Money Laundering News

Is this real? It came from this e-mail address:

email@wcvc.emv1.com

We do not wish to comment one way or the other on the question of whether this came from Barclays or not, we leave it to you to decide for yourself but, as always, be careful.

The news has rightly been full of reports of the collapse of Christmas saving scheme company Farepak. We do not know the facts but something obviously has gone wrong. No crime has yet been established and if it has then it will probably be some type of fraud.

The point is that if there has been a crime then the consequences should be dealt with under the relevant criminal provision, yet once again we hear that an MP has accused Farepak of money-laundering. Such accusations do not help or take the matter any further. There should be an investigation. If a crime has been committed and money has become 'dirty' then appropriate steps can be taken but surely the proper step is to see if there is a crime leading to the creation of dirty money first.

MasterCard have issued a threat warning. We frankly can do no better than to reproduce below their warning:

The new measures to fight carousel fraud by reversing the VAT payment structure have been delayed.

We set out below the text of a Government announcement as published by Business Brief:

VAT: PROPOSED REVERSE CHARGE ACCOUNTING FOR BUSINESSES TRADING IN MOBILE TELEPHONES, COMPUTER CHIPS AND CERTAIN OTHER GOODS - UPDATE ON TIMETABLE

Business Brief 14/06 gave 1 December 2006 as the planned implementation date for reverse charge accounting for businesses trading in mobile telephones, computer chips and certain other goods. Because EU discussions about the necessary derogation are still continuing, the reverse charge will not now be introduced on 1 December. The Government still intends to introduce reverse charge accounting for these goods as soon as the derogation has been agreed, in order to counter attempted MTIC fraud, but is also mindful that businesses will need time to prepare for its introduction. We will therefore give businesses about eight weeks notice of its introduction, and will provide further information as soon as possible.

In its annual report on money laundering methods FATF (the Financial Action Task Force on money laundering) has, belatedly, warned that Internet casinos are an attractive resource for criminals needing to launder the proceeds of their crimes. They explain in a report that internet gambling’s attractiveness lies in the fact of the difficulties encountered by the authorities in tracking cyber transactions.

The report states that some criminals are already using online gambling as a cover for money laundering. The report goes on to say that Internet gambling not only makes it difficult to track money movements, but also to decide on the jurisdiction that has appropriate authority.

Below you will see an e-mail that was received by my computer apparently sent to me by e-bay. The point is that I am not an e-bay member. However I was concerned that someone might have stolen my identity and involved me in a dispute. The action that I took was to forward the e-mail to our computer people and their response was as follows:

We have deleted the link elements of their e-mail as we did not wish to reproduce their links and give them any publicity.

A new report by the Financial Action Task Force states that cybercriminals looking to launder money via the Internet have a host of tools at their disposal. The report has highlighted problems arising from differences in regulatory policies regarding Internet payments and indicates that this is one of the major issues that FATF will explore in coming months. They intend to investigate the measures that countries should adopt to better secure online payment systems.

Once they develop recommendations countries will have to choose whether to adopt them.

The BBC have repoted that it is the police belief that one in 10 of Glasgow's financial call centres has been infiltrated by criminal gangs.

Once a financial call centre has been infiltrated the scam is easy. It works by either planting staff inside offices or by forcing current employees to revealcustomer details. The information so gleaned is used to steal identities and to fraudulently set up accounts or transfer money.

The Law Society have recently published the following information in an e-mail circular, we quote:

The Law Society Regulation Board, which will become known as the Solicitors Regulation Authority from 2007, has brought the provision of money laundering advice and guidance within the ambit of the Professional Ethics Helpline, instead of it being offered by a separate service. All solicitors requiring money laundering guidance should now contact the Professional Ethics Helpline on 0870 606 2577.

The Law Society, as your representative body, provides several services dedicated to assisting solicitors with their anti-money laundering compliance duties.
Read more at www.moneylaundering.lawsociety.org.uk

We recently received the e-mail below. It looks genuine but we do not have a NatWest Account.

New Page 1

The anti money laundering regime relies on those of us within the regulated sector policing money transactions and becomming informers. So what is new about the Chancellor's announcement in his Mansion House speech, of a 'new regime' for national security focusing on financial intelligence as the key instrument in rooting out terrorist financing? The burden of supplying the intelligence still must rely on the regulated sector, especially banks, being vigilant.

The Law Society has recently carried out a survey to gather the professions views on priorities.

1,466 solicitors completed the survey on which regulatory issues are the most important to solicitors.

Solicitors were asked to rate various issues on a scale from 1 to 10, with 1 as not important and 10 as very important. Money laundering scored 7.65 and was the most important issue.

Be careful of the new phishing website that direct visitors to a fake music download site. Prospective targets will receive an e-mail that directs them to a website where the victim is lead to believe that he can listen to free music on Myspace.

The victim is not directed to Myspace, he is directed to a website where he may purchase certain music. Not only does the music ordered never arrive but the phisher would have received the victims credit card details.

The 13th October last saw the enactment in the US of an anti internet gambling law. Following that date it became illegal in the US for gamblers to make payments to the owners of internet gambling websites. PartyPoker, one of the largest such sites pledged to kick off all US users.

Within a very short time of the law being passed tens of thousands of US gamblers opened accounts offshore and wagering through PokerStars.com and FullTiltPoker.com both of whom are licensed by the Canadian Mohawk Territory of Kahnawake and who are both happily taking US customers. PokerStars also has a license with the government of the Isle of Man and these companies saw record numbers of payers sign up and gamble through them.

The internet is global and governments must recognise that when passing legislation they are in effect blocking holes in a sieve. There must be an answer for the perceived problem, but no one as yet has found that solution.

Regular readers will know that we have regularly reported on the dangers of the many informal international banking systems used for the transfers of money.

Italian police have announced that they have broken a ring of drug dealers using an informal banking system created and used by immigrant workers.

Informal money transfer systems are notoriously difficult to break into but the Italian police used a sting called “operation khyber pass” and cracked into a Dubai based Hawala system.

A respectable computer magazine has recently published an article in which it states that the problem of ID theft from computer related matters has been blown out of proportion. The article states that more than 21 million households are at risks from so called bin raiders and the dangers of ID theft by bin raiders is much greater than the threat from hackers and phishers.

They may or they may not be correct. Does it really matter? ID theft costs billions of pounds a year and the significant point is that we should be careful, not just when using our computers but when disposing of anything that maybe used by others to steal our ID e g old utility bills or receipts.

It is reported that KPMG have carried out a survey of 60 major firms and companies within the regulated sector. They have reported that 70% of those surveyed have said that they will spend more during 2007 than they have in previous years to ensure compliance with money laundering procedures. More than 15% stated that there will be an increase in the budget allocated for compliance officers. The other major items upon which expenditure will increase will be in respect of upgrading software and general procedures.

We have often in the past reported on carousel fraud and the immense costs to the UK economy.

Although the new measures that H M Revenue & Customs wish to introduce have not as yet been introduced, the heightened awareness of this type of case is beginning, according to H M Revenue & Customs, to impact on their results. Not only are the number of prosecutions increased but they state that the value of goods involved in the type of VAT fraud reduced from £1,500,000 in July to £1,200,000 in August.

One months figures cannot be relied upon

We have recently issued various warnings about scam e-mails appearing to come from respectable banks, please see news postings of 27th and 28th September relating to e-mails purporting to emanate from NationWide and HSBC.

Over the last few days we have received a series of similar e-mails asking that we confirm further details, except these purport to come from the Halifax. In ordinary circumstances we would not have noted these as the scam has become so obvious that our spam blocker is now picking them up. We only noticed the deluge appearing to come from the Halifax when we went through out spam blocker before clearing.

Be very careful, the e-mails look real.

The government has announced that it is entering into consultations with both the police and other enforcement agencies on the target to be set for the criminal asset recovery agency.

The government wishes to increase the target to a minimum of £250,000,000 a year by 2010.

Our understanding of the current legal aid situation is that when dealing with civil legal aid, the subject matter of a dispute is not considered as part of a persons wealth, but in dealing with criminal legal aid allegedly dirty money, being the proceeds of the crime, are considered to be part of the defendant’s assets even if frozen.

The new legal aid system introduces a ceiling on wealth above which a person will not be entitled to legal aid. If the sum in question therefore is the subject of the prosecution and possibly frozen it appears to us that there is anomaly. The person is not granted legal aid because money which possibly is frozen or possibly will be forfeit, but which is not available to the defendant, is taken into consideration when calculating his wealth.

We are certainly not and do not claim to be experts on legal aid. If our above conclusion is wrong then we would invite our readers to e-mail us and we shall correct the above.

The new VAT system designed to combat carousel fraud will come into effect in December and affect mobile phones, computer chips, electronic storage media and electronic storage devices.

The fact that the new regime will only affect these high cost but physically small items which are easily transported in bulk, will not, unfortunately, block fraudsters opportunities for carousel fraud. The EU has failed to review the scheme across all sectors so the likelihood is that fraudsters will simply change to using different products!

Small casinos in the Nevada i.e. those with profits of less than a million dollars, had for sometime been exempt the full force of U.S. Federal money laundering laws. This clearly has enabled a drip of dirty money to be laundered.

The Nevada Gambling Regulars have now eliminated the loop hole. From now on all Nevada casinos are subject to full U.S. Federal and money laundering rules and regulations.

Regular readers of this web page will know something of carousel frauds, i.e. goods bought within the EEC without VAT and being sold in the UK with VAT, then the trader disappearing with the VAT monies yet the same goods being returned to Europe and being sold again thereby entering the carousel as they go round and around.

H M Revenue & Customs have announced that they have plans to try to stop this type of fraud. In simple terms they propose a reverse charged procedure i.e. VAT will be paid on acquisition and later recouped. We all must await to see the actual legislation when it is passed (or more likely introduced by statutory instrument) and can only hope that the fraud which costs the Revenue, and therefore us, billions of pounds a year can be stopped.

The landmark case of Bowen -v- Fells is unlikely to be affected by the Third European money laundering directive which comes into force in December.

In its consultation on the implementation of the directive the Government has made it clear that it will not enact anything which would interfere or erode what has now become the accepted position on legal professional privilege.

The FSA has published material concerning the new revised risk based approach to anti money laundering. The FSA financial crime sector leader recently wrote to the chairman of the JMLSG (Joint Money Laundering Steering Group). The letter confirms that the FSA expects supervisors to switch to a risks based system. Those readers who wish to see a copy of the letter should look at the FSA website.

A risk based system of course is superior to a rigid system where one would have to carry out checks on every case. However, the likelihood is that overly cautious MLROs will still carry out full ‘know your client’ and ID checks in cases where the risks really is minimal and the likely reduction in overall costs of money laundering red tape is unlikely to be dramatically reduced.

We welcome the risk based system but wonder why we should be limited to just one remedy to what at times is a disproportionately cumbersome and administratively expensive system, why not add a di minimis rule.

In our last news post we mentioned the problems in South Africa over ‘cash-in-transit’ robberies and the fact they the governor of the Reserve bank is having nightmares over the problem of money stolen and laundered through casinos.

The South African Casino Industry has retorted saying it actively assists the authorities to apprehend criminals and is certainly not party to the washing of the stolen funds. The president of the South African Casino Association has said that a large number of syndicates and individuals have been arrested at casinos as they try to launder stained bank notes. He said that the South African casino business is a highly regulated environment and subject to regular inspection and with sophisticated security systems.

In a cashed based society it is of course possible to easily identify stained bank notes, i.e. bank notes that had been sprayed with a dye by a security system while they were being stolen. However, despite the protestations of the representatives of the Casino Association there can be little doubt that casinos throughout the world are being used for money laundering.

