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Money Laundering and AML Compliance
61–70 of 218 posts
Re: Money Laundering and AML Compliance
#62It is expensive to keep a crime and corruption department on your banking institution. If you are dealing with a millionaire who is related to some oil mogul in Russia you can do your due diligence and Vladimirovich can hire a team of accountants to prove that his business is legit and not at all related to the corporativist oligarchy his uncle runs. Or it might be, but the risk vs reward is good enough to turn a bli…
There’s a really great book called Kleptopia by T. Burgis. It’s about how wealthy oligarchs use the Western legal and banking systems. He points out that the US financial system is squeaky clean. Oligarchs wind up in prison because they think they can pull the crap in New York that they pull in London. But outside the financial sector it’s the 100% opposite. Americas permissive corporate transparency lets assets vani…
> The best example: if you want to get a mortgage to buy a house you have submit to a financial strip search. But if you want to buy a house with bags of cash, you don’t even need to give your name.
What is this an example of? You are submitting a financial strip search because the lender wants to ensure the borrower can pay the debt, not to ensure they are a criminal or not.
And that is because prior to 2008, lenders were giving out loans to people with zero underwriting, hence the cascading defaults, and then financial crisis, which led to more regulations on proper underwriting.
Re: Money Laundering and AML Compliance
#63The biggest money launderers are close to those who write the AML policies. One of the most significant money launderers is a famous attorney from Shearman and Sterling in NYC. From my experience, prominent financial executives attempted to engage in blatant laundering of drug money in BVI. These individuals were connected to the attorney and one is a public official appointed by 4 US Presidents. This was 20+ years a…
I'm reminded of something some newcomer to DC said about corruption:
"What's shocking is not the illegality going on. What's shocking is what's legal. "
Re: Money Laundering and AML Compliance
#64> At many institutions, one SAR is a non-event. Two, for a retail client, means one gets a letter saying the bank wishes you the best in your future endeavors and will not bank you anymore. That letter will often mention that this is a commercial decision of the bank and will not be reversed. Some clients receiving that letter will, on attempting to open account at a different bank, get refused because the first bank…
The former affects blacks, which are a recognized political constituency. The latter allows you to debank your political opponents (cf Operation Chokehold), which is useful.
Re: Money Laundering and AML Compliance
#65Earlier quoted context omitted.
Thanks to the Wikileaks effect of the internet (rapid info declassification + sharing) more corruption is able to be exposed, and the scale is shocking and enormous. The hardest part is then trying to change a known-to-be-corrupt system, when those who write the rules always do so in their favour. Here in Australia we have slid into the bottom 10 percent of global corruption index [0] Politicians, lawyers, accountant…
Source shows the opposite: although Australia is declining in the rankings, it remains in the top 10% of least corrupt countries.
Thanks you are correct and I will fact check my posts a bit more next time.
I thought our last 15 years of politicians were massively unaccountable and corrupted by self-created taxpayer slush funds plus lobbyist megabucks, corporate kickbacks and post-politics directorships.
I suppose politicians everywhere are essentially driven by the same human frailties, yet mostly worse than what I am seeing locally!
Re: Money Laundering and AML Compliance
#66Al Capone would have passed KYC
Do you mean KYC now, or what passed for KYC in the 20s?
Before he got busted by the Feds, he went to baseball games and posed for pictures, and "respectable" people might be seen with him. I don't think he'd ever have been invited to the White House, though.
As someone else here said: no, the "reputational risk" would doom him now.
Re: Money Laundering and AML Compliance
#67Excellent essay.
The 10k rule mentioned is totally a thing. I was at a company implementing AML for the first time, and the compliance team told us to add it, which I always thought was an inane. They came up with a variety of rules with just arbitrary figures in them, including the 10k rule. Didn't matter if you had previously been transacting 7k regularly before jumping to 10k, didn't take overall volume into account, didn't look for unusually high acceleration of transactions. Just a magic number pulled out of industry precedents.
The interesting thing was if you read the actual legislative requirements it was excessively vague, like "take reasonable steps to find suspicious transactions". Institutions don't build software if they don't have to. The goal always was to do the minimum to check the box, not actually find laundered money.
Re: Money Laundering and AML Compliance
#68Earlier quoted context omitted.
It's not really a private or voluntary search when it's imposed by government. Otherwise I could just make a law saying everybody who walks down X private road has to get searched by private security or turn around, obviously that won't work. The private road owner might never wanted to do it, they're only doing because the gun of the government man is at their head. It is a public search carried with the dirty work…
But the government DIDN'T impose it. Whatever the bank's procedures may be, the regulator can say with a straight face, "We didn't tell them to implement those procedures, and we didn't tell them to take those actions. That was their decision." And, unbelievable as it may seem, the government won't be exactly wrong either.
I don't think anyone can say with a straight face that the KYC laws as written don't impose the requirement to search
papers to verify proof of identity, address, etc.
Sure cute games can be made about the semantics of it, but that's why we have human beings as judges. It's blatantly obvious that when you threaten to toss someone in a cage for not doing something that you are imposing that on them, it's not voluntary and you are doing it on behalf of the imposer. If a human being judge truly can't recognize that then the whole system is broken and we need to start over.
Re: Money Laundering and AML Compliance
#69Excellent write-up. Key point is, no one truly looks at the efficacy of AML which makes it more theatre than crime-fighting tool (not that it doesn't fight crime, it just does not do so efficiently nor is it likely the best way to do so, let alone us defining broadly what crime actually is). If these systems were re-designed from the ground up, AML procedures and policies would likely look quite different than they d…
Yeah, it's a box ticking exercise not a finding laundered money exercise. For one, the idea of approaching AML on an organisation to organisation basis seems flawed. Like no team has the whole view, so how can you be effective.
Example, my flatmate worked at a bank doing AML looking into flagged transactions. One day they found a chain of 87 different bank accounts moving money, 1k at a time to obscure it's source. All were real people who had passed KYC. The money came in from another bank, then went out to another. So she calls up the AML teams at those banks - they found similar chains. The only reason they found it at her bank was because the chain got too big.
Re: Money Laundering and AML Compliance
#70Governor Tarkin: Princess Leia, before your execution, you will join me at a ceremony that will make this battle station operational. No star system will dare oppose the Emperor now. Princess Leia: The more you tighten your grip, Tarkin, the more star systems will slip through your fingers. Every government and central bank in the world is tightening their grip around the tiniest transactions of their citizenry. In t…
I dunno, I sent Sam Bankman Fried all my Galactic fiat credits, and suddenly couldn't make withdrawals. I called my senator to look into it, but then I find out the Emperor has dissolved the senate.
Call a Fett. That's what the bounty hunters are for.