regimented and automatic approaches to KYC procedures. It has issued a warning that some companies may well be upsetting their customers by insensitively implementing anti-money laundering procedures. Philip Robinson, an FSA sector leader, said procedures were being instigated as a "prescriptive obligation" and that "Firms approaching anti-money laundering in this way will do it mindlessly and insensitively, producing limited value and alienating their management, staff and customers."

Our own experience is that clients understand, complain about useless red tape, but sympathise with us that we have to go through the ‘rigermarole’, and they comply with requirements. They then let us get on with dealing with their business. The fuss is far greater than the reality!

27/04/04 AUTOMATED KNOW YOUR CLIENT

OneSource Information Services has announced a new ‘anti-money laundering Synergy Solution’ which it states enables financial services organisations to quickly and easily identify the risk level of a potential client, partner or supplier.

The OneSource® Synergy Solution for Anti-Money Laundering is reported to be compliant with the Money Laundering Regulations 2003 and the Proceeds of Crime Act.

Large organisations using these resources need to be careful of automated systems. One of the keys to regulation is staff training, ie the human factor. If systems are automated then it is as certain as night follows day, that some clever criminal somewhere will find a method to satisfy the computer check, leaving the professional who has relied on an automatic system vulnerable.

27/04/04 10 YEARS FOR POSSESSING A FALSE ID CARD

The media yesterday was full of news of the Government’s intention to introduce ID cards. It will be compulsory to carry one, but that is not where the intended law will stop. The key is that the intention is not to punish those who do not carry their card, after all much is being made of the fact that you will be identifiable to the main database without your card, the intention is to catch those carrying false ID cards.

The government will create a new offence of being in possession of a false document with a maximum penalty of 10 years' jail. This will be an entirely new facet of law, merely possessing a false document is currently is not an offence.

24/04/04 FSA FINE FOREIGN BANK

The European commission in the new rules that apparently will be published in June may well include a banking regulation requiring all banks to disclose a full list of all accounts held. This is indicative of the centralisation of banking requirements and regulation within the EEC. An example of this can was seen a few days ago when the UK Financial Services Authority took unprecedented action by penalizing the UK branch of Raiffeisen Zentralbank Österreich (RZB), an Austrian bank, for failing to maintain required money laundering controls, not in Austria but in the UK.

While the $270,000 fine is relatively small when compared with the penalties the FSA levied against Abbey National Bank and Royal Bank of Scotland the penalty marks the first occasion that the FSA has fined a UK branch of a bank from another European Union country.

22/04/04 BANK EXECUTIVES PUT ON NOTICE

The Financial Times has reported that the Financial Services Authority (FSA) has written to about 40 chief executives of banks placing them on notice that their top executives are not receiving enough information from their staff to assess money laundering risks with the result that some annual anti-money laundering reports were not up to scratch.

The report specifically stated, "senior management would not have received sufficient information to assess the level of money laundering risk within the organisation and the adequacy of anti-money laundering controls within their groups".

Could it be that these large institutions are relying too much on IT devices to do their work for them?

21/04/04 EVEN MORE REGULATIONS

With the latest set of anti money laundering regulations only becoming fully effective as recently as the 1st April I’m sure that you will be astonished to learn that the European Commission’s proposals for further anti-money laundering rules will be published this June. This of course is months earlier than firms and trade groups wanted and is despite several countries still not having implemented the Commission's previous set of AML rules.
>
HM Treasury's Money Laundering Advisory Committee, has called on the Commission not to publish the new rules until the end of the year to allow time for the proper implementation of the first tranch - they have been ignored.

The upcoming rules apparently are aimed at defining what types of criminal activity need to be reported under anti-money laundering rules but the Commission spokesman did not comment on specifically what will be included. One other area being considered by the Commission is the introduction of a rule requiring European firms to apply European AML standards in foreign branch offices.

21/04/04 POWERS TO BE EXTENDED

There is a new proposal currently before Parliament, that convicted crime bosses will have to produce copies of their bank statements and credit card bills AFTER they have freed from jail having served their time. Failure may result in another 10 years behind bars.

The White paper states:-

"This could constitute a requirement to file every six months after release, detailed returns setting out income, assets and expenditure.” It goes on, "Released offenders would be obliged to report all bank accounts, credit cards, etc being used, and be forbidden to carry out financial transactions using any other route. - "Non-compliance or false returns would be punishable by revocation of licence or by a separate term of imprisonment... perhaps for as long as five to 10 years."

20/04/04 WHY SHOULD WE COMPLY?

Unbelievably we have received many enquiries from persons/companies which fall within the widened regulated sector under the Money Laundering regulations 2003. Who monitors us, they ask, and why should we comply? The answer is straight forward and perhaps the best way of answering is to set out Regulation 3(2) which states that on breach of regulation you are guilty of an offence and liable:-

a) on conviction on indictment, to imprisonment for a term not exceeding 2 years, to a fine or to both;

or

(b) on summary conviction, to a fine not exceeding the statutory maximum.

As to who monitors, the answer is that failure to comply is a breach of the criminal law and all law enforcement agencies, from the police to the Inland Revenue will bear the position in mind. Remember, it may not be you under investigation but you may be caught in the investigation of a client.

19/04/04 ALTERNATIVE REMITTANCE SYSTEMS

Around the world there are thousands of migrant/foreign workers, a high proportion working legitimately with permits, away from their homes. They tend to do menial jobs not wanted by locals yet still earning sufficient money to support their families at home. Remitting money 'home' frequently by-passes usual expensive banking channels and relies on "alternative remittance systems" - such as hawala, hundi, chiti,or chop. Such systems are well tried, reliable and far cheaper than conventional routes. Operators are unregulated and drive a coach and horses through a net aimed at catching criminals and terrorists.

Can these leaks be plugged? How? In the absence of exchange control regulations are any laws being broken?