The Governor of the Reserve Bank of South Africa has told businessmen in Johannesburg that bank robbers and ‘cash-in-transit’ robbers are using casinos to launder the money that they steal. He stated that the problem was so serious that it was keeping him awake at night.

South Africa is a cash economy and apparently it is only with the assistance of the armed forces that they are able to distribute cash around their vast country. However, ‘cash-in-transit’ robberies are common place and are disturbing enough to possibly effect the economy of the country.

For the latest government report of on confiscation and compensation orders and their successes see the following website (Cut and paste the whole very long address into your browser):

https://www.gnn.gov.uk/imagelibrary/detail.asp?MediaDetailsID=180259&HUserID=878,793,895,848,781,866,866,845,786,674,677,767,684,762,718,674,708,683,706,718,674

The Daily Telegraph reports that the Financial Services Authority has told banks to monitor the accounts of politicians and government officials. This is to be restricted to "the accounts of politicians and government officials who it believes are vulnerable to being corrupted and falling prey to money-launderers."

Who is to judge which politicians and government officials are vulnerable? Who is to watch the watchers? Are we destroying our freedoms in the nameof catching money launderers? Is this a step too far?

The Chancellor of the Exchequer and the Economic Secretary recently met members of the High-Level City Group to discuss proposals to maintain and enhance the City of London's competitiveness throughout the world. One of the specific area discussed was:-

"To maintain the reputation of the City by establishing a new supervisors forum, bringing together all UK supervisory agencies with responsibility for preventing money laundering and terrorist financing in the UK, to share best practice on risk-based supervision, investigations and enforcement. The forum is intended to fill a gap in the domestic supervisory architecture for financial crime, bringing together all agencies with responsibility for ensuring compliance with domestic and international anti-money laundering (AML) /counter-terrorism financing (CTF) standards."

HIPs will be introduced next June. We all must be very careful about news reports which give the impression that the Government, having watered down the Home Inspection report element to an HIP, has the effect that they are no longer of any real consequence and that conveyancing procedures will remain virtually unchanged except for the requirement to provide an energy report on the property.

Anyone under such an impression is wrong!

After next June an HIP must be prepared BEFORE a property is marketted. It will be an offence to market a property if an HIP has not been made and ultimate penalties can be harsh eg withdrawing the right of an estate agent to carry on business.

Our readers will know that we do not use this area of our website for marketing purposes but the subject of HIPs is so important that we hope you will forgive us if on this occasion we remind you that we have a full lecture on the subject available on CD carrying CPD hours at 85.00+ VAT = £99.88.

As stated yesterday, this news page is generally dedicated to money laundering themes, however the question of HIPs affects the overwhelming majority of our readers.

The lawsociety has published profession guidance on the question which can be found on their website.

While this news page is generally dedicated to money laundering themes, the question of HIPs affects the overwhelming majority of our reader. We accoringly today and tomorrow reproduce some important information fro the Law Society.

"The Law Society is pressing ahead with its national dry run to prepare solicitors for Home Information Packs (HIPs). A series of seminars will initially take place in the six government pilot areas. The first seminar will be held in Southampton on 3 November."

The FATF HAS issued a report on money laundering methods.

The report on new payment technologies (prepaid cards, Internet payment systems, mobile payments, and digital precious metals) found that, while there is a legitimate market demand for these payment methods, money laundering and terrorist financing vulnerabilities exist. Specifically, cross-border providers of new payment methods may pose more risk than providers operating within a jurisdiction. The report recommends continued vigilance to further assess the impact of evolving technologies on cross-border and domestic regulatory frameworks.

The US is adopting an increasingly hard line policy against Korea following their nuclear test. Once again money laundering legislation is apparently to be used for a purpose for which it was never intended. This time to attack a sovreign government.

Reuters report that US hardliners are opposing any form of compromise on the crackdown on North Korean off-shore accounts. A major account in question is Macao's Banco Delta Asia, which froze $24 million that Washington alleges to be linked to counterfeiting and money-laundering.

The policy however is said to affect all North Korean international transactions, not just illicit accounts. As may have been expected, Pyongyang concludes, "the U.S. is pursuing a policy of regime change."

The Law Society Gazette has recently published an item informing solicitors that a special hotline has been launched for both solicitors and other professionals who have concerns over the question of whether the confidentiality of money laundering reports has been breached.

The hotline number is 0800 234 6657.

The concern of all professionals must be over the necessity for such a hotline. SARs by their nature are confidential and the mere fact that a hotline dedicated to concerns over breach of confidentiality has been opened, can only be the result of complaints having been made of the breach of such confidentiality.

We must all continue to make reports where appropriate but we equally must ensure that any breach of confidentiality results in the strongest possible complaint for the protection of everyone within the regulated sector.

Be very careful. Below is an e-mail that we received. You should note that we do not have a Nationwide account!

Some months ago we reported on the arrest of an estate agent in Belfast on money laundering charges. While we generally do not report on individual cases we mentioned this case as it was the very first case brought against an estate agent in the course of his ordinary occupation.

After investigation all charges were dropped against the gentleman concerned which is little consolation for the fact that he has been financially ruined and lost his chain of six estate agent offices in East Belfast.

Generally, as readers will know, he has no right to compensation and prosecuting authorities should always be extremely careful before taking any action and appreciate that even if dropped shortly after, the action itself inevitably causes damage.

Sydney’s Daily Telegraph is carrying reports that a major task force is going to be set up in New South Wales to investigate possible money laundering by pokies (internet poker players).

Apparently the world wide scale of playing poker via the internet now runs to billions of pounds and authorities generally are becoming more and more concerned that internet gambling will become a major method of money laundering. It is the fact that internet poker is world wide that, it is feared, will be the attraction to money launderers as money will flow through the gambling system from one country to another.

Noting the publicity about internet poker a New South Wales government official said that currently there was no evidence that the system was used to fund terrorism.

Carousel fraud involve purchasing goods from the EEC without paying the VAT, selling them and them and collecting VAT yet arranging for those goods to be exported without VAT, re-imported and sold again with VAT. Round and around as on a carousel with VAT being constantly collected but never paid over. (see earlier reports)

Yesterday we reported on the apparent low recovery rate but today we can report that at a series of confiscation hearings at Nottingham and Birmingham Crown Court a number of men convicted of a carousel fraud have been ordered to repay nearly £12,000,000 to H M Revenue and Customs.

It maybe that publicity about seizures and Orders reflects what ought to be the position rather than the actual recoveries made and the enforcement of the Orders.

In a speech at the Treasury Select Committee the deputy chairman indicated that following 9/11 only 152 bank accounts containing £475,000 have been frozen. Further police have also seized around £400,000 of suspected funds since 2001.

The basic comment made is that these sums appear very low for a five year period during which there has been considerable activity and one must suspect that despite glowing reports the actuality of seizures leading to arrests and convictions are on the low side. On the other hand it may just be that the Government has disproportionately blown up the danger of terrorist activity within the UK but, even they have it does not mean that we should let our guard down.

The ASA has announced training courses for 250 officers on how they should recognise money laundering. Investigators will be trained to follow money trails from “individuals with a life style beyond their legitimate means backed with criminal resource”.

It is good to see that police are not simply relying upon those of us in the regulated sector to make reports and thereby act as informants only.

We all know that we are under a duty to report suspicious activity. Many within the regulated sector, including the Law Society, who have made very forcible representations, are concerned at the way in which SARs are implemented and reported.

The Chancellor and the Home Secretary have therefore asked Sir Stephen Lander to review how the SARs regime could be managed better.

We shall of course report more once it is known.

Most readers will know that the Third European Directive on money laundering which was adopted in December 2005 has to be implemented into national law by December 2007.

As a measure towards implementation the UK government published a consultation document on the 31 July last. Those who wished to reply to the consultation have until the 20 October to respond.

A new set of money laundering regulations will come before Parliament by mid 2007 and will cover areas such as in house lawyers and there will be more on customer due diligence.

Barclays Bank plc has announced that it intends to issue special hand held card readers to its 1.6m online banking customers.

The devices will be stand alone and calculator size and will be based upon card readers developed by the banking industry.

Barclays are not being generous by issuing these card readers. Last year card fraud costs the banks £183,000,000 and Barclays consider that the savings that they will achieve will more than pay for the costs of these devices.

Lord Goldsmith the Attorney General, has published a report into fraud. Within the report he found that one in ten of all frauds in the U.K. are internet fraud. The costs of these frauds runs to billions of pounds every year. http://ononemap.com/

Lord Goldsmith stated that the police are under resourced and there are insufficient specially trained officers to fight this type of criminal activity and only the creation of a special police force dedicated to fighting internet fraud will result in any appreciable cut in internet crime.

While this news page is dedicated generally to money laundering matters, occasionally we come across a website that we think will be of interest to our readers. One such website is OnOneMap (http://ononemap.com/).

This facility uses a version of Google’s mapping service. It displays houses on a map rather than in a list. People using the facility then can simply click on an icon of a house to find out its price and other details. Grey’d out house icons indicate a sold property while coloured icons show properties currently for sale or rent.

Google users will soon find that the Google search engine will divert users to a special website which will warn of any Trojans or spy ware that may appear to be lodged in the destination site.

Google will issue the warning but will not stop you from going to a dangerous place should you so wish.

There are reports of conmen trading honestly on e-bay so as to establish a good reputation and to generate positive feed-back about themselves. Once a good reputation with genuine feed-back has been established the fraudsters commence their own cons and, for example, they will offer items such as MP3 players at apparently good prices.

It only needs 15 positive feed-back items to create a false identity allowing fraudsters to set up their con.

Regular readers of this web page will know something of the Carousel Fraud, i.e. goods bought within the EEC without VAT being sold in the UK with VAT, the trader then disappearing with the VAT yet the same goods then being returned to Europe and being sold again – entering the Carousel.

H M Revenue and Customs announced that they have plans to introduce a reverse charge procedure for items such as mobile phones, the subject of many Carousel Frauds scams. The problem is that it is impossible for our government to act independently to stop the fraud which costs, it is estimated, billions of pounds a year. We are dealing with Common Market matters and so must apply to the European Commission before it can make any changes.

Further to yesterdays news post, we have received another e-mail. This one purporting to be from HSBC Bank. Would it surprise you to know that we do not have an account with HSBC?

The e-mail that we received was as follows:

Dear HSBC Member,

We have reason to suspect that your HSBC account may be in use by an unauthorized party.

Your account has recently been accessed from a foreign country, while we understand that you may be on vacation or traveling abroad, HSBC Security has a obligation to protect our user's security. Within 24 hours of this message, your account will be placed on hold to ensure your personal account safety. Verification of your specific account details will enable you to once again have full access to your HSBC account.

To ensure that your service is not interrupted, please submit your billing information today:

We recently received the e-mail below. It looks genuine. Indeed it may be genuine but consider it against the background of the fact the we do not have a Nationwide Account.

BE CAREFUL.

THE HEADING APPEARS TO BE THE NATIONWIDE BUILDING SOCIETY AND CONTINUES AS FOLLOWS:

Due to concerns, for the safety and integrity of the nationwide
account we have issued this warning message.

It has come to our attention that your nationwide account information needs to be
updated as part of our continuing commitment to protect your account in this year 2006 and to
reduce the instance of fraud on our website. If you could please take 5-10 minutes
out of your online experience and update your personal records you will not run into
any future problems with the online service.

Once you have updated your account records your nationwide account
service will not be interrupted and will continue as normal.

Visit our Privacy Policy and User Agreement if you have any questions.
http://www.nationwide.co.uk/help/index.jhtml

The Economic Secretary to the Treasury has warned that organised criminals and terrorists are becoming ever more sophisticated in the systems that they use to launder money through the UKs financial institutions. In order to defeat their efforts the Government has announced that it intends new curbs on money laundering and to that end the Treasury is publishing a consultation paper on the European Unions Third Money Laundering Directive. Responses are due by October which will give the government a year to enact new laws before the 2007 deadline.

