Freud & the anaconda – all in the cause of financial crime

On a soggy Tuesday morning, writes David Coates, the Law Society’s symposium on financial crime kicked off with an ambitious set of objectives from its Chief Executive, Desmond Hudson. In a script that could have been borrowed almost in toto from the British Bankers’ Association (BBA), he emphasised that combating fraud and financial crime was not just the job of the legal profession. Firms were committing substantial financial and legal resources. Burdens needed to be proportionate and effective. He hoped the meeting would consider effectiveness, challenge accepted wisdom and look at innovative ways of tackling the problem. Feet shifted in response.

David Coates may be contacted on david.coates@live.co.uk

FATF and the Fourth EU Money Laundering Directive

The body of the meeting devoted considerable time to the new Financial Action Task Force (FATF) Recommendations and the consequent EU measures (probably but not unequivocally a Fourth Directive, not a Regulation, according to Tobias Mackie, the EU point man for the reforms). Valerie Schilling, Principal Administrator and Policy Analyst for FATF, emphasised that the 2012 Recommendations were mainly an elaboration of the requirements, not a wholesale rewrite. The numbering of the Recommendations had been changed to incorporate the nine Countering Terrorist Financing Objectives in the main body of the text. Despite FATF disclaimers, the elaboration of the requirements on customer due diligence (CDD) are not problem-free and there is considerable detail expected on identifying beneficial ownership but also the possibility a second-best alternative, if serious best efforts prove unavailing. The risk-based approach (RBA) got a good airing, albeit in the context of a document that has increased from 53 pages in 2003 to 125 pages in 2012, mostly thanks to the FATF glossary, which has a curious in and out status. Serious tax evasion becomes a predicate offence for all FATF jurisdictions while there is now a new section on the financing of weapons of mass destruction (WMD).