15/04/04 THE 40 RECOMMENDATIONS

The Financial Action Task Force on Money Laundering (FATF) has spearheaded the effort to adopt and implement measures designed to counter the use of the financial system by criminals. They have published 40 recommendations which are being adopted by Governments universally. The recommendations are the font of laws being adopted universally to fight money laundering. The full version can be found at http://www1.oecd.org/fatf/#Fraud%20Warning.

15/04/04 WE'RE BACK

We hope that all of our readers have had a good Easter break. We shall resume our full news service on Monday but for the moment wish to repeat some general information.

VIRUS WARNINGS.

The computer industry is issuing new-virus warnings almost every other day. You can avoid most problems by watching out for the following characteristics of most of the viruses and Spam now in circulation:-

1). They have an attachment which carries the actual virus code that activates when you click on it. The remedy against infection is quite simple, don't open an attachment unless you know for sure what it is. If in doubt DON'T.
2). Sometimes the Sender will be unknown to you. Check the Sender's e-mail address by looking at the Properties of the e-mail. Often it will be from a foreign domain or be obviously jumbled to disguise it's origins. (Feel free to ask me if you want clarification on this point).
3). Sometimes it will not be addressed to you by name. If the Sender is known to you but you are unsure it is genuine, contact the Sender and ask if they have sent you an e-mail.
4). Sometimes the Subject line will contain a meaningless string of characters; sometimes it will seem official - be paranoid and don't trust what you are not expecting.
5). Very occasionally the virus will be written in html code which means it can infect your computer just by being read. To be secure, close the Preview Pane so that all you see of an incoming e-mail is the Subject line. If you are happy the e-mail is genuine, double-clicking will open it so it can be read.

The only reason viruses spread is because people open attachments which they shouldn't. So, be part of the solution and not part of the problem!!

05/04/04 WE'RE TAKING A BREAK

We're taking a break until after Easter - hope that you consider that it has been well earned. Please take the opportunity of reading some of our back items - simply scroll down the page, the overwhelming majority are as pertinent today as the day on which they were published.

We shall resume on Thursday the 15th April.

HAVE A GOOD BREAK EVERYONE.

05/04/04 LAW SOCIETY GUIDANCE

Have you a money laundering query?

The Law Society's professional ethics team provides a confidential advice service for solicitors and their staff about professional conduct rules including money laundering (tel: 0870 606 2577, from 11am-1pm and 2-4pm).Other professional bodies offer something similar.

Never forget that in the event of a problem the Courts will have regard to guidance from professional bodies. If you have a query don’t hestitate to seek guidance but always ask yourself whether the mere fact that you require guidance means that a suspicion has already arisen and that in those circumstances you should report

02/04/04 NEARLY RIGHT

Yesterday the BBC website news page reported a survey that stated “that many UK businesses are not ready for new rules against money laundering, despite the threat of jail for bosses who do not comply.” The news page goes on to say, and we quote:

”The rules come into force on 1 April, and mean that a new range of firms have to report money laundering suspicions.“

The research that they report was carried out by BT and unsurprisingly the research suggests that financial institutions have generally taken steps to identify customers properly but it warns that many of the sectors newly included - such as jewellers and auctioneers - are lagging behind.

The report carries on in the same vein and of course is accurate, what surprises us is that it was published on 1st April and says that the new rules came into force on that very day ie the 1st April. The report is inaccurate. Firstly the rules came into force on 1st March for most of the regulated sector, it was only the business making sales for cash over 15,000 Euros who yesterday came with in the sector. Secondly the report was wrong in that it gave an incorrect cash figure and thirdly, it reported that transactions over £10,000.00 had to be reported - only suspicious transactions need be reported.

01/04/04 BEWARE A NEW BANK SCAM

Capital Merchant Bank is a Brazilian corporation. It sounds and looks like a proper established and respectable bank. It is an established company and not something that has recently been incorporated. The services that it provides appear to include custodianship and wealth management services.

The problem is that it is not a bank!

Be careful – don’t just be attracted by offers – don’t be mislead by appearances.

31/03/04 MONEY LAUNDERING AT THE PIZZA PARLOUR

On Monday we reported that the new anti-money laundering regime was being actively enforced. Another example is that of a 71 year old pensioner who last week was warned by a Judge that following conviction he faces a custodial prison sentence. The pensioner was convicted of laundering money through a series of bank accounts in Britain and Spain. The man hailing from Essex collected bags of cash from various places including a Pizza Hut, a hotel car park and a service station and then paying the money into various bank accounts. Customs officers evidence was that they had witnessed transactions over a 9 month period during which £1.2 million of dirty money went through the ‘placement’ stage of a money laundering operation.

30/03/04 WARNING - DATA PROTECTION

While this news site generally is dedicated to money laundering issues we do from time time time carry items that we consider to be of importance to our readers eg virus warnings.

Today we wish to bring a data protection scam to your notice, one of which we very nearly fell foul.

You may already have received a very official looking letter warning you that your Data Protection Act registration has expired and asking for a fee. The problem is that the letter does not come from the relevant authority, it comes from a company and it may be that a registration that you never sought and did not want has expired, but don't be fooled into thinking that you are obliged to make any payment - JUST BE CAREFUL.

28/03/04 POLICE ARE VERY ACTIVE

The new anti money laundering legislation is being used continually and effectively by law enforcement agencies. There are constant references in the media to this raid or that conviction. Only last Friday there was a report of a woman who had been arrested in connection with money laundering inquiries after £1m in cash was found during a raid on a house in Lowestoft, Suffolk.

She was one of 15 people held after a series of swoops in Britain and Spain. She was held after one of a series of raids by customs officers in this country and on the Costa Del Sol but was later released on bail. It was the culmination of an 11-month investigation involving 60 Spanish officials.

26/03/04 ARE WE IN DANGER IN SACRIFICING OUR FREEDOMS?

In the wake of the Madrid bombing, EU leaders are contemplating a declaration on combating terrorism. Proposals include enhancing the powers of police, security and intelligence agencies across Europe enabling them to hold and exchange data on individuals - and detain them. There are more than 50 proposals giving a wide arsenal of powers in the area of European cooperation. The UK has so far been reluctant to get too involved in the European Justice system but apparently the Government has now indicated that it is ready to drop its veto over important areas of EU judicial co-operation.