Two men were recently arrested in America for a bank robbery of some $65,000.

A security device used to prevent robbers benefiting from their crime exploded as they escaped, soaking the money in a red dye and therefore making the notes unusable by the robbers.

The robbers were caught at a coin operated laundermat where they were attempting to remove the red dye by literally laundering the money.

We have reported on a number of occasions on so called ‘Bin Ladens’ i.e. 500 Euro notes and the fact that there are more in apparent circulation in Spain than every other EEC country combined although they are not in every day circulation. The conclusion of course has been drawn that these large denomination notes are being used to hide dirty money.

Recognising this preponderance of 500 Euro notes, it has been announced in Washington that Spain and the United States have jointly planned a specialised police group to fight money laundering from drug trafficking that somehow connects the US with Spain. The police group will basically work on the analysis and development of strategies “that permit the obtaining of operational results.”

Every lawyer will know that differences between the Scottish and English legal system are immense. While no consolation, it is not only lawyers that are so affected. Fresh advice was due to be given to Scottish chartered accountants on how they should report suspected money laundering but that guidance has been delayed because lawyers north and south of the border do not agree on the correct approach!

George Bernard Shaw once said that the English and Americans were divided by a common language, English and Scottish legal systems are simply divided!

Over the summer break the European Parliament agreed to implement the European Commission proposal to tighten the control on money transfers.

The new regulation when it comes into force will require that money transfers will not be undertaken unless they are accompanied by the identity of the sender. The identity details must include the name address and account number. The reason for that requirement is to enable appropriate law enforcement authorities to detect and investigate terrorist and other criminals and in tracing their assets. The regulation brings the EU plan in line with the FATF recommendations.

The committee for the prevention of money laundering and terrorist financing, which is a committee composed of members states and shared by the European Commission, has agreed a draft for technical measures that are necessary to implement the third directive. The directive was adopted in October 2005 and the latest date for implementation across the EEC is December 2007.

The Financial Action Task Force (FATF) has announced that fraudulent trade deals are becoming an increasingly attractive tool for money laundering scams. The review states, “trade based money laundering represents an important channel of criminal activity and, given the growth of world trade, an increasingly important money laundering and terrorist financing vulnerability.”

The FSA goes on to report that the simplest fake trading scam involves one company agreeing with another to over-value the cost of goods. The receiving company pays the actual price for the goods plus an additional amount and that excess is transferred abroad as being part of the cost but the recipient then gives credit to the sender.

There is a paper trail but it is very hard for a revenue authority to actually check that the price on the invoice was over stated.

Regular readers will know that over the years we have carried reports, gleaned from various sources, indicating the success of the ARA (Assets Recovery Agency). It appears that the reports that we have been relying on may not be accurate.

It has always been the avowed intention that a major proportion of monies seized is ploughed back into the ARA to allow them to continue and, indeed, widen their work. However, a new report states that although something like £96m was seized from criminals during the year 2005/6 and that as much as £234m has been seized since the Proceeds of Crime Act came into force, only £26m has been used to fight crime.

So where has the money gone? Somebody must have been a loser for the money to have been the proceeds of crime in the first place. The Treasury is clearly gaining from the efforts of the ARA and one wonders whether they are becoming receivers!

The US Treasury Secretary John Snow was recently subpoena’d to give evidence and in doing so he was forced to admit that US authorities are tracking Swift financial transactions. Not just one or two but millions of those transactions. Big brother is capable of watching money movements and does do so.

We should be aware that it is highly likely that similar transactions within the U.K. are being monitored by U.K. authorities.

The idea behind all anti money laundering legislation is that in this modern day where it is difficult to use large amounts of cash, criminals and terrorists could be tracked by tracking the flow of money. Moreover by forcing people working within the regulated sector to inform about suspicious circumstances, it has been possible to create a whole new area of crime detection/prevention without a proportionate increase in the number of police officers.

How surprising therefore it is to note an article in the New York Times which states that some five years or so after September 11 and the introduction of money laundering legislation, nothing appears to have changed too much in the USA. While investigators are examining international money transfers of thousands of Americans they apparently have not yet obtained any Court Orders or Warrants to do searches authorised by their legislation.

The British Banks Association (BBA) has revised its online anti money laundering training programme. The reason behind this is the Joint Money Laundering Steering Group (JMLG) guidance. The principle of importance to all solicitors and accountants is the changed approach to anti money laundering guidance. Rather than continue with stiff rigid rules the new approach, as we have previously reported, is that of being ‘risk based.’

We all must now assess the risk of money laundering in any particular case. It follows that the guidance is that eg we do not need to investigate too deeply when dealing with an ordinary application for Probate but that we must be more careful when dealing with administration of an estate.

The FSA has been engaged on a consultation process over the rigid rules that were placed into effect following the coming into force of the Proceeds of Crime Act 2002 and the Money Laundering Rules 2003. The finding of the consultation is that there was overwhelming support for changes.

Although these changes came into effect as long ago as last March many firms that we have spoken to appear not to have understood the principle behind the changes. It maybe that lawyers find certainty of provisions to be easier to follow rather than exercising a discretion.

The new rules introduce a risk based guidance system. This is being developed with the Joint Money Laundering Steering Group (JMLG). Every case must be decided on its own merits and the risk of money laundering involved. Every firm must employ its own risk based approach in devising its policy although it is anticipated that many firms for the sake of certainty and security will continue the older more rigid system.

It has been reported in Australia press that accountants may have to start going through a ‘know your client’ process similar to that required by all within the regulated sector in the U.K. Apparently they do not as yet have the same level of rigorous rules as applied to us.

If developed nations are still trying to catch up what hope do we have of putting in place an effective worldwide system?

At a recent meeting of the world richest nation’s finance ministers they issued a joint statement as follows:-

“We confirm our determination to combat money laundering and terrorist financing and we intend to build up our asset – freezing system and information exchanges as well to develop multi-lateral financing magnesium’s to eradicate criminal and illegal activities”.

Why has it taken them so long to come to a position where they have only been able to issue a joint communicate, when will this be put in practice?

It is said that life in New Zealand is similar to that in England but the England of some years ago. They are however trying to catch up quickly with their anti money laundering regime. The associate minister of justice has announced that it is important that systems are in place to prevent terrorist financing even though there is no evidence of anything of that nature occurring in New Zealand. They intend to extend money laundering regulations to cover lawyers, accountants, real estate agents, casinos and jewellers. Welcome to the world!

There are more EUR 500 notes in circulation in Spain than in any other EU Country. The represent 62 percent of all the cash in Spain where they are known as ‘Bin Ladens’ because, like the leader al-Qaeda, everyone knows they exist, but very few have seen one. So where have they gone? The suspicious is that they are used for money laundering and are hoarded.

The number of EUR 500 notes grew 32 percent from last year to EUR 101 million this year and is attributed to the rise in undeclared income in thousands of households and by increased criminal activity.

The Government in Madrid has now issued a special plea to banks in Spain to watch how these notes are used and to threat unusual demands as being suspicious.

Hello readers and welcome back to the Kaye Tesler & Co money laundering news website.

There have been a number of interesting pieces of news over the summer break and over the next few weeks, while keeping you abreast of the latest developments we shall also fill in the main items of interest that arose through the summer months.

See you tomorrow for an interesting item on Spanish Euro notes.

Our news service is now taking a summer break and will retun on 3rd September.

We wish our loyal readers a good holiday and hope that you have found our news posts and items to have been useful and interesting.

Please remember that details of our lectures can be found at

http://kt.uklaw.net/pages/training/

In the USA one is subject to Federal and State law. Gaming is dealt with under State law so that gaming may be legal in one state while illegal in another. This gives a tremendous problem to authorities in the US who are trying to fight or even regulate internet gambling.

Contrast this situation with for example Hong Kong where gambling is illegal except in approved Hong Kong Jockey Club schemes. In the UK gambling is perfectly legal provided it is with a licensed body.

But how do you control the truly international internet? How do you protect your citizens from criminals who not only use gambling as a source for scams and obtaining details of credit cards etc but also to launder money.

We wish those trying to find an answer luck and warn our readers to be extra vigilant if they wish to gamble on line.

Surrey police have been very successful in filling their coffers at criminal’s expense. Figures recently released show that they confiscated more than £800,000 in one year from drug dealers, money launderers and a brothel. Items seized included seven Cartier watches and a Cartier diamond ring from a drug dealer in Reigate.

Under the rules the force can keep some of the cash which will fund four finance investigation staff plus a supervisor.

Recently we have received a couple of e-mails purporting to have come from a bank.

To keep you entertained we now reproduce another e-mail which is typical of those sent in advance fee fraud cases.

Recently we have received a couple of e-mails. We leave it to you to assess whether they are genuine or not today we reproduce an e-mail purportedly emanating from Barclays. Just bear in mind that we do not have an account with Barclays!

Recently we have received a couple of e-mails. We leave it to you to assess whether they are genuine or not today we reproduce an e-mail purportedly emanating from HSBC. Just bear in mind that we do not have an account with HSBC!

The Chanel Island's banking secrecy laws are thought to have been a haven for dirty money. To combat this, Jersey has announced new measures to stop money laundering. They will go through a consultation process with their financial service providers and hope to introduce an increased level of monitoring of unusual or complex financial transactions and hope thereby to focus resources on what is described as the island's "higher risk" customers. They also intend at the same time to relax the rules for simpler transactions, including less emphasis on checking the identity of the people involved.

Transport for London has announced that plans to use Oyster cards for small payments as a cash replacement will not work work and so has abandoned its plans to use the Oyster ticketing system as a form of electronic money. Use will be limited to the ticketing system.

The decision to abandon the cash card is a blow to money launderers who saw the cards as an easy system to carry cash in a way that currently is above suspicion.

A few days ago we copied into these news pages an e-mail that we had received which purportedly came from HSBC bank but one that we suspected to be a phishing attempt. We have now received a further e-mail which we reproduce below:

I certainly looks real and it may well be real for all we know, BUT we have never had an HSBC account and certainly have not given them our e-mail address.

Spain's government has ordered an investigation into an anomaly. It has been found that Spain is using something approaching a quarter of the world's largest denomination bank notes, namely the €500 note, worth about £345. The €500 notes are nicknamed "Bin Ladens" because everybody knows they are around but hardly anyone has seen them.

The Bank of Spain has Ordered the investigation as it is unable to explain where all the notes are going. Of course the country's black market falls squarely in the frame and money-launderers are the chief suspects.

Evidence has been given to the Northern Ireland Affairs Committee by a DUP MP who said that charity regulations needed to be tightened as criminals in Northern Ireland are using charities to launder dirty money.

The Government has recognised the problem and apparently intends to establish a Charity Commission for Northern Ireland. However members of the Northern Ireland Affairs Committee felt that the proposed measures did not go far enough.

To see a letter from from Philip Robinson setting out the FSA's approach to supervision in light of the 2006 JMLSG Guidance goto the following web page:

http://www.jmlsg.org.uk/content/1/c4/71/06/FSA_letter_of_comfort_on_guidance.pdf

In October 2005 the EU passed its Third Money Laundering Directive. That Directive is to be implemented by December 2007 at the very latest. The “Committee for the Prevention of Money Laundering and Terrorist Finance” have agreed the wording of the EU Commission's draft relating to the technical measures implementing the Third Directive.

While this news page is probably an inappropriate place to detail the technical regulations that have been agreed, the message for our readers is that measures necessary for the proper implementation of the Third Directive will be in place in good time for the Governments of individual States to take their own steps so as to implement the Third Directive within the given time.

