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“What is all this good for?” A layman’s question

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The Critical Handbook of Money Laundering

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Abstract

It can often be elucidatory to explain to a layman what one is doing and for what reasons. The ‘tabula rasa’ of the layman forces one to explain what has been taken for granted in the development of the mainstream discourse and routines. So, let us allow that hypothetical layman, as a kind of modern Candide, already briefly presented in the introduction, to wander through the AML territory. We will try to answer the questions bubbling up from his pure, ‘child-like’ ignorance.

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Notes

  1. 1.

    To paraphrase the novel Candide ou l’optimisme, by the 18th Century philosopher Voltaire, who describes how a naïve person walked on this earth full of war, cruelty and misery. It was a satire of his colleague, philosopher Leibniz who claimed we live in the best of all possible worlds.

  2. 2.

    Directive 2005/60/EC 26 October 2005 (p. 1) on ‘the prevention of the use of the financial system for the purpose of money laundering and terrorist financing’, available from: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32005L0060. Accessed 19 October 2015.

  3. 3.

    Financial Action Task Force on Money Laundering Report 1990-1991 available from: http://www.fatf-gafi.org/. Accessed 29 September 2017. http://www.fatf-gafi.org/media/fatf/documents/reports/1990%201991%20ENG.pdf. Accessed 29 September 2017.

  4. 4.

    Resolution No AGN/66/RES/18.

  5. 5.

    The FATF consolidated standard on information sharing. Updated November 2017. http://www.fatf-gafi.org/media/fatf/documents/recommendations/pdfs/Consolidated-FATF-Standards-information-sharing.pdf. Accessed 24 January 2018.

  6. 6.

    FATF (2007) Guidance on the risk based approach to combat money laundering and terrorist financing. High-level principles and procedures; p. 16. See also: FATF (2013) National money laundering and terrorist financing risk assessment.

  7. 7.

    Guidance on the risk based approach to combatting money laundering and terrorist financing. High-level principles and procedures. 2007, FATF/OECD.

  8. 8.

    See also Van Duyne and Levi (2005), Van Duyne (2013), Levi (2015); and Harvey and Lau (2009).

  9. 9.

    UNODC Publication Reports 2017.

  10. 10.

    Concha Verdugo Yepes, IMF Working Paper WP/11/177 Compliance with the AML/CFT International Standard: lessons from a Cross-Country Analysis, 1 July 2011.

  11. 11.

    UNODC (2017) Theft national level, police records. Financial and economic crime is lacking.

  12. 12.

    The Dutch Statistics Office. In a press release it was noticed that crime reduction appeared to be due to an aging population with younger people tending to stay at home, clinging to their smart phones and tablets.

  13. 13.

    R 33 ‘largely compliant’ looks very flattering and is not supported by assessors’ own annotations throughout the report with 64 instances of ‘statistics’.

  14. 14.

    Issued September 2016; 206 pages. Assessment team: eight staff; three reviewers 3.

  15. 15.

    The report observes in para 178 that “Austria has not shown results in line with Austria’s ML/FT risk profile as an international financial centre, with funds transiting through Austria where no predicate offence may have taken place.”

  16. 16.

    Issued April 2015: 213 pages. Assessment team: seven staff; three reviewers.

  17. 17.

    Issued September 2016; 216 pages. Assessment team: ten staff; five reviewers.

  18. 18.

    The MER (p. 21) does, however, refer to the NRA as identifying fraud as high risk.

  19. 19.

    It seems that the assessment team has also used the reports on the situation in Hungary, issued by the US Department of State.

  20. 20.

    Issued September 2016; 223 pages. Assessment team: seven assessors; three reviewers.

  21. 21.

    Issued February 2016; 230 pages. Assessment team: eight staff; three reviewers.

  22. 22.

    Issued December 2014; 206 pages. Assessment staff: ten assessors; three reviewers.

  23. 23.

    Issued December 2014; 206 pages. Assessment team: ten staff; three reviewers.

  24. 24.

    Issued April 2017; 216 pages. Assessment team: 7 staff; 3 reviewers.

  25. 25.

    Issued December 2016; 266 pages. Assessment team: ten staff; three reviewers.

  26. 26.

    The FATF seems to have shown a great degree of leniency given the gaps it has observed in US’ AML framework over the years. As admitted by the FATF: “The BSA AML/CFT regulatory framework has a number of exemptions, gaps and thresholds which do not appear to be justified or in line with the vulnerabilities identified through the risk assessment process.” MER USA 2016, para 10. p. 6.

  27. 27.

    There is a systematic bias in risk assessment: as the Recommendations use a dichotomy of ‘high’ and ‘low’ risks, while contrary to ‘high risk’ proposing a ‘low risk’ requires a burden of proof (and “strictly limited circumstances”), it is likely that the consequence will be a bias towards ‘high risk’. Sometimes an in-between ‘medium’ risk is mentioned, though without many consequences attached. The Interpretive Notes to Recommendation 1 mentions only “higher” and “lower” risk (pp 32–33).

  28. 28.

    The assessors did not raise the question whether such a bureaucratic layer would be commensurate to a low-crime country such as Norway.

  29. 29.

    This is not unlike the phenomenological school of the 1950s and 1960s, with its emphasis on total understanding (‘Verstehen’) which could mean anything.

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Author information

Authors and Affiliations

  1. Department of Penal Law, Tilburg University, Tilburg, The Netherlands

    Petrus C. van Duyne

  2. Newcastle Business School, Northumbria University, Newcastle upon Tyne, UK

    Jackie H. Harvey

  3. University of Manchester, Manchester, UK

    Liliya Y. Gelemerova

Authors
  1. Petrus C. van Duyne
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  2. Jackie H. Harvey
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  3. Liliya Y. Gelemerova
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Correspondence to Petrus C. van Duyne .

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van Duyne, P.C., Harvey, J.H., Gelemerova, L.Y. (2018). “What is all this good for?” A layman’s question. In: The Critical Handbook of Money Laundering. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-52398-3_9

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  • DOI: https://doi.org/10.1057/978-1-137-52398-3_9

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  • Print ISBN: 978-1-137-52397-6

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