Civil liberties campaigners argue that much in the proposals is too widely drawn and gives licence for "electronic fishing expeditions" with the danger that innocent people or merely those suspected of relatively minor offences, will find themselves caught by the trawl.

Every terrorist outrage gives rise to proper and justified anger but we must be careful that in anger we do not lose our civil liberties and allow our free society to be changed for the worse – that way the terrorists definitely win.

25/03/04 BEAT THE CASINO

Casinos are specifically mentioned in the Money Laundering Regulations 2003 as being within the regulated area of business and we are sure that our readers will find interesting the invention of a hand-held device which allegedly can beat the roulette wheel.

Apparently an Hungarian woman fronting for a syndicate went to the Ritz Club casino using a computerised scanner to predict the outcome of every spin of the wheel. Unsurprisingly she and others have been questioned by Scotland Yard detectives. The scanner was concealed in a mobile phone and was intended to measure the speed of the ball and calculated which numbers it was most likely to come to rest upon.

24/03/04 THE FSA HAS TEETH

Regular readers will have noted our reports of swinging fines imposed on major institutions by the FSA in respect of ‘know your client breaches.’ The importance of the FSA and its role as a Regulator continues to grow and undoubtedly it will soon become one of the major law enforcement bodies in the land. The latest occasion of it flexing its muscles was seen as recently as the 19th March when they fined Allied Dunbar Assurance Plc £725,000 for serious flaws in its procedures for handling mortgage endowment complaints. The flaws identified occurred between May 2001 and April 2003.

It is interesting to note that there are 19 more firms, who have not been publicly disciplined, who are reviewing their sales of mortgage endowments. All consumers will be compensated where appropriate.

23/03/04 FURTHER VIRUS WARNING

Once again we must thank Lawrence McNulty for a warning and we can do no better than to pass his words on to you:

I continue to receive e-mails with the Subject "Protect Your Data" and  purporting to come from either "Windows Update"  or  "Windows Fix".  When I  attempt to open the e-mail it immediately downloads information from a web site that contains a virus-link.

However, being the suspicious sort that I am, when I first check the e-mail's Properties I see the sender of the last attack was dvd@metal.com.br   and the sender of the previous attack was  uvIi@thmech.nott.ac.uk  neither of whom would  seem to be Microsoft employees!

If you see information downloading from a web site when you open an e-mail, you  can stop it by immediately clicking on the Close button X at the top-right hand  corner of the e-mail window.

22/03/04 NEW VIRUS WARNING

Regular readers will know that I have confidence in the virus warnings and advice of Lawrence McNulty. His latest e-mail is as follows and we can do no better than to pass his advice on to you:

I have today received warnings from anti-virus companies about the latest variants of the BAGLE virus. Here is how one described it :-

"This new BAGLE variant is capable of infecting files. It propagates by sending emails which do not have an attachment. Instead it contains a link which, upon opening the email, starts a series of events that eventually downloads this file-infector into the system."

This means that if you are using the Preview Pane in Outlook Express you are in grave danger that your PC will be infected. To stop using the Preview Pane choose the View menu, then Layout, and then uncheck the Show Preview Pane box toward the bottom of the Layout window. Finally, click OK

19/03/04 WAS MONEY LAUNDERING MENTIONED IN THE BUDGET?

In simple terms the answer is ‘NO.’ Yet this shows the insiduous nature of the subject and the way in which it will dominate every aspect of professional lives.

The budget included a provision that tax avoidance schemes had to be approved/registered. What if a client attempts to use a tax scheme that was not approved? The client may be totally ignorant of the fact and may have relied totally on his advisor. If the scheme had not been approved the money that he ‘saved’ would include an element that ought to have been paid in tax and so becomes ‘dirty money.’ That dirty money mixed with the client’s other money contaminates all.

Just one more example of the ‘possibly’(?) unseen consequences of the anti-money laundering regime. Would one have to check whether a tax scheme a client entered into was valid when subsequently acting for him in connection with a totally unrelated matter.

18/03/04 THE TREASURY WILL NOT APPROVE ACCOUNTANTS GUIDANCE

The accountancy profession must be in turmoil following a reported refusal by the Treasury to approve their professional body’s guidance. The Treasury apparently had in the past said that they would approve the guidance ahead of the new rules coming into force. Compliance with professional guidance was intended to give accountants some degree of protection. The problem is that the Treasury has been advised that they could face problems if it approved guidance which a Court subsequently considered to be incorrect.

17/03/04 THE TAXMAN

There are reports that the taxman is readying to reap a harvest resulting from reports of money laundering resulting from tax evasion. The number of reports and consequential harvest must increase as dealers in high-value goods and services, such as casinos, jewellers, car dealers, auctioneers and estate agencies realise their obligations and report payments in excess of £10,000 in cash.

Tax receipts apparently have fallen in recent years and the Inland Revenue is under increased pressure to plug the gap by aggressively investigating tax evasion. We may be stating the obvious but there can be little doubt that any report of tax evasion made to NCIS will as a matter of course be sent on the Inland Revenue.

16/03/04 SMALLER FIRMS THE MOST VULNERABLE

The Law Society’s Gazette reports that Cliff Knuckey, who formed Scotland Yard’s Anti-Money Laundering Team in the 1990’s, is of the view that law firms with four partners or fewer are the most vulnerable to criminal infiltration. He said this because he was of the view that smaller firms have a poor record for implementing the necessary ‘know your client’ procedures.

Our own view, based on our own training experience, is that all firms are conscious of the implementation of the Money Laundering Regulations. Probably the majority of professional firms are taking steps to implement office procedures immediately. The danger lies not so much with professionals but with other businesses which now fall within the regulated sector. Most estate agents probably did not realise that they were in the regulated sector until the wave of publicity on 1 March which accompanied the implementation of the Regulations. They now are searching for information on what they must do and the bulk of the information is aimed directly as solicitors and accountants and others who are qualified to understand the complexity.