The following warning has been issued by McAfee:

Microsoft released three Security Bulletins covering vulnerabilities in Adobe Flash Player, Microsoft Distributed Transaction Coordinator and Microsoft Exchange Server Calendar attachment processing.

McAfee AVERT Labs has determined that three vulnerabilities may result in permanent compromise of the attacked systems when successfully exploited. The Microsoft Exchange Server vulnerability in particular is believed to be a worm candidate because it does not require user interaction for exploitation.

Yesterday we reported on an e-mail that we had received requesting details from us. We clearly are being targetted as we have received another e-mail, this purporting to be from 'HSBC online.' See below:

It might interest you to know that we do not have an HSBC UK Internet Banking Account.

We have given numerous warnings about phishing.

We set out below an e-mail as received by us. We leave it you you to decide whether it is genuine or a phishing attempt.

personal & business account

Security Alert

Please note that Your Halifax Online Account is about to expire. In order for it to remain active, please use the link below to proceed and restore access to Your Account. https://www.halifax-online.co.uk/_mem_bin/formslogin.asp

SOCA is the UK's Financial Intelligence Unit. It replaces NCIS. Suspicious activity reports (SARs) are now sent to it in order to counter money laundering.

It's general website can be found at http://www.soca.gov.uk/index.html and the specific area of that website dealing with intelligence relating to money laundering can be found at http://www.soca.gov.uk/financialIntel/index.html

The financial services sector has seen two important developments with implications for solicitors. The Joint Money Laundering Steering Group (JMLSG) has published new guidance following lengthy consultation. The FSA has published changes to its rules. JMLSG guidance and FSA rules

The law Society has issued revised guidance for practitioners undertaking private client work. This guidance applies to trust work, administration of estates, powers of attorney, Court of Protection work, and wealth management.

The guidance covers the application of the Money Laundering Regulations (2003), as well as the Proceeds of Crime Act (2002). It can be found on the Law Society's web site at Guidance on private client work

The FSA has announced – already in effect - measures that reduce the reporting requirements placed on senior managers.

Companies no longer have to give notice annually to the FSA of the roles and responsibilities of their managers approved by the FSA.

This reduction in red tape is estimated to save the industry about £2 million a year in administration costs.

It can be profitable to inform on your employers. The Business Software Alliance (BSA) the anti-software piracy group, is offering a £20,000 reward to anyone who informs on their employer for using illegal or unlicensed software.This doubles the reward that it was previously offering. The BSA has an online hotline on which the use of illegal software can reported.

The BSA announced that it had commences 420 investigations in the last year as a result of these tip-offs, the majority of which came from people in IT. They also said that in a survey of employees three-quarters of staff said that they would inform on their employers.

The views of the Law Society were recently sought on the subject of client identification for the purposes of compliance with anti money laundering regulations. Their response was as follows:-

The Law Society’s position in relation to electronic identification providers is that the Law Society does not approve nor disapprove of such commercial organisations.

The procedure for undertaking identification is a risk based decision for the firm. There may be some instances where it is appropriate for identification to be conducted on an electronic basis, and Chapter 3 of our guidance, paragraph 3.954 refers to this. However, the first option should always be to consider meeting the client in person and undertaking the identification on that basis.

A representative of the Federation of the Retail Licensed Trade, when giving evidence to a Westminster committee examining organised crime, said that proposed changes to liquor licensing laws may make it easier for organised gangs to launder money. She said that plans to abolish the Registration of Clubs (Accounts) Regulations would facilitate money laundering.

The licensed trade is basically a cash trade and has been identified by HM Revenue and Customs as a type of business through which dirty money can be passed and laundered and the proposed changes might make it easier for a wider range of people to enter the trade, specifically to launder money.

It is reported that the Department of Social Development Minister is considering a lengthy consultation before enacting any changes that may have the feared effect. This of course may be code for kicking the proposal into touch.

The UK new FBI style agency, SOCA (Serious Organised Crime Agency) has published a review of the way that suspicious activity reports are handled. The review makes twenty four recommendations on how to improve the system but the prime recommendation is to focus the role of SOCA specifically to intelligence to ensure the effective functioning of the regime.

We know it is an old theme but our view is that the implementation of a di minimis rule would be the most effective improvement.

The National Criminal Intelligence Service has issued a warning concern cash machines. It appears that a highly organised gang have been either fitting portable card readers or pin hole cameras to cash machines. These devices enable the criminals to capture card details and pin number. Those details are then used tocreate cloned or counterfeit cards which are then used to empty your bank account.

It is very hard to spot these machines. For those of you who are interested in seeing a picture of a cloned machine, the NCIS web site www.ncis.co.uk/press/cashmachinesecurity.asp shows photographs of an ordinary cash machine and one which has the devices attached.

Forbes are reporting that Slobodan Milosevic had $800m stashed away in Cyprus. Papers that are filed with a war crime tribunal showed that the money was carried in cash to Cyprus which was described as a, “a passage to the world.”

The report goes on to say that Cyprus with its strategic position is, in effect now selling it self as the next tax haven for corporate America where business can cut their tax bills by setting up a holding company that does not have any physical assets.

While this news page is basically concerned with reporting on money laundering issues, every so often we come across an item that we consider to be of general interest.

There can hardly be a computer user in the country who has not lost data through failure to backup. We all ultimately learn the importance of backing up the hard way.

In the circumstances we are pleased to be able to report that a new piece of software has become available which will allow the backup of data from one computer to another. There is of course nothing new about that.What is new is that this software is free. The software uses the internet to transfer data from your computer to a designated computer and for better security the software compresses the data and scrambles the data before it is sent.

Yesterday we warned of the danger of rootkit technology. On the same theme we report that research which has been carried out by scientists at three US universities have concluded that phishing scams are now so sophisticated that the best of them fool nine out of ten users. They also concluded that only half of web users could tell the difference between fake and legitimate online banking sites.

The researchers blamed much of the success of phishers on the ignorance of web users and although the very best fraudulently constructed web site may ultimately be undetectable the percentage of people who are caught and who are losers would be far less if people where less trusting and took the time and trouble to educate themselves fully on the dangers of internet fraud.

Leading anti virus publishers, McFee researchers have reported a six fold increase in the use by hackers of rootkit technology. This is used to hide spyware and other malicious programmes from the security programmes published by companies such as McFee.

The research said that over a period of three years the incidence of the uses of stealth technology has increased more then six times and issued a warning that it is becoming harder for firms to prevent and to remove these malicious programmes.

The problem simply is greed. Hackers find the rootkit technology to be so effective and the rewards for so little effort to be so great that they are prepared to take the risk of detection, especially in eastern Europe.

It is all very well warning that we be careful but if major anti virus developers such as Mcfee have difficulty in dealing with these programmes then what chance have you and I if we are subjected to attack. Being careful may not be sufficient for our own protection but what else can we do?

We recently have been telephoned by more then one firm asking about changes to the disclosure procedure.

The criteria for making a disclosure has not changed. The change is that one no longer makes a disclosure to NCIS but disclosures are now made to the Serious Organised Crime Agency ( SOCA ).

Blackberrys are the most widely used personal IT device amongst the legal profession. A vulnerability has been discovered that could prevent users from opening email attachments. This vulnerability has been recognised by manufacturer, Research in Motion( RIM ).

The problem apparently relates to the way in which blackberrys handle images created by TIF files. If a .tif file is opened by a blackberry which contains a specially configured file then a code within that file could stop all attachments from working.

Rim have developed a patch to cure the vulnerability and that patch currently is testing. Blackberry users are strongly advised to keep an eye on the rim Webb site to see and use the patch as soon as testing is complete and it becomes available.

The new guidance for solicitors published by the Law Society suggest that obtaining a Grant of Probate or Letters of Administration may not actually fall within the definition of ‘relevant business.’

Do not however be misled in to thinking that your obligations will have ceased. If you deal with the administration of the estate after obtaining the Grant then that work, in dealing with the administration, is, according to the guidance, “likely to fall “ within the definition of relevant business.

If our profession was not sufficiently bound up in red tape and regulations the Law Society has decided even more regulation is probably necessary so that the Law Society can be regarded as the effective modern regulator.

So far the Law Society has only published a draft strategy upon which it is seeking responses which should be sent to the chair of the regulation board by the 24^th June 2006. The draft strategy can be found on the Law Society’s web site www.lawsociety.org.uk

We have been asked by some of our readers why we do not report on individual cases so as to give a flavour of the types of prosecution that are ongoing. To be frank the reason we do not do this is that there are simply are so many. We do however know that knowledge of the facts of cases within this sphere is of it self educational and illuminating on the subject.

Those readers who wish to know about ongoing cases can receive updates by contacting poca.update@ara.gsi.gov.uk. This is the asset recovery agent news letter which is distributed by the government news network news distribution service

A recent report by the has highlighted the success of the anti money laundering regime since the widening of its effect flowing from the Proceeds of Crime Act 2002. Various agencies are involved leading the guilty ultimately to conviction while at the same time the assets recovery agency and the Enforcement Task Force (EFT) seek to remove the profit from crime.

The ETF reported in April that it has reached 100 million pounds in receipts of completed cases.

The intention is not only that crime does not pay but the proceeds of crime are confiscated and used in the ongoing fight against crime .

Regular readers to these pages will be aware that we have written on a number occasions about unregulated money transfer systems e.g. that used by foreign workers to remit monies to their families at home. Such a system of money transfer has been in operation for a very long time and certainly has been used by money launderers to transfer funds overseas and to bring cash into the electronic money age, the first level of money laundering.

A new system of money transfer has be launched which is so broad based that money can be transferred from mobile telephones. Users of web purchasing systems will be aware of PAYPAL. They are setting up a system under which it will be possible to pay for goods or transfer monies using simple text messaging.

Let us hope those operating this system will understand their obligation under the anti money laundering regulations and ensure that their system, which many will consider to be an advance, is not misused.

We all probably remember the remark recently made by Mr. Cameron, the leader of the conservative party, concerning the UK independence party. His remarks where immediately followed by a threat from that party to bring proceedings.

Proceedings for defamation are of course nothing new but the advent of the internet and the vast volumes of emails which can be readily forwarded to tens of thousands of people has opened a new avenue for defamatory statements to be published and widely circulated. There are reports that with the growth of email there has been a growth of defamation proceedings. The UK Independence party is not a stranger to those proceedings. Michael Smith, a UK Independence candidate was recently awarded £10,000 in a defamation action concerning defamatory comments made about him on an internet discussion board.

We are familiar with the protection offered by credit to consumers who by goods using their credit cards. The High Court sometime ago ruled that the protection did not extend to supplies of goods and services bought from an overseas seller. That decision of the High Court has been overturned by the Court of Appeal who say that consumers are entitled to exactly the same level of protection that they would have if they purchased those goods and services within the UK.

Undoubtedly this will increase the cost to credit companies and as sure as night follows day, they will quickly add to their charges.

Spyware programmes are insidious devices used by fraudsters to obtain private information about you recorded by your own computer. For example they can record the entries that you make when you depress keys on your keyboard.

The anti spyware coalition has published a new guide for consumers to help them protect themselves against spyware. The guide is entitled ,”protecting your computer: detecting and avoiding spyware.”

The technology outlines the steps that you can use to stop spyware programmes from infecting your computer and it also shows you how to set up protection properly and to remove unwanted programmes which have lodge themselves on your computer

We nearly all aware of the services of companies such as VERISIGN. That company issues certificates to web sites saying that they have passed various security tests. Of course fraudsters have managed to break security level after security level. The various companies have agreed to up their standard before they will grant a security certificate.

Every measure taken against fraudsters is to be welcomed but there can little doubt that these strengthening measures will soon be overcome by one fraudster after another.

