According to Transparency International UK, “billions of pounds of dirty money” are passing through the UK monetary system, due to what TI describes as a “woefully inadequate” and fragmented anti-money laundering approach.
The UK isn’t alone in lagging behind the money launders. As each nation develops new counter-money laundering strategies, unscrupulous facilitators invent work-around solutions.
But while a dynamic approach to regulation is important in combating organized crime and terrorism, it is equally important to cultivate a business space that encourages investment and speculation. Too much regulation runs the risk of stifling the economy at a time of austerity and challenge. So what is the answer?
I agree with TI’s observation that professional enablers are not being punished enough to deter their antics. Heavier sentences, allied with the imposition by statute of a duty of care on all financial institutions to the victims of fraud or corruption (if they are failing in their duty to know their customer), will make most facilitators think twice.
At the moment there is no realistic deterrent, and fraud victims have a difficult road to traverse in search of compensation. Yes, penal anti-money-laundering legislation is in place and the courts can give transgressors a fine or a term of imprisonment, but it rarely happens. Bent professionals will run the risk of detection when punishments are weak.
Broadly-speaking, white collar crime is notorious when it comes to punishment: perpetrators receive slaps on the wrists, and are rarely imprisoned. Victims are forgotten about. They face a set of judge-made choices requiring them to prove that a specific enabler — a banker, a lawyer, or accountant — knowingly assisted a fraudster to take or to hide victim money.
The point I am making is that we are in serious danger of over-regulation and stifling business when all we really need is for the enablers to understand that if they get caught, not only are they going to prison, but a negligence claim may follow against the institution from victims.
Martin Kenney, pictured above, is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice focused on multi-jurisdictional fraud and grand corruption cases www.martinkenney.com |@MKSolicitors.