There are probably thousands of businesses who, because of the cash rule, fall within the regulated sector who still are not even aware that they have been affected.

15/03/04 BUDGET CRACKDOWN ON TAX AVOIDANCE PREDICTED

‘Informed’ sources are speculating that the Chancellor, Gordon Brown, is considering ways to close tax avoidance schemes even before they are implemented. As tax returns fall he is considering ways to increase budget revenue but to do so as effectively as possible without further tax rises. It is estimated that effective tax schemes save or cost (depends which way you look at it) more than £10bn a year.

Consideration is apparently being given to the far more effective systems that operate in Australia and the US. The system in Australia gives authorities the power to block the operation of avoidance schemes once identified. Under the US system tax advisers have to inform the Inland Revenue Service about the schemes they plan to sell and they must obtain prior permission to proceed.

Whatever, if new laws or systems are developed then practitioners will have yet a further area that they must bear in mind when considering the implication of money laundering in relation to any scheme.

12/03/04 LIMITED INTELLIGENCE VALUE REPORT

NCIS have realised that as a result of the way in which the anti-money laundering legislation has been drafted they are likely be inundated with reports that have limited intelligence value but have been sent in to protect the sender. They have now published a report form that they have called a LIMITED INTELLIGENCE VALUE REPORT. The form and guidance may be found on the NCIS website.

There are only limited circumstances in which the report can be used. We strongly suggest that you read the guidance notes before using the form to ensure that you are using it in appropriate circumstances.

11/03/04 SPAM

While this page is generally dedicated to news items about money laundering, every so often we have included items of general interest eg virus warnings, and today we wish to bring an anti-spam program to our readers attention.

With a website as well publicised as our own we have been inundated with spam. On one Monday morning we returned to the office to find 480 e-mails, mostly advertising viagra! In desperation we looked for a spam blocker and now run a system supplied by Cloudmark The effect has been fantastic. I now receive so little in my in box that I feel neglected.

We have no financial interest of any type in the company and merely pass on our recommendation, why not have a go at the month free trail on offer.

10/03/04 POLICE READY TO TAKE ADVANTAGE OF ENHANCED POWERS AND REWARDS

Yesterday we reported on the enhanced powers given to police. They have not been slow in taking up those powers as new asset-stripping squads are being formed to seize houses, cars, cash and other goods they suspect have been paid for by crime.

Five, 30-strong squads, scattered around the country will target known criminals. They will be able to bring civil proceedings and therefore be able to establish claims on the balance of probability test rather that having to prove beyond a reasonable doubt that the assets seized were the proceeds of crime.

Roger Aldridge, deputy chief constable of Warwickshire police said: "Now we can take homes, cars, the lot. There is plenty of evidence to suggest a confiscation order is as effective as a prison sentence in stopping these criminals leech off local communities. We have to show people that crime doesn't pay."

09/03/04 POLICE POWERS AND REWARDS INCREASED

Caroline Flint, the Home Office Minister, has announced a halving of the cash seizure threshold from £10,000 to £5,000. This allows police and customs officers to seize sums in cash up to £5,000 and it is then up to the owner to prove that it was legitimately in his possession.

She also announced that Police will receive 33% of all recovered assets above £40 million next year, increasing to 50% in 2005/06. Ms Flint said: "One year on, the tough powers in the Proceeds of Crime Act are hitting criminals where it hurts - in their pockets. Law enforcement agencies are using the new tools to strip criminals of their assets with great success. Now is the time to spur police on to achieve even greater success by giving them a stake in the assets taken back from criminals."

08/03/04 ONE FOR THE ACCOUNTANTS

Peter Mitchell of the Society of Professional Accountants has raised a very good question.

S.330 Companies Act 1985 prohibits directors loans yet they are frequently made and if not paid are treated, usually by concession as directors remuneration for tax purposes. Does one, he asks, have to report a directors loan to NCIS?

Our immediate gut feeling was that despite the usual concession and the common place practice, the matter should be reported but the report should go on to say how the matter was being dealt with. We raised the point with Jonathan Fisher QC, the co-author of our lectures and staff training programs on money laundering. His reply was emphatic:

Dear Michael

Breach of section 330 constitutes a criminal offence under section 342. Accountants need to look at it. If the commission of a criminal offence produces benefit, it is a reportable event.

05/03/04 VIRUS WARNINGS

I must give credit to Lawrence McNulty who keeps us up to date on virus warnings. As we felt it necessary to issue a second warning yesterday we think it appropriate to repeat his general advice. He has e-mailed me as follows and we believe that all that he says is worth repeating:-

“The computer industry is issuing new-virus warnings almost every other day. I've no wish to add to the amount of e-mails hitting your inbox so I have refrained from publishing every warning I receive. However, you can help yourself by watching out for the following characteristics of most of the viruses and Spam now in circulation:-

1). They have an attachment which carries the actual virus code that activates when you click on it. The remedy against infection is quite simple, don't open an attachment unless you know for sure what it is. If in doubt DON'T.
2). Sometimes the Sender will be unknown to you. Check the Sender's e-mail address by looking at the Properties of the e-mail. Often it will be from a foreign domain or be obviously jumbled to disguise it's origins. (Feel free to ask me if you want clarification on this point).
3). Sometimes it will not be addressed to you by name. If the Sender is known to you but you are unsure it is genuine, contact the Sender and ask if they have sent you an e-mail.
4). Sometimes the Subject line will contain a meaningless string of characters; sometimes it will seem official - be paranoid and don't trust what you are not expecting.
5). Very occasionally the virus will be written in html code which means it can infect your computer just by being read. To be secure, close the Preview Pane so that all you see of an incoming e-mail is the Subject line. If you are happy the e-mail is genuine, double-clicking will open it so it can be read.

The only reason viruses spread is because people open attachments which they shouldn't. So, be part of the solution and not part of the problem!!