We are pleased to report that a free download is available that is intended to alert internet users both to email phishing and spam.

CipherTrust claims that its TrustedSource toolbar can check the reputation of the sender of any email and when one clicks on an email in order to open it the toolbar automatically checks the name of the sender against the list of IP addresses which are known to be used by fraudsters.

We have not tested this system and fraudsters will quickly catch on and send their emails from new unlisted addresses. That being said, provided the toolbar works relatively quickly, any help against these fraudsters is to be welcomed. Unfortunately the report that we have seen on this free toolbar does not give the address of where it can be downloaded but we are certain that if you are interested you will be able to find CipherTrust on the internet.

While this news page is intended to relate to money laundering matters, occasionally we come upon points which we think are of general interest.

An increasing proportion of grocery shopping is now undertaken online. Asda, Sainsbury, Tesco, Waitrose and Ocado are the main supermarkets offering the service but beware, the Office of Fair Trading has advised that customers should check their bills very carefully. The point is made that the prices that are shown on the supermarkets websites are guideline prices only and may be different on the date of delivery than on the date that the order was made. This was particularly prevalent in cases of special offers which were made online but no longer were current on the day a delivery.

The OFT has advised that if the price charged is different to the price that was shown then you have the right to reject the goods.

Probably the difference will be pennies and very few people will return goods that they want but they should be aware of being overcharged. Occasionally however the delivery price will be less than the order price and customers may simply regard it as being swings and roundabouts.

The Scottish Law Society chief accountant, Lesley Cummings was recently physically attacked and it is believed that this was connected to his investigation of crooked dealings amongst Scottish lawyers.

Scottish accountants are therefore demanding protection and anonymity in respect of cases where they report their client of suspected money laundering.

The question of confidentiality of reports is one which troubled every one in the regulated sector from the inception of the anti money laundering regime. Money launderers are criminals and money laundering is a large scale crime which often involves vast sums of money. There can be no doubt that criminals will seek to avenge themselves against any one who they see as having ‘grassed’ on them. The Scottish accountants plea is not new and is one that should be heeded not in only in respect of Scotland but in respect of the whole of United Kingdom.

It has been reported that a team of international monitory fund personnel have carried out an investigation into the working of Gibraltar’s financial system. The team consists of 10 people who are focusing their investigation on the banking and insurance sectors. The purpose of the investigation is to see how well Gibraltar is implementing the 49 principles designed to protect financial centres against terrorist activities and money laundering.

They will in due course publish their report and we hope carry the result on our news page.

There can be few people in the country who have not received a letter telling them of a vast fortune available if they can only help to recover it from the country where it sits blocked. Although people still fall for the fraud people are becoming far more conscious of these attempts to steal their money and the fraudsters are becoming increasingly inventive in the way that these schemes are worked.

The latest talks of “SWIFT CREDIT CARD PAYMENTS SYSTEM.”

The scheme takes the form of an email which talks of a new payment system in titles above. You are invited to apply but you have to give all details of your existing credit card, bank etc. We leave it to your imagination as to what happens next!

The ICAEW (the Institute of Chartered Accountants England and Wales)has published some advice for small business on how to prevent money laundering.

This advice is something which ought to be known by every accountant who should pass it on to his small business clients.

In an interview a representative from the ICAEW said that in 1963 the great train robbers had problems in dealing with their cash. It should be so much more difficult now so as to make money laundering virtually impossible provided every one complied with appropriate regulations.

The Law Society is lobbying against the unreasonable imposition of Money Laundering Regulations within the UK. Representatives have met with members of the government's Davison Review over the way in which the UK has implemented the EU Regulations.

The Law Society state that the UK Regulations have placed an unreasonable burden on solicitors’ firms and they claim credit for having so far achieved a reduction in the reporting requirements under the Proceeds of Crime Act 2002 and have influenced amendments to the serious Organised Crime and Police Act 2006.

The Legal Services Complaints Commissioner, Zahida Manzoor CBE, has announced that she has declared the Law Society's final Plan for securing effective and efficient complaints handling as inadequate.

Ms Manzoor said:

"I am very disappointed to have to declare this Plan inadequate, particularly after the joint working that has taken place between my office and the Law Society to have the Plan ready for the start of April. Unfortunately, I have been left with no option as the Plan neither includes all the targets I set, which I believe to be reasonable, nor does it aim to deliver sufficient improvements in complaints handling which consumers and practitioners expect and deserve."

We are certain, at least we hope, that you will be pleased to know that our normal news service will resume on Monday.

We hope that all of our readers have had a good break.

Dear Reader

Our news service is currently on an Esater break resuming on Monday 24th April. Until then we are daily giving details of our range of CD lectures.

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 from avaricious brokers. Our talk gives you all the knowledge you need to help your clients in a burgeoning area of business. CPD available of 1 hr. Cost £45.00+ VAT = £52.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Dear Reader

Our news service is currently on an Esater break resuming on Monday 24th April. Until then we are daily giving details of our range of CD lectures.

On 1st June 2004 everything changed. Part II of the Landlord and Tenant Act 1954 has 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 specialising in Landlord and Tenant Law. Mistakes relating to the Landlord and Tenant Act 1954 result in more negligence claims than any other piece of legislation. Can you afford not to be up to date on the complex procedures?

CPD available of 3 hrs. Cost 85.00+ VAT = £99.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Dear Reader

Our news service is currently on an Esater break resuming on Monday 24th April. Until then we are daily giving details of our range of CD lectures.

These new Regulations affect every employer and employee in the country. They impose procedures which if not followed may result in an employer automatically losing an application before an Employment Tribunal even when his actions are justified, or an employee losing the right to take an employer to the Employment Tribunal. We are all employers or employees and changes in law and practice dramatically affect all of our rights in a way that may be unexpected.

CPD available of 1 hr. Cost £45.00+ VAT = £52.88

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Dear Reader

Our news service is currently on an Esater break resuming on Monday 24th April. Until then we are daily giving details of our range of CD lectures.

The newspapers are full of articles about internet telephony and how calls can be made for a fraction of current cost. Our talk explains the systems that are available and shows how we have reduced our own telephone bills from hundreds of pounds per month to less than £25 per month. On our CD you hear us make a call to demonstrate that on making a call to an ordinary landline in the UK, no matter where it is, or the duration of the call and whatever the time of day, you only pay 2p for connection and then the call is free. We are making massive savings and show how you can do so as well. We have done the research for you. After the connection is made at a cost of 2p,you will hear the operator actually announce that the call itself costs ‘0’ pence.

CPD available of 1 hr. Cost £45.00+ VAT = £52.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Dear Reader

Our news service is currently on an Esater break resuming on Monday 24th April. Until then we are daily giving details of our range of CD lectures.

Estate agents will in the future have complete control of most of the pre-contract elements of a house/flat sale. They face considerable increase in regulation and responsibility but gain an exciting business opportunity. The changes which come into effect in January 2007 spell considerable danger to High Street estate agents and solicitors. Only with the knowledge of what is about to happen – remember the Housing Act 2004 has already been passed - can you plan a way to deal with the coming new world.

CPD available of 3 hrs. Cost 85.00+ VAT = £99.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Dear Reader

Our news service is currently on an Esater break resuming on Monday 24th April. Until then we are daily giving details of our range of CD lectures.

From June 2006 the Land Registry will refuse to register the overwhelming majority of leases unless certain clauses appear in a prescribed format.

Every office with a residential or commercial conveyancing department will be affected so we are pleased to announce the publication of an appropriate talk on CD. Supporting documents include a simple guide to relevant clause requirement CPD available of 3 hrs. Cost 85.00+ VAT = £99.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Dear Reader

Our news service is currently on an Esater break resuming on Monday 24th April. Until then we are daily giving details of our range of CD lectures.

The year 2005 has seen significant clarification/change in understanding and practice. We have split our talks into two sections as the case of Bowman v Fels only affects lawyers and concerns questions of professional privilege. The second part is on general updates affecting all parts of the regulated sector.

Part 1. Bowan v Fels CPD available of 1½ hrs Cost £55.00+VAT = £64.63 per practice.

Part 2. 2005 General Updates CPD available of 1½ hrs Cost £55.00+VAT = £64.63 per practice.

Combined parts 1 + 2 CPD available of 3hrs Cost £85.00+VAT = £99.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Dear Reader

Our news service is currently on an Esater break resuming on Monday 24th April. Until then we are daily giving details of our range of CD lectures.

This talk covers the FAQs put to our Mr. Kaye and Mr. Fisher QC when they have given live lectures. The talk is broken into specific areas of concern to different parts of the regulated sector.

CPD available of 3 hrs. Cost 85.00+ VAT = £99.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Dear Reader, We are taking a two week Easter Break and we shall resume our normal news postings on MOnday 24th April. In the interim we hope that you will forgive a little commercial plug. We shall each day post details of one or other of our CD lectures. HAVE A GOOD BREAK.

MONEY LAUNDERING - THE BASIC LAW. Dear Reader

Our news service is currently on a winter break resuming on Monday 16th January. Until then we are daily giving details of our range of CD lectures.

This lecture on double audio CD has been written, and updated with developments in the law, by our Mr. Michael Kaye and Mr. Jonathan Fisher QC. It is a comprehensive talk on the law. We deal with the twin track approach to the regulatory scheme covering both the criminal law (the offences and the defences) and the civil compliance code (dealing with the way that you are required to organise your office).

The talk is intended for qualified people or your nominated officer and will give him/her all the information necessary to ensure that your office complies with the very onerous obligation now placed upon us all.

CPD available of 3 hrs. Cost 85.00+ VAT = £99.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

There are more then forty casinos in Ireland and the Financial Action Task Force (FATF) said that those casinos fell outside the scope of anti money laundering provisions in the Irish Criminal Justice Act. They said:-

“this lack of anti money laundering and combating financing of terrorism requirements for the gaming sector was a matter of concern for the evaluation team.”

There is a strange situation in Ireland over casinos. They have actually been banned since 1956 but there is a legal loophole which allows private clubs to offer gaming. In their report FATF found Ireland had a sound legal framework in place to combat money laundering even though the number of convictions for money laundering was somewhat low. Nevertheless there was a clear warning that the casino loophole was one which had to be closed.

There must hardly be a person in the country who has not received a letter containing a sob story about a vast fortune caught in an African bank and offering a fantastic percentage for assistance in releasing the money. These are known as 419 scams.

There has been a major operation in Amsterdam where the Dutch authorities have recently arrested 12 people involved in large scale Nigerian 419 scams.

The gang’s gains, according to the police, exceed $2 million and the police in their raids confiscated 25,00 euros in cash, computer equipment, bank statements and forged passports.

Every success against 419 scammers should be applauded. The problem is that for everyone of these weeds that is pulled up, two more grow. There are just too many vulnerable people who are too easily conned.

BT has started to offer its broadband customers an insurance policy to protect them against ID theft. In addition to insurance BT are offering a support service to advise their policy holders on how to reduce the chances of their identity being stolen with result of financial loss. Help is offered through BT Identity Advice Line.

The magazine ‘Which’ however, says that ID fraud insurance is something which has been created by a marketing department and cashes in on the general fear of ID theft but that ID insurance is almost worthless. They say that consumers would be better off buying a shredder!

A telephone survey of accountants has revealed that many accountants feel that the extension of privilege to certain communications to their profession will lead to an increase in work. One accountant is reported as saying:-

“I have seen cases where potential clients have gone to lawyers instead of accountants. Now a factor in a clients choice of advisor has been taken away.”

While there has been an increasing crossover of work done between lawyers and accountants, we very much doubt that the extension of privilege will make very much difference to clients choice between solicitor and accountant and the results of the survey if anything reveal, in our opinion, the lack of understanding by accountants of the limited extent of client privilege.

Below is the text of an e-mail that we recently received. It came under a Barclays logo.

It may be a scam - BE CAREFULif you receive something similar.

Dear Barclays Member,

Barclays Data security is the new program launched by Barclays Bank PLC.

The data processing filter (type E-secure M5772) is encrypted not to allow third party access to Barclays accounts. We Have tried to upload your information to the new program, but it seems like your billing information is incorrect or you have problems with your online banking, therefore we ask you to click on the following link below and provide the necessary information:

http://ibank.barclays.co.uk/accts/cgi-bin/?verify

We allow you 24 hours to complete this step, if we do not get your valid information, Your Barclays Online Banking account will be closed, and it will be treated with full access of law as Internet Fraud. We are sorry for this inconvenience that this e-mail may caused. But this step is done to protect our customers.

John L. Nelson
Barclays Bank PLC.

It may be a scam - BE CAREFUL if you receive something similar.

The latest newsletter issued by the Government News Network on money laundering can be found at

http://www.gnn.gov.uk/content/detail.asp?NewsAreaID=2&ReleaseID=191622

Simply cut and paste this address into your browser to view.

The growing demand for MLROs has resulted in a boom in salaries on offer and the creation of training courses at universities and business schools. Top banks and other financial institutions offer MLROs an excellent career and pay and conditions. Large salaries and the benefits do not come without responsibilities. Last month saw the first prosecution of a money laundering reporting officer for breach of his duties. In the particular instance he transferred money before receiving permission to do so from the National Criminal Intelligence Service.

The facts are simple. The particular MLRO found circumstances of a requested transaction to be suspicious. In a proper way he reported and sought consent to undertake the requested transaction. Prior to receiving that consent however he undertook the requested transaction and hence not only has been charged but has been committed to a Crown Court for trial.

Whatever the outcome of the trial a warning has been sounded to all MLROs. They have an important role within the anti-money laundering regime. They must exercise proper caution and care at all times as they constantly put their heads personally on the block.

Auto Express has interestingly recently published an article affecting money laundering. It appears that many motoring insurance cover providers in the Eastern block are run by gangsters as front operations for money laundering. Tongue in cheek Auto Express reports that people whose car is stolen are guaranteed a speedy replacement - the replacement cars are stolen to order!

The Dutch Finance Ministry has found that the Netherlands fiscal ability has made it a haven for money launderers. Their report states that the annual sum of laundered money in the Netherlands was equivalent to approximately 5% of the Dutch gross domestic product and indeed it said that while the Netherlands remained a transit country for dirty money it financially benefited from these activities.

There has been a growing number of crimes in Holland which are thought to reflect money laundering activity, for example there have been murders of estate agents which can be coupled with the arrest of 14 people a month or so ago as part of an investigation into extortion within the real estate sector. Of course real estate is a popular haven for dirty money. It appears that Holland does more than export butter and bacon!

Xzasi Limited was a company that advertised its services as being authorised to place certain insurance business. What actually occurred was that it wrote insurance business before underwriting was completed.

The company’s managing director realising there was a problem brought it to the attention of the FSA. A little later the MD reported that it had actually failed to obtain the underwriting and was insolvent. The FSA therefore cancelled the firms permission to trade.

The firm had already ceased trading but the significance of the facts is that the FSA has flexed it’s muscles within the regulated sector.

While ‘know your client’ compliance is increasingly becoming more risk based as to the degree of enquiry that is necessary, it goes with out saying that ID confirmation remains, and will remain, as important as ever.

We think it right that we bring to your notice a new company called Callcredit who are able to undertake ID checks at a fraction of the cost that has been charged by companies in the past.

Callcredit are being promoted by the Skipton Building Society and their website is at www.callcredit.plc.uk.

To give you an example of their rates, we have recently purchased a block of one hundred ID check searches at the price of £4 per search.

Whatever one may think of Hamas it is a fact that they have been elected in Palestine. It is similarly a fact that for the purposes of anti money laundering laws Hamas is on the UN list of banned organisations. It follows therefore that totally apart from any political consideration there are legal implications to passing money directly to Hamas.

The law is the law and should not be ignored for political expediency. So what to do?

We can only say that we are glad that we do not have to deal with the problem. Whatever decision is made it will be open to legitimate criticism.

European commission has adopted the second report on the measures undertaken by member states to comply with the council framework decision taken as long ago as June 2001 on money laundering, which includes the identification, tracing, freezing seizing and confiscation of the proceeds of crime. The report that it has adopted has assessed that members states have satisfactorily implemented the main elements of the 2001 decision but that only some of the countries which have been assessed have taken the corrective measures that have been recommended to them. Malta for example has not provided information regarding it’s progress on full implementation while Latvia doesn’t have confiscation of procedures in place.

However, overall the report does find a very considerable degree of compliance and unification of implementation and standardisation across the whole of the EC.

If there is a degree of standardisation one wonders why reporting levels are so different in different countries. Implementation may be relatively standard but enforcement seems to very considerably from country to country with the UK operating the strictest enforcement procedures.

It is well known that in purchasing new technology that the moment that one purchases anything is the very moment when the purchase goes out of date.

All business users now know the benefit of broadband and we are all inundated with adverts for broadband connections at 2Gb through to 8 Mbit’s and onto 24 Mbit/s but, believe it or not NTL will begin testing a 100 Mbit broadband in homes in the Kent area this month.

Is there any point in purchasing a faster connection now only to know that a cheaper and faster still connection will be available a few months down the road?

We each must make our own decision. Currently we are happy with our own 1 Mbit connection. It serves our requirements. We are keeping an eye on development and once we see an improvement that justifies not only the cost but also “fixing something that ain’t broke” we shall consider changing and upgrading.” We can only recommend that you equally keep abreast of the situation and make your own decision when best for your office and business, not when best for your I.T supplier!

The office of fair trading has published a new guide intended to help people to avoid internet scams which apparently are now costing the UK public more than one billion pounds annually.

The guide which is entitled Scam Buster, gives information about the most common scams including pyramid selling and the new scam of conning people out of money on dating websites. Interestingly a survey showed that the most vulnerable were people in the 45 to 54 age group.

A copy of the guide is available on the oft website at www.oft.gov.uk

The Home Office has announced measures that it intends to include in the current Police and Justice bill. Under their proposal the penalty for maliciously impairing a computer will be 10 years. The penalty for unauthorised access to computer material will be increased from 6 months to 2 years.

The intention of the legislation is to criminalise ‘denial of service attacks’ i.e. virus attacks.

Anything that will decrease virus attacks much be welcomed, the problem however is that British legislation applies in the UK and most viruses come from abroad. It needs other countries to follow suit with a tough and implemented policy to have any real affect.

The Office of Fair Trading, OFT has joined similar organisations in other countries in conducting a sweep of the internet seeking sights that try to swindle people out of their money. Different subjects are looked at annually. This years sweep is internationally known as ‘Hidden Traps Online’ and is particularly aimed at frauds which appear to offer business opportunities.

The problem that faces the OFT is that even though it may identify a scam, it has almost no power to take any action against a scam that is based abroad.

We have in the past reported on the ridiculous effects of the strict application of the anti money laundering rule. We certainly do not wish to keep beating on the same drum but it is as well to be reminded every so often lest we forget.

The Observer has recently run a story about a grandmother who wished to purchase some premium bonds for her newly born great grandson. The premium bonds would have had to be held in the name of the child’s mother but she, being a young person herself did not have a passport, lived at home with her parents and does not pay household bills and was too young to drive. She did not have any of the ID requirements of National Savings and Investments and the premium bonds could not be brought. By contrast The Observer report went on to itself report a Radio 4 programme on which a spokesman from N S & I confirmed how prisoners were entitled to buy premium bonds.

RIDICULOUS! The law should never be made a matter of ridicule.

Last month the newspapers were full of Gordon Brown’s manoeuvring as the so called ‘prime minister in waiting’ he made a number of speeches. One was specifically on the question of money laundering. He stated:-

“We need not only to deny a safe haven to terrorists, but ensure there is no hiding place for those who finance terrorism. Since 2001 we have frozen assets of terrorists of nearly 80 million pounds including for over 100 organisations with links to Al Qaeda. Today I am announcing new measures to prevent terrorist financing, identify suspicious transactions and disrupt terrorist activity.”

The Chancellor’s proposals were:-

· A joint review with the Home Office of how best to root-out terrorist abuse of the charitable sector and protect donor confidence; · New proposals to strengthen safeguards introduced after September 11th for "Money Service Businesses" - and thereby protect the integrity of global remittance flows; · New guidance to help firms target their efforts to detect terrorist financing on the areas of highest risk and ensure that senior managers in firms take responsibility for the financial crime risks that they face; · A new dedicated forum bringing together Government and the financial services sector to identify and challenge terrorist threats; and · Strengthening the Treasury's asset-freezing operation, through greater joint working with other departments and agencies in order to disrupt terrorist networks when they come to light.

In a recent report the World Bank has said the over regulation of financial markets has drastically affected the remittance of funds from migrant workers back to their families in their countries of origin. The report argues that the restrictions are “an over reaction to an otherwise smaller problem.”

The Global Economic Prospects 2006 report of the World Bank specifically addressed the very significant benefits that poor countries obtain from migrant workers and even though unregulated means of transfer still account for considerable flows of money, some being the proceeds of crime, the overall transfer has been affected. Regulations aimed at hindering terrorist and drug dealers is actually taking food from the mouths of the poor.

Why oh why cannot world regulators impose a di minimus rule.

In Gordon Brown’s recent speech (reported earlier in these news pages) he did not actually mention one thing which was tagged onto the end of a press release. What had been tagged on were the words “I have written to the financial action task force asking that Britain take over the presidency in 2007.”

As there are 29 members of FATF and they work in 6 monthly rotation leadership devolves upon a country every 14 years. That is the situation at present but countries constantly are added to those represented on FATF. By asking for UK’s leadership to be treated out of turn Gordon Brown possibly is asking for a high profile job which will show him fighting on the side of the angels in months that possibly could be leading up to the next General Election.

That being said he probably would do a good job in the role!

Regular readers will have noted that the FSA have announced that they will be revoking their money laundering source book in its entirety and that they will be replacing it with a new set of rules contained in the System’s and Control source book and that firms have until the 31 August next to comply with a new risk based regime.

It is reported that Huntswood a professional services firm have warned that this change in system to being risk based and the scrapping of the old source book will impact on various areas of every firms operational process. They state that their research has indicated that due to the sheer size of the task of revising how the anti money laundering regime is to be implemented, a minimum of 18 months is realistically required for implementation.

The JMLSG comprises the leading UK Trade Associations who work in the financial services industry. It has issued new guidance:-

· Allow firms to focus their resources on the minority of customers who represent a higher risk; · Reduce the documentation needed to verify the identity of non-personal customers; · Simplify the document requirements by which most individuals have to 'prove' their identity; · Encourage wider use of electronic means of verification of identity; · Reduce unnecessary duplication of identity checks; and · Provide additional guidance, tailored to particular business areas, to take account of special features in a number of sectors.

Legal privilege has been extended to accountants but only to a very limited extent. Unfortunately the world at large, including some lawyers, think that professional privilege applies to anything said between a client and his lawyer. That is very far from being the case.

If lawyers themselves have a great deal of difficulty in deciding whether a communication is covered by privilege or not, then without any doubt the even more limited privilege extended to accountants will be difficult to understand.

We have never before used this news page to commercially plug our CD lectures but we are making an exception in this instance because of the importance of the subject. A major part of our practice consists of preparing lectures and selling the same on CD. We have now written a special lecture aimed specifically at accountants on the question of privilege and how it affects accountants at a price of £45.00 plus VAT. Simply send us a cheque for £52.88 to Kaye Tesler & Co., 86 West Green Road, London N15 5PD and we shall send you the CD.

The editor of this news page was brought up in an era when English was the spoken language in the UK. Of course alphabet was spoken at times e.g. BBC or even TTFN (ta ta for now). However, in the modern technical world, speaking in alphabet (acronyms) has become common place. The latest acronym that we have seen is one that probably will become common place in businesses that operate in the anti-money laundering regulated sector. The new acronym is KYE. What does this stand for?

We are all used to KYC (know your client) obligations. KYE stands for ‘know your employee.’

Of course there is no similar obligation for KYE as exists in respect of KYC. However it has been pointed out that common sense dictates that if your employees are in positions of authority where they ought to be reporting suspicious circumstances, then you ought to KYE those employees.

While the Assets Recovery Agency has recovered vast sums of money since it was created, the very first freezing order that the agency applied for has now been obtained. The relevant legislation only came into force on the 1st January 2006 and its purpose is to prevent respondents from dealing with property that is specified in the Order while the ARA’s investigation is ongoing.

Conviction is not a prior requirement. Commencement of proceedings is not a prior requirement. These orders are obtained to keep assets intact while investigations are ongoing.

Of course the investigations may lead nowhere and we would hope that the ARA is cautious in it’s use of freezing orders and does not become overly zealous in their application in a way similar to that in which Customs have applied regulations in the past (see earlier news posts).

The third Directive states that every EU member State must establish a licensing and registration system for “trust company and service providers.”

Of course solicitors, especially those dealing with probate, will fall within this category. It might be argued that when operating in this category solicitors are already ‘licensed and registered’ by the mere fact of their qualification and membership of the Law Society. However it is reported that the Law Society is participating in a Treasury working group to examine different ways of achieving the Directive’s requirements.

We shall report any developments as when we see them but meanwhile can only suggest that you continue your practice as before.

Dear Reader

Our news service is currently on a winter break resuming on Monday 16th January. Until then we are daily giving details of our range of CD lectures.

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 from avaricious brokers. Our talk gives you all the knowledge you need to help your clients in a burgeoning area of business. CPD available of 1 hr. Cost £45.00+ VAT = £52.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Phishing has become one of the biggest causes of loss through credit card and other electronic fraud. This news page has constantly warned of new dangers as they have been perceived.

Unfortunately yet a further method used by phishers has come to light. The way the new phishing scam works is quite simple. People receive E mails apparently coming from authentic and reputable bodies such as Visa. The E mail is headed “Attention! Several Visa cards data bases have been lost!”

The E mail then simply asks the recipient of the E mail to send in his or her credit card information so that it can be re-entered. The clever part of this scam is that there actually was a data loss that related to Visa in August 2005. However Visa didn’t loose the details it was Bank of America, but that’s another story.

The JMLSG (Joint Money Laundering Steering Group) has published new guidance on the prevention of money laundering. The JMLSG membership comprises the leading financial institutions in the UK. The guidance changes the way that risk is managed in the UK and affects the way that it recommends that the regulated sector manages its risk. It has been issued following the decision of the FSA to completely delete it’s Money Laundering Sourcebook. The whole intention is to change everything so that decisions are based on risk management.

Very few solicitors will be effected by these changes which are aimed more at the banking and insurance sectors. We recommend that solicitors maintain their cautious approach to this subject.

At present it is possible to make a Suspicious Activity Report (SAR) by fax or by post. The National Criminal Intelligence Service (NCIS) is currently suffering under an unmanageable case load. It is therefore experimenting with an online reporting system to help it deal with the challenge of processing SARS quicker and do so by adopting a standard reporting system.

In our view a di minimus rule would quickly and significantly reduce the case load and enable them to concentrate on more serious matters as envisaged by the legislation.

Beware a new epidemic of ‘phishers’ are working very hard to get your personal details. WORLD MONEY LAUNDERING REPORT, one of the most respected specialist in the area of money laundering have themselves been the subject of a phishing attempt. They recently received an e-mail which stated:

Dear Customer, Our technical service department has recently updated our online banking software, and due to software upgrade we kindly ask you to follow the reference given below to confirm your membership details. Failure to confirm your membership details will suspend you from accessing your banking online. Reference https://ibank.barclays.co.uk/olb/p/LoginMember.do/confirm"

It goes without saying that Barclays were not the enquirers.

While this news page is intended to bring items relating to money laundering to your attention every so often we come across a piece of information which we feel our readers may find useful.

The DVLA has now made it possible to renew your car tax online. The service which can be found at www.dvla.go.uk uses the motor insurance database to check that the car is insured and additionally requires the reference number from either the vehicle registration certificate or the new style computerised MOT receipt. With this information you can renew your vehicle tax disk online.

We doubt that there is a solicitors or other professional in the country who has not received an email from someone, normally in Africa, explaining that a vast sum of money belonging to a relative has been caught and asking from held to get that money out of the country. These are colloquially known as ‘419 scams.’

Beware there is a new variation that is much more sophisticated. It involves an email asking for assistance in connection with the deposit of a large sum of money, but nowhere near as large as the older style, but has the twist that the email purportedly comes from a UK solicitor or barrister.

Don’t be tempted if something looks too good to be true then without doubt it is not true!

KPMG forensic has analysed details of fraud cases heard in Crown Courts. Their report shows that there has been an explosion in fraud case prosecution and in particular that fraud against financial institutions is “spiralling dramatically.”

Their report shows that in the second half of 2005, 134 cases came to Court. The alleged frauds in those cases were valued at £693 million. That should be contrasted with the fact that only 88 cases were brought in the first six months of 2005 and the value of those cases was £249 million.

The KPMG forensic report says that the 2005 number of prosecutions is the highest since 1995 and the second highest since it started recording the data in 1990.

A you are all probably aware following the 2004 Budget and the Finance Act 2004 all tax schemes have to be reported and cleared with H M Revenue and Customs. This obviously gives them an opportunity to close off any valid loop hole.

The first major scheme has now been closed and Pay Master general, Dawn Primarolo is reported as having said about the scheme:-

“Use of avoidance schemes such as this which get around intention of Parliament is unacceptable and unfair to the majority of tax payers who pay their fair share. The disclosure regime has enabled HMRC to make real progress in understanding how these complex schemes work and to close the loop holes upon which they depend at the earliest opportunity. If necessary we will not hesitate to move against similar schemes in the future.” font>

The particular facts of the tax scheme which has just been closed are not the subject of this news post. The point that we wish to make is that we should all be very wary of clever schemes. They are likely to be closed and not only closed but those who have sought to participate may well find themselves worse off as the result of the arrangements that they made to go into the tax scheme in the first place. We should all be wary of advising clients to enter tax schemes of any type unless they are subject of settled and accepted law e.g. husband and wife changing ownership of their home from joint tenants to tenants in common to take advantage of inheritance tax allowances.

Many of our readers may have noted a recent press release concerning H M Revenue and Customs having settled a claim from Hoverspeed Limited that resulted from the crushing impact on their business of Customs over zealous activity aimed at controlling cross channel smuggling of alcohol and tobacco. While liability has not been admitted HMRC has agreed to pay Hoverspeed £950,000 plus costs of £850,000.

Liability may not have been admitted but we leave it to you to draw your own conclusions. This is another example of the over enthusiastic application of regulation without thought for the consequences and is a direct result of the increasing interference of government by introducing an over burden of regulation which, in this instance, has been over enthusiastically applied. How much more so in respect of the anti-money laundering regulations.

The Mutual Fund Dealers Association Of Canada has issued a bulletin warning their members that FINTRAC (The Financial Transactions And Reports Analysis Centre of Canada) has at last published a notice which clarifies the steps that Canadians securities dealers have to take when they open an account in the name of a person who deals in securities outside of Canada.

We are amazed that so long after the worldwide implementation of anti-money laundering measures so advanced a financial society as Canada has only just found it necessary to clarify identification procedures. We need to contrast the readiness of our regulatory body not only to adopt measures but to adopt them very strictly. So strictly that they are now reviewing all measures with the intention of lightening the load on the regulated sector.

Our regular readers will be aware that we have highlighted the problem of the ease by which the so called ‘Informal Money Transfer’ arrangers can by-pass many of the anti-money laundering regulations. One of the major informal transfer systems is the ‘hawala’ system which is used for the transfer for substantial sums of money from UK residents to Bangladeshi citizens.

The money that is transferred using this system is significant and very important to the Bangladeshi economy and accordingly with a view to boosting that economy arrangements are being put in hand for remittances to be transferred through official channels. Two major Bangladeshi banks, Sonali Bank UK Limited and Rupali UK Limited are increasing their efforts to take a bigger share of what is to them a straight forward but lucrative business.

The transfer of money through formal banking institutions rather than the informal system will help control the flow of black money.

While this news page is basically dedicated to matters of money laundering interests occasionally we come across something which we feel ought to be reported.

Every thinking person must be concerned over the possibility of a world pandemic of bird flu. Unfortunately there are always unscrupulous people willing to take advantage of other peoples' fears so we ought not to be surprised to hear of a case of a man in Texas having been arrested and charged with administering a false anti-bird flu vaccine.

While we have constantly railed against the use of anti-money laundering for purposes other than those intended by the legislators, this, in our view, may be a case for the person in question to catch everything that may be going.

Although that we accept that this news item may not directly concern money laundering we think it is a matter of interest to all professionals.

Inheritance tax now provides a larger revenue stream to the government than excise duty on tobacco so it isn’t surprising that attempts to fraudulently evade payment are now the subject of close monitoring.

HM Revenue Customs have set up a specialist prosecutions department (Revenue and Customs prosecutions office - RCPO) which is a totally independent prosecuting authority which reports directly to the attorney general and is responsible for the prosecution of all revenue cases in England and Wales.

The Department has brought it’s first successful prosecution in relation to inheritance tax. A search on the internet will reveal the facts of the case for those who are interested but the point that we are making is that correct calculation of inheritance tax is something that has always been a matter of importance but now is the subject of close scrutiny.

You may be interested to learn that the Government publishes a MONEY LAUNDERING NEWSLETTER.

The latest is issue No 22. Each contains details of recent proceedings. Issue No.22 can be found at

http://www.gnn.gov.uk/content/detail.asp?NewsAreaID=2&ReleaseID=184404

HM Revenue and Customs have been ordered to pay damages for tactics employed by them which have resulted in innocent businesses being forced to close down.

A carousel fraud is one where goods are brought within the EC so that VAT is not paid. The goods are then sold from company to company. When they pass within the UK tax ought to be paid and allowed. The purpose of the fraud is ultimately that the final company in the chain commits disappears without paying the VAT that is due. Customs did not allow the rebate of VAT paid by innocent intermediary companies.

A Court has found that Customs acted improperly and illegally so far as those innocent companies within the carousel fraud are concerned and have been ordered to pay damages to losing companies some of whom have been forced into liquidation because of Customs high handed approach.

This news page is certainly not intended to be a manual on methods of money laundering. Occasionally however an item of interest on how money laundering operations are carried appears. One such is a report carried by Associated Press on the way that criminals are using day to day items to facilitate their money laundering activities.

It appears that criminals are buying gift cards from stores and phone cards and other prepaid similar instruments. Those instruments are really the equivalent of cash but they, to use the words of a US Federal Report “provide a compact easily transportable and potentially anonymous way to store and access cash.”

One wonders at the size of such transaction, surely stores would notice a substantial increase in pre paid cash cards!

Football followers may be interested to learn that investigations are ongoing in Switzerland concerning the transfer of Claude Makelele from Real Madrid to Chelsea in 2003. The allegation is that Georges Phillipe is suspected of having drawn up false receipts for a total of €2.5 million as justification for commission pay.

It appears that investigations into money laundering in relation to football transfers are taking place across the whole of Europe not just in southern England Premiership clubs where one brave manager is taking a stand.

Those readers who have followed our news items know that only in exceptional cases (DeLay being one) do we speak about individuals or specific companies. However occasionally an individual matter is worthy of notice.

ABN Amro are one of the largest most respected banking organisations in the world. The bank is a Dutch bank but size does not come into the question when money laundering matters are involved. The US Federal Reserve Board recently ordered the bank to pay $40 million to the US Tresury, $20 million dollars to New York State Banking Department and $15 million to Illinois Department of Financial and Professional Regulation. All of these are to do with the way in which the bank conducted Financial Transactions with Iran and Libya.

Apparently the bank was so happy with being let off that it volunteered to give a further $5 million to the Illinois Bank Examiners Education Fund!

Many of our readers are following the progress of proceedings brought against indicted Texas Republican Representative Tom DeLay. He is facing charges of Money Laundering based upon improper contributions to election funds. President Bush recently put his foot in his mouth by declaring that Tom DeLay was innocent and this of course produced a hail of criticism from Democrats claiming that he was pre judging the case and interfering in the course of justice.

Hastening to dig himself out of the hole President Bush has recently gone on television to say that he wished to clarify his previous statement and of course to say that what he said was right, DeLay was innocent, but innocent until proven otherwise.

New York state prosecutors are convinced that major banks in the US are being used to launder money for both terrorists and drug cartels and they are apparently quietly increasing the level of pressure on the banks. It is reported that four of the nation’s largest banks, JP Morgan and Chase, Bank Of America, City Group and Wachovia and many other smaller banks are feeling the heat. They are all are being carefully watched and many are paying stiff fine for the way which they have conducted business and especially money transfers to Argentina, Brazil, Paraguay and that geographical area of South America.

Money laundering laws are intended specifically for the purpose of catching terrorists and major drug dealers and it appears that they are being correctly applied in the US. Contrast the UK where senior judges have applied, even mistakenly, our regulations so strictly that they deal with such matters as the salary of an au pair (P -v- P).

Immediately prior to the xmas break the law society issued a new guidance on money laundering specifically for the attention of conveyancers.

The relevant guidance can be downloaded at

http://ww.lawsociety.org.uk/document/downloads/ML_Cforconveyancing1205.pdf

Shortly prior to the xmas break the law society felt it appropriate to draw attention to the home office circular on the confidentially and sensitivity of Suspicious Activity Reports (SARS) and on the identity of those who make them.

The relevant website is as follows:- http://www.knowledgenetwork.gov.uk./HO/circular.nsf/79755433dd36a66980256d4f004d1514/33ea52c7344053585802570d10054abc7?OpenDocument

The FSA has publicly confirmed that it is proceeding with a review of its anti-money laundering requirements for firms. Hopefully this is good news as it will be specifically aimed at simplifying its Handbook with the intention of removing rules and guidance that are no longer needed.

It is not surprising that the announcement of the review has been met with overwhelming support from the regulated sector. It is reported that the existing detailed rules on anti-money laundering controls will be removed in their entirety and will be replaced with high-level requirements for firms to have their own risk-based controls on money laundering.

News papers have been full of reports that US politician, Tom DeLay, faces criminal charges. One count of money laundering and one count of conspiracy to launder money. The prosecutors are seeking to apply a money laundering law which when originally drafted was intended to as a weapon in the fight against the drug trade.

DeLay is accused of laundering $190,000 in "dirty" corporate money to back the election campaign of seven Republican candidates for the state House. It is generally illegal in Texas elections for Corporate money to be used to support the campaign of any candidate.

Delay supporters of course accuse the prosecution of trying to stretch of the law to facilitate a politically motivated witch hunt. Houston attorney David Berg, an active Texas Democrat, called the charges "a very odd application of the money laundering statute. What the Legislature wanted was to attack drug dealing. There was no intent for the statute to be applied this wide."

No such distinction applies in the UK. If the money is dirty then handling it constitutes an offence.

History was made late last year at Snaresbrook Crown in east London when in confiscation proceedings a convicted tax credit fraudster was ordered to pay £1.275m. This was the very first time in the UK that the Proceeds of Crime Act 2002 (POCA) has been used by HM Revenue & Customs (HMRC) in a Tax Credit fraud case in which separate money laundering and confiscation investigations were carried out simultaneously.

The confiscated monies can now be used to fund similar investigations in the future.

HM Revenue and Customs is said to be behind more 150 mobile phone dealers in the UK finding themselves treated as money-launderers. Dealers say the Revenue is instructing banks not to service accounts of mobile customers. A detailed report in a publication called Mobile News states that a simple denial by the Customs officers won't be found convincing.

The report goes on to say that more than 150 mobile phone dealers are so likely to be damaged by the position that they have instructed a Birmingham law firm to prepare proceedings against the banks. Vincent Curley - managing partner at VAT consultant Curley & Co is quoted in the publication as saying:-

"I would expect Customs to point out to a bank their money laundering obligations and I know from advising on the mobile industry that main high street banks close down the bank accounts of mobile phone traders without proper explanation."

Developments may prove very interesting.

It has been reported that in 2005, the Russian Federal Financial Monitoring Service has conducted 2,400 money-laundering investigations and that these in turn resulted in more than 800 criminal cases being brought.

Intent on cleaning its name and reputation the director Viktor Zubkov said:-

"In 2005, the Federal Financial Monitoring Service has carried out 2,400 probes with law enforcement agencies initiating criminal proceedings in 800 money-laundering cases."

Recently we have received 2 emails from ‘webmaster@fedex.com’ and another from ‘postmaster@aol.com’. Both had the subject line “your password” both had attachments. We opened neither as we are neither Fedex nor AOL users therefore do not have passwords but there are probably tens of thousands of people who do. Beware of another phishing attempt.

P.S. Since originally writing the above we have received 9 more similar e-mails purporting to come from different sources. BE CAREFUL.

To conclude our short series on the ARA, we quote their section on targets and progress.

Our progress against targets over 2004/05 has been marked by notable successes and important learning points. We are delighted that in many instances we have been able to exceed the targets which we set ourselves a year ago:

1. disruption of 35 criminal enterprises – 36 disrupted;
2. adoption of a further 35 cases – 51 adopted; and
3. early restraint of assets to the value of £15 million – £17 million of assets under early restraint.2

The ARA have been allocated 15.5m a year for three years. We again quote from their own website:

We have continued to meet and exceed our targets for disruption activity. We have achieved interim receiving orders, freezing orders, tax assessments and criminal restraint orders in over 30 cases, and have a value of approximately £17 million of assets under restraint. This value represents assets held in cash, cars, houses, businesses, livestock, jewellery and commercial premises.

We have had a number of high-profile successes over 2004/05, and have achieved recovery orders and final tax assessments in over 10 cases with a value of over £5.5 million. Some of the stories behind these cases are detailed as case studies in the operational section of this Annual Report. We have begun to turn the orders into cash, which will fund other crime reduction activities. We have used public auctions to dispose of houses, to assist in our objective of reassuring the public that action is being taken against the property of those individuals who have acquired it as a result of their unlawful conduct.

We quote from their own website:

1 to disrupt organised criminal enterprises through the recovery of criminal assets, thereby alleviating the effects of crime on communities;
2 to promote the use of financial investigation as an integral part of criminal investigation, within and outside the Agency, domestically and internationally, through training and continuing professional development; and
3 to operate the Agency in accordance with its vision and values. Which include:
i). working together to deliver results and celebrate success;
ii) always acting with high standards of integrity, honesty and professionalism;
iii) continuously improving the quality of our work, through innovation and managedrisk taking;
iv) supporting learning and skill development to help us do our jobs better; and
promoting diversity and valuing

We quote from their own website:

The Recovered Assets Incentive Fund (RAIF) was set up by the Home Office in 2003/04. Its purpose is to build asset recovery capacity in front-line law enforcement and prosecuting agencies as a contribution to crime reduction. A total of £15.5 million a year for three years has been allocated to the Fund. The funds have been fully committed to projects, agreed by the Home Office, on recommendation from members of CICFA, with the aim of increasing capacity to improve the confiscation of criminal assets.

Welcome back to our news site.

We hope all of our readers have had a pleasant break and we wish you all a happy new year.

To start the year we will from be running a week long series of articles based upon the ARA’s ANNUAL REPORT for 2004/05. The report gives a valuable insight into the aims and purposes of this major anti money laundering institution.

Dear Read

I hope that we haven't bored you too much over the break with commercial plugs for our CD lectures. You will be pleased to know that we shall be resuming our news service next week and we intend running a series of articles about the ARA (the Assets Recovery Agency) who are now becoming a major tool in the anti money laundering arsenal.

Dear Reader

Our news service is currently on a winter break resuming on Monday 16th January. Until then we are daily giving details of our range of CD lectures.

Estate agents will in the future have complete control of most of the pre-contract elements of a house/flat sale. They face considerable increase in regulation and responsibility but gain an exciting business opportunity. The changes which come into effect in January 2007 spell considerable danger to High Street estate agents and solicitors. Only with the knowledge of what is about to happen – remember the Housing Act 2004 has already been passed - can you plan a way to deal with the coming new world.

CPD available of 3 hrs. Cost 85.00+ VAT = £99.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Dear Reader

Our news service is currently on a winter break resuming on Monday 16th January. Until then we are daily giving details of our range of CD lectures.

The newspapers are full of articles about internet telephony and how calls can be made for a fraction of current cost. Our talk explains the systems that are available and shows how we have reduced our own telephone bills from hundreds of pounds per month to less than £25 per month. On our CD you hear us make a call to demonstrate that on making a call to an ordinary landline in the UK, no matter where it is, or the duration of the call and whatever the time of day, you only pay 2p for connection and then the call is free. We are making massive savings and show how you can do so as well. We have done the research for you. After the connection is made at a cost of 2p,you will hear the operator actually announce that the call itself costs ‘0’ pence.

CPD available of 1 hr. Cost £45.00+ VAT = £52.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Dear Reader

Our news service is currently on a winter break resuming on Monday 16th January. Until then we are daily giving details of our range of CD lectures.

This lecture on double audio CD has been written, and updated with developments in the law, by our Mr. Michael Kaye and Mr. Jonathan Fisher QC. It is a comprehensive talk on the law. We deal with the twin track approach to the regulatory scheme covering both the criminal law (the offences and the defences) and the civil compliance code (dealing with the way that you are required to organise your office).

The talk is intended for qualified people or your nominated officer and will give him/her all the information necessary to ensure that your office complies with the very onerous obligation now placed upon us all.

CPD available of 3 hrs. Cost 85.00+ VAT = £99.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Commonhold. Dear Reader

Our news service is currently on a winter break resuming on Monday 16th January. Until then we are daily giving details of our range of CD lectures.

A totally new form of title. Our lecture gives explains the whole process.

CPD available of 1 hr. Cost £45.00+ VAT = £52.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Dear Reader

Our news service is currently on a winter break resuming on Monday 16th January. Until then we are daily giving details of our range of CD lectures.

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, but says the recommendations do not go far enough! Our talk gives you a full insight into what is coming. Forewarned is forearmed

CPD available of 1 hr. Cost £45.00+ VAT = £52.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.

Dear Reader

Our news service is currently on a winter break resuming on Monday 16th January. Until then we are daily giving details of our range of CD lectures.

We have all read different news items on the Clementi report but few of us have either the time or indeed the inclination to read this important but lengthy report in full. Our CD talk gives a full overview.

CPD available of 1 hr. Cost £45.00+ VAT = £52.88 per practice.

To purchase this CD and to see the order form for our full range of talks on CD please click on this link. http://kt.uklaw.net/pages/training/purchase.html Regards to all.