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Money Laundering

This paper, by Nigel Morris-Cotterill, was first presented in June 1997 in Milan and first published in the UK that same month.

It deals with internet banking, cyber-currencies, inter-bank regulatory risk and a host of other topics that are seen as trendy today.

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Fraud using technology is not a new occurrence Over the centuries, it has been called by many names - cheating, false accounting, confidence tricks, forgery, impersonation - all are examples of fraud in the widest sense.

This article was first published by Nigel Morris-Cotterill in June 2003
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The financial services industry is getting only part of the risk management and anti-money laundering point. And modern business models in banking and insurance militate against effective know-your- customer procedures says Nigel Morris-Cotterill of The Anti Money Laundering Network.

This article, by Nigel Morris-Cotterill, was first published in September 2002. It is, in part based on a briefing to banks, etc, in London in November 2001 and draws attention to the effect of the money laundering, etc. provisions of the just in-force USA PATRIOT Act.

BIScom Subsection: 

As China continues is increasingly effective "Operation Fox Hunt" against corrupt officials who have left China with their spoils, or sent their money abroad in the hope of hiding it, there is growing co-operation between Chinese authorities and those in the countries where people and/or assets are located. Australia is one country that has been helping. But a thorny old question remains.

For much of the past 25 years, Nigel Morris-Cotterill has argued that any corporate structure that goes is more than three layers deep should be regarded as prima facie suspicious unless a good commercial and legal reason can be established. Incredible India, which is turning from a sink hole for dirty money into a leader in developing structures and policies to combat financial crime has just announced that Indian groups will not be permitted to have more than two layers of subsidiaries. That's going to cause major consternation amongst Indian corporates which use complex structures to minimise tax revenues and to avoid exchange control measures, as well as to hide proceeds of fraud and other offences.

A purported mailing list broker is marketing a list of users of money laundering, etc. risk management software. There are clear security implications for officers in sensitive functions, if the list is what it claims to be and money laundering risk officers, etc. should therefore be aware that information relating to them and their employers and suppliers is being indiscriminately touted for sale.

When the Commonwealth Bank of Australia (CBA) story first appeared, I instructed World Money Laundering Report that we should not become involved in what would inevitably become a frenzy of speculation and ill-informed comment as consultants (of which I am, obviously, one) and media outlets vied to benefit their own profile, and to get website visits, while the story was hot. I wrote what amounted to a placeholder article .

Often, one is tempted to shake one's head in amazement when a regulator or enforcement agency is proud that it's done something that has been obvious for, well, pretty much for ever, in money laundering terms. If one were to shake one's head with appropriate force at FinCEN's boast that it is to target shell companies that have been used to purchase expensive properties in seven expensive areas, there's a risk it would topple free of one's shoulders. Surely the point is not the FinCEN has just noticed, but that it's just noticed that banks, lawyers and estate agents have not been making reports. Shades of Commonwealth Bank, maybe?

This is such a massive topic that we can, today, do little more than make a placeholder article. How, one has to ask, does anyone "miss" tens of thousands of errors? We think it's probably not too difficult and banks, etc. should take note.

BIScom Subsection: 

The US Department of Justice has charged four men from a district of California known as "the Inland Empire" with a range of tax offences that, it is alleged, generated substantial revenue by making false tax claims in the names of innocent individuals. It's time governments started doing effective KYC.

The former deputy treasurer for the City of Compton, California, has pleaded guilty to federal charges stemming from his theft of more than USD3.7 million of city funds. His wife has pleaded guilty to money laundering.

Reports that Australian banks are going to co-operate on KYC information are welcome but fall far short of the ideal. Also, conceptually, it's been tried before, and failed. We know: we covered one such attempt in WMLR Vol 5 No 3 in November 2003.

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