04/03/04 YET ANOTHER RUSSIAN BANK LOSES ITS LICENSE

The Central Bank of Russia announced that it has revoked the general banking license of Novocherkassk City Bank a privately-owned commercial bank located in the southern Rostov region of Russia. The license was actually revoked on 29th May. The reason for the revocation was because of violations of the “law on Counteraction of Money Laundering and Sponsorship of Terrorism”. The bank’s management is also accused of falsifying returns’ data and of failing to comply with a number of laws which regulate banking activities.

04/03/04 VIRUS WARNING

Lawrence McNulty, a well known and trusted expert in the IT sphere has sent us the warning set out below which we are glad to pass on.

A new virus seems to be going the rounds.

Subject is "Important notify about your e-mail account".

It claims to say that your e-mail account has been temporarily disabled "because of unauthorized access". An attachment is claimed to be 'further details' which contains the virus.

The rule is to doubt everything you receive that you are not expecting.

03/03/04 MORE CRITICISM

Trevor Trefgarne, the chairman of the investment trust Recovery Trust, is reported as saying that some of his most senior colleagues recently had to spend time worth an estimated £2,000 dealing with money laundering regulations while negotiating an overdraft with the trust's bank. He believes that the red tape also affects private individuals when they want to change bank accounts. Trefgarne says: "The cost to the investment trust is one of time by directors, managers and administrators filling in forms to meet banking requirements. If professional people are spending several hours on this, that's a cost."

02/03/04 TREASURY PRESS ANNOUNCEMENT - 1st March

Below is the text of a press announcement released yesterday by H.M.Treasury:

New money-laundering regulations which expand the regulated sector came in to effect today. Businesses covered by the new regulations are estate agents, casinos, insolvency practitioners, tax advisers, accountants, auditors, lawyers, company and trust formation agents and anyone conducting a business of dealing in goods (including auctioneers) accepting cash of £10,000 or more in a single transaction.

Financial Secretary to the Treasury, Ruth Kelly said:

"These regulations represent an important new development in our strategy to tackle both money-laundering and terrorist-financing, and ensuring our systems meet international standards. They have been developed in consultation with industry to ensure that excessive burden is not placed on business.

"The proceeds of money-laundering allow criminals to profit from their crimes and are used to fund organised crime and terrorist activity. The integrity of the UK financial system is dependent on there being robust measures in place."

01/03/04 TODAY'S THE DAY

The Money Laundering Regulations 2003 come into full force and effect today. If you do not have an office manual, if you haven't trained your staff or if you do not apply a full know your client procedure AND you fall within the regulated sector then you commit a criminal offence.

If you have not received a copy of the Money Laundering Regulations from us as part of our CD lecture then you can download a copy from HMSO's website.

27/02/04 SOME HELP

The Consultative Committee of Accountancy Bodies has obtained some useful clarifications from the Treasury on the vexed question of reporting. The clarifications include a proviso that reports do not need to be made to the National Criminal Intelligence Service where there is no knowledge or suspicion that clients or third parties are in possession of criminal proceeds or no "reasonable grounds" for knowledge or suspicion.

We do not understand why they feel this worthy of reporting. In the simplest of terms if there are no grounds for suspicion it follows that no report is necessary.

However the clairifation continues and says that the higher than normal risks that certain business sectors or groups, such as cash-based businesses or overseas trusts, are more likely to be used for money laundering "do not constitute of themselves reasonable grounds for making a report of suspicion."

26/02/04 FUNDEMENTAL PRINCIPLES UNDER ATTACK

There has been much publicity about a British FBI system to fight organised crime, money laundering and terrorism. Last night’s TV news confirmed that 1000 more agents were to be recruited for our security services. The hype seems to have either missed or ignored the fact that when making the announcement Tony Blair said that the “beyond reasonable doubt” test should be relaxed in serious criminal cases to make it easier to convict organised crime bosses and people traffickers. He further said: “I think people would accept that, within certain categories of case, provided it’s big enough, you don’t take the normal burden.”

Fundamental principles are fundamental. We must be on our guard against giving away freedoms that protect our society for the convenience of the moment.

25/02/04 JAPAN’S FSA

Japan's FSA has an effective way of disciplining members for breach of money laundering rules and regulations. Rather than following the English FSA's example of imposing swinging fines on miscreants, they simply suspend authorisation for elements of business for a time.

Standard Chartered, who have recently been implicated in a money laundering scheme by an organised crime gang, has been the subject of this novel approach to punishment. Ordering that Standard Chartered must improve its operations and demonstrate effective due diligence on new accounts during the next year Japan's FSA has Ordered that Standard Chartered cannot to take on new custody or clearing business for a year, starting this week.

24/02/04 PWC WARN - UK FIRMS UNPREPARED.

Unsurprisingly PricewaterhouseCoopers warn that tens of thousands of UK businesses are unprepared for the imposition of the new anti-money laundering regulations in force from 1 March this year. For the first time, retailers of high-value goods such as car dealers, jewellers, auctioneers, fine art dealers and yacht brokers have to comply with the Regulations where cash payments exceed £10,000.

Other businesses such as Solicitors, Accountants and financial advisers although not fully prepared are conscious that they have steps to take. PwC state that a large number of businesses may be unaware of the requirements eg Estate agents, car dealers, jewellers and casino operators and have not started preparations.
Simplified training for staff is available on this website, simply click the demo button on the left of the screen and proceed from there.

23/02/04 VISA & MASTERCARD SCAM

The following story/warning from Laurence McNulty (a reputable source) has been forwarded to us. It is worth being aware of. The scam works like this:

Person calling says, "This is Carl Patterson (any name) and I'm calling from the Security and Fraud department at VISA. My Badge number is 12460. Your card has been flagged for an unusual purchase pattern, and I'm calling to verify. This would be on your VISA card. Did you purchase an Anti-Telemarketing Device/ Any expensive item for £ 497.99 from a marketing company based in Anywhere?"

When you say "No". The caller continues with, "Then we will be issuing a credit to your account. This is a company we have been watching and the charges range from £297 to £497, just under the £500 purchase pattern that flags most cards. Before your next statement, the credit will be sent to (gives you your address), is that correct?" You say, "Yes". The caller continues . . ."I will be starting a fraud investigation. If you have any questions, you should call the 0800 number listed on your card and ask for Security. You will need to refer to this Control #". Then gives you a 6 digit number. "Do you need me to read it again?" Caller then says he "needs to verify you are in possession of your card. Turn the card over. There are 7 numbers; first 4 are 1234 whatever) the next 3 are the security numbers that verify you are in possession of the card. These are the numbers you use to make internet purchases to prove you have the card. Read me the 3 numbers." Then he says "That is correct. I just needed to verify that the card has not been lost or stolen, and that you still have your card. Do you have any other questions? Don't hesitate to call back if you do."

You actually say very little, and they never ask for or tell you the card number. But after we were called on Wednesday, we called back within 20 minutes to ask a question. Are we glad we did! The REAL VISA security dept. He told us it was a scam and in the last 15 minutes a new purchase of £497.99 was put on our card.

Long story made short, we made a real fraud report and closed the VISA card and they are reissuing as a new number. What the scam wants is the 3 digit number and that once the charge goes through, they keep charging every few days. By the time you get your statement, you think the credit is coming, and then it's harder to actually file a fraud report. REMEMBER: THE REAL VISA REINFORCED THAT THEY WILL NEVER ASK FOR ANYTHING ON THE CARD (THEY ALREADY KNOW EVERYTHING ABOUT US)!!!!

PASS IT ON!

20/02/04 NEWS SERVICE RESUMES NEXT MONDAY

Have a good weekend

13/02/04 TAKING A BREAK

Ladies and gentlemen, we are taking a half term break. We hope you consider it to be well earned.

We shall be back in full flow on Monday 23rd.

12/02/04 THE FORTY RECOMENDATIONS

The Financial Action Task Force on Money Laundering (FATF) has spearheaded the effort to adopt and implement measures designed to counter the use of the financial system by criminals. They have published 40 recommendations which are being adopted by Governments universally. The recommendations are long and complex. The full version can be found at on the FAFT website. We have been publishing extracts. See archive for earlier postings for examples of the extracts.

11/02/04 GLASGOW MONEY LAUNDERING RAIDS

Lawyers' and accountants' offices in Glasgow have been raided and many other locations including a petrol station and a pub in Springburn, north Glasgow . The largest raid was on the house of a Mr Stirton's in the village of Mugdock.

No charges have been brought against Mr Stirton but it is reported that £2m of his assets have been frozen.

10/02/04 ANTI-MONEY LAUNDERING TRAINING

Following our recent postings we have had a number of calls concerning our on line staff training. Many firms wish to pay for training and start immediately having regard to the fact that all staff must be trained by 1st March next. They wish to pay by credit card and have asked whether our website at www.mlts.uklaw.net is secure.

We confirm that payments via the website are secure and operate under Verisign.

09/02/04 RIDICULOUS

The Guardian Newspaper recently printed a letter from a reader highlighting one ridiculous effect of our new anti-money laundering regime.

The writer explained that she wanted to switch her baby daughter's money from the Nationwide to the Alliance & Leicester. When she went to them she apparently was told that regardless of what ID was provided the application for her child was refused as part of an anti money laundering "computer check".

Apparently the baby had no means of identification!

06/02/04 SELF FINANCING POLICE

Avon and Somerset Police have confiscated £600,000 of laundered drug money, six times more than the amount seized in the previous year. In addition they have made a total of 40 arrests. These are all the result of Operation Moneyspinner, which was specially set up to tackle money laundering.

The arrests and seizures will help finance the increase of thee Constabulary's Financial Investigation Unit by three officers and this in turn leads to an expectation of more arrests and seizures as it can now devote more time to target those who launder the proceeds of crime.

05/02/04 ICAEW COME TO AN ARRANGEMENT WITH NCIS

The Institute of Chartered Accountants in England and Wales (ICAEW) has reached an important agreement with the National Criminal Intelligence Service (NCIS) to permit dual reporting.

This system will allow ICAEW members who report smaller values examples or suspicions of money laundering to put in a short form report. Larger examples will continue to need full and detailed reports. NCIS, however, has yet to decide what the threshold will be for larger cases. As solicitors we hope that the Law Society is in the process of arranging a similar agreement.

04/02/04 NOW IT’S DELOITTE’S TURN

Yesterday we reported on troubles affecting KPMG. Today it’s Deloitte’s turn although their problem does not relate specifically to money laundering.

The Financial Services Authority has fined Deloitte’s subsidiary Deloitte & Touche Wealth Management, a massive £750,000 for ‘serious compliance failings’ in relation to its pensions review. This is the largest fine imposed by the FSA for this type of failing.

If we cannot rely on the biggest and supposedly best names in the accountancy spheres, then who can we rely upon? Are we perhaps approaching a position where the regulatory duties imposed on us are just getting too much?

03/02/04 ONE AFTER ANOTHER THE MIGHTY ACCOUNTANTS ARE HIT.

Now apparently it is the turn of KPMG. It has been announced that KPMG's deputy chairman in America, Jeff Stein, will retire at the age of 49. He will be followed by other ‘movements.’ First is Jeffrey Eischeid. He has been removed as partner in charge of personal financial planning and replaced and is on administrative leave. Next is Richard Smith, vice chairman of the firm's tax-planning unit. He has been transferred.

These ‘movements' follow criticism of KPMG’s ethics at a US Senate hearing a few months ago. KPMG officials were given a roasting for creating and advising their clients about financial schemes whose only purpose was apparently to fool the tax authorities.

If advising on tax avoidance as opposed to tax evasion is judged as being ethically wrong then the whole of the accountancy profession is in trouble.

02/02/04 VIRUS WARNING

I thank Lawrence McNulty for details of the virulent virus affecting tens of thousands of computers. Lawrence writes:

A virus is going around known as W32/Mydoom@MM . The virus arrives in an email message as follows:

FROM: (Spoofed email sender)

Do not assume that the sender address is an indication that the sender is infected. Additionally you may receive alert messages from a mail server that you are infected, which may not be the case.

SUBJECT LINE: (Varies, such as) Error, Status, Server Report, Mail Transaction Failed, Mail Delivery System, hello, hi

BODY CONTENT: (Varies, such as:

"The message cannot be represented in 7-bit ASCII encoding and has been sent as a binary attachment."

"The message contains Unicode characters and has been sent as a binary attachment."

"Mail transaction failed. Partial message is available."

On no account open the attachment:

ATTACHMENT: (varies [.bat, .exe, .pif, .cmd, .scr] - often arrives in a ZIP archive) (22,528 bytes) examples (common names, but can be random): doc.bat, document.zip, message.zip, readme.zip, text.pif, hello.cmd, body.scr, test.htm.pif, data.txt.exe, file.scr



IF YOU RECEIVE SUCH A AN E-MAIL - DELETE IT WITHOUT OPENING.

30/01/04 RIDICULOUS

The Guardian Newspaper recently printed a letter from a reader highlighting one ridiculous effect of our new anti-money laundering regime.

The writer explained that she wanted to switch her baby daughter's money from the Nationwide to the Alliance & Leicester. When she went to them she apparently was told that regardless of what ID was provided the application for her child was refused as part of an anti money laundering "computer check".

Apparently the baby had no means of identification!

29/01/04 SHARES FALL

Yesterday we mentioned the FSA’s recent fine imposed on HBOS – see also our report of 22/1/04. This has not only affected the Bank and its employees but shareholders generally as the Bank’s shares fell and continued to fall.

This does not only hurt wealthy investors in stocks and shares. We are all probably affected as investments in our pension funds are hit by price falls in blue chip company share values.

28/01/04 SCOTTISH BANKS TARGETTED

The police have warned that AL-QAEDA is targeting blue-chip companies in Scotland as part of an attempt to perpetrate frauds worth millions of pounds on the financial sector. There is a suggestion that every Scottish bank has an account that is linked in some way to terrorism. It is believed by some experts that Scotland is vulnerable as security is not as rigorous as in London and New York, but following the FSA’s recent fine imposed on HBOS, that probably is changing rapidly.

It is belived that Terrorist groups including al-Qaeda have been undertaking a range of scams including money laundering, internet and credit card fraud. Inspector Brian Connel, the assistant director of the Scottish Business Crime Centre, said companies were under a daily threat of "electronic terrorism" and Special Branch was working closely with business leaders to tackle the problem.

27/01/04 1st MARCH IMPLEMENTATION?

We have complained in these pages that the Government had promised a 3 month moratorium from publication of the Money Laundering Regulations 2003 until implementation. The Regulations were laid on 28th November 2003 for implementation on 1st March 2004, ie the 3 months promised. Unfortunately although the regulations were laid on the date mentioned they were not made available to the public until the beginning of January, giving approximately 9 weeks for implementation.

We can however take some much needed comfort from an article on the Law Society’s Gazette in which they reported that the Law Society had emphasised to Government the view that not sufficient time had been allowed for implementation. Apparently, for what it’s worth, ‘the Treasury assured the Law Society that it would take a common sense approach.’

25/01/04 FSA SWITCHING ATTENTION.

Despite the warning to insurers we recently reported, the Financial Services Authority has additionally indicated that it is switching its attention from banks with poor money laundering controls to serious financial fraud. Chief executive John Tiner is reported to have said: "If you look at our priority risks, money laundering is not one of the headline issues. Our activity in the past has been taken because we have to make sure firms have controls and processes in place to detect money laundering. We think that in the money laundering area firms need to continue to be vigilant. But we have switched our focus from money laundering to fraud and the broad area of financial crime."

The FSA has given contradictory messages and firms within the enlarged regulated sector would be very foolish to think that the heat is off. Everyone may come in for some scrutiny. You only have until 1st March to implement the Money Laundering Regulations 2003.

23/01/04 FSA WARNING

The Financial Services Authority has warned that insurers, managed funds and security funds are the next financial institutions in line for a clampdown on anti-money laundering. The watchdog said it was concerned that although banks had understood the message to tackle money laundering, other institutions had not. The warning comes as the FSA fined HBOS (LSE: HBOS.L - news - msgs) 1.25 million pounds over breaches of money laundering rules through poor record keeping and controls at its Bank of Scotland division.

22/01/04 ANOTHER BANK FINED

A few weeks ago we reported the massive fine imposed on Abbey national for failure to comply the anti-money laundering regulations in connection with record keeping. They are not alone. The Financial Services Authority (FSA) on 15th January fined Bank of Scotland plc (BoS) £1,250,000 for “failing to keep proper records of customer identification as required by the FSA's Money Laundering Rules.”

Andrew Procter, FSA Director of Enforcement, is reported to have said: "The FSA requires firms to maintain records of customer identification because these records are vital to the investigation, detection and prevention of financial crime. The records can help law enforcement agencies by identifying individuals involved in money laundering and linking them with criminal funds passing through the UK financial system. The failure by Bank of Scotland to keep proper records of customer identification could have seriously undermined its ability to comply with the requirements of orders served by law enforcement agencies under the Proceeds of Crime Act.”

Watch this space for news of contradictory statements being issued by the FSA.

21/01/04 RIDICULOUS

The Guardian Newspaper recently printed a letter from a reader highlighting one ridiculous effect of our new anti-money laundering regime.

The writer explained that she wanted to switch her baby daughter's money from the Nationwide to the Alliance & Leicester. When she went to them she apparently was told that regardless of what ID was provided the application for her child was refused as part of an anti money laundering "computer check".

Apparently the baby had no means of identification!

20/01/04 ADVICE IN MATRIMONIAL PROCEEDINGS

The case of P-v-P has lead to problems facing a solicitor when dealing with matters of ancillary relief. In the simplest of terms being involved in an arrangement involving the proceeds of crime is one of the major money laundering offences, s328 Proceeds of Crime Act 2002. A solicitor is in a difficult position if he suspects that matrimonial assets are to any extent the proceeds of crime.

The Law Society has now issued guidance which can be found at www.lawgazette.co.uk/gazetteinpractice/maingiparticleframe.asp?ArticleID=59

19/01/04 MORE ON THE LAW SOCIETY GUIDANCE

By now every partner in a solicitor’s office has probably received a letter from the Law Society warning that changes required by the Money Laundering Regulations will come into force on 1st March next. This gives us all little time in which to appoint a money laundering officer, draw an office manual and train our staff. I urge everyone to print off a copy of the guidance which can be found at www.lawsociety.org.uk.

You must allow yourself a little time as the guidance is contained in 29 separate files. You will need a copy of Acrobat reader in order to access the Law Society files. If you have not got a copy of that program then don’t worry, the Law Society’s website gives you the appropriate link.

You of course MUST be aware of our professional body's guidance but please forgive a further commercial plug if we say that you may find our audio CD and staff training website easier to follow - see www.mlts.uklaw.net

15/01/04 LAW SOCIETY GUIDANCE

The Law Society has published updated money laundering guidance for solicitors.

The new Guidance can be found at www.lawsociety.org.uk. There are 8 chapters which are 102 pages long followed by 17 annexes.

It will takes ages just to download the guidance as it is contained in 29 pdf format files. These have to be downloaded separately using Acrobat reader.

You of course must be aware of our professional body's guidance but please forgive a commercial plug if we say that you may find our audio CD and staff training website easier to follow - see www.mlts.uklaw.net

15/01/04 BEWARE FRAUDULENT WEBSITE

Yesterday we reported on ‘phishing.’ We highlighted no idle threat. The Hong Kong Monetary Authority has issued an urgent press release as follows:

The Hong Kong Monetary Authority (HKMA) wishes to alert members of the public to a suspected fraudulent website with the domain name "www.swisscreditbank.com". The website is operated by an alleged "Bank of Swisscredit" which claims that it has a head office in Zurich and branches in Hong Kong and Canada, and offers various banking and investment services.

While the warning comes from the other side of the world, never forget that the Internet is global in nature. The prospective fraudsters were phishing.

14/01/04 PHISHING

"Phishing" – is a new term to describe a process of which we should all be aware and wary. It is the use of spam, or junk e-mail, to lure people to bogus Web sites disguised to look like the websites of reputable companies. The purpose is to deceive the unwary into divulging personal data, especially credit card information, which can then be used to empty accounts. The term is comes from the practise of computer thieves "fishing" for private data.

13/01/04 BCCI CASE STARTS TODAY

Many years have passed since the collapse of BCCI. It happened in the days when money laundering was thought only to apply to American gangsters and Las Vegas. Today sees the launch of a case against the Bank of England claiming damages for its failure as a regulatory authority. The case which will run for as long as a year will bring the regulatory processes of the ‘Old Lady’ under a microscope.

A jaundiced view is that whatever the outcome of the case, any criticism of the Bank of England is likely to be ignored on the basis that things have now changed.

10/01/04 EUROPEAN POLICY FORUM REPORT

A report published by the European Policy Forum says, as we had anticipated in our last news posting, that Britain’s anti money laundering system is failing under the burden of reports. KPMG say “Tens of thousands of low quality ‘suspicious activity reports’ are clogging the system.

The report says that banks and financial institutions are obliged to file tens of thousands of reports on their customers transactions to the NCI Sand that many are either unprocessed or not followed up. If you hear nothing seven days after making any report you are deemed to have ‘consent.’

The report warns that UK policy is moving in the wrong direction, “A last minute change by the Treasury to implement an overdue new Money Laundering Regulation means that thousands of businesses far removed from the provision of banking services will be obliged to submit suspicious activity reports and train staff how to do so”. It goes on to say that the system needs fundamental redesign. It urges that ministers should set a new target of no more than 5-10,000 suspicious activity reports a year to cut the tide of useless paper whilst focusing law enforcement efforts on pursuing suspected criminals and using modern technology to receive help from banks and financial institutions.

In our view the position remains that it will be years before a de facto di minimis rule is made, until then a de ure rule may be applied for expedience.

07/01/04 NCIS OVERWHELMED

It has been reported that leaked information from the National Criminal Intelligence Service (NCIS), the agency responsible for following up on reported suspicious transactions, strengthens anecdotal evidence that the volume of reported suspicious transactions is already such that the only those of the most suspicious nature, are followed-up. There simply is not the resource base to follow up everything.

Unfortunately it will be years before a de facto di minimis rule is made, until then a de ure rule may be applied for expedience.

06/01/04 SANCTIONS FOR NON-COMPLIANCE WITH THE MONEY LAUNDERING REGULATIONS 2003

Failure to discharge any one of the obligations which we listed in yesterday's posting, constitutes a criminal offence punishable by a maximum period of two years imprisonment and an unlimited fine.

The person likely to be prosecuted is the person who has responsibility for complying with the regulations, for example, the money laundering reporting officer/nominated officer, or if one has not been appointed, the senior partner and/or the managing partner.

05/01/04 SUMMARY OF THE OBLIGATIONS IMPOSED BY THE MONEY LAUNDERING REGULATIONS

From the 1st March 2004 a solicitor is obliged to discharge the following obligations –

(1) identify clients where there is a business relationship between the solicitor and the client;

(2) establish a system to retain evidence obtained of client identification;

(3) establish procedures for internal control and communication for the purpose of forestalling and preventing money laundering;

(4) establish a system for the reporting by staff members to a nominated officer of reasonable grounds to suspect that a person is engaged in money laundering;

(5) provide staff training to make them aware of the dangers of money laundering, and the application of the money laundering offences and regulations.

These procedures should be recorded in an office manual

04/01/04 DOWNLOAD THE MONEY LAUNDERING REGULATIONS 2003

You may download the Money Laundering regulations from the following website: