Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

How goes the war against laundering?

How goes the war against laundering?

If a willingness to do the right thing were the fuel that powered the attack on money launderers, that initiative would be a total success. Compliance professionals, regulators and law enforcement officers are motivated, but we struggle to think outside the box and change our method of operation. It’s time for us to work together and recalibrate.
We have a pretty good idea about the amount of illicit funds that slip past the efforts of law enforcement, regulators, and the private sector. One need only assess the findings of the UNODC about their estimates of illicit funds seeking money laundering services each year. Their rough assessment is $2 trillion annually from all walks of crime (tax evasion, sanctions busting, drug trafficking, white collar crime, etc.) With regard to drug trafficking alone, the estimates vary, but are in the range of $400 billion a year.

If you assess the real seizures of drug traffickers’ assets per year, not fines imposed on banks and their shareholders, you’ll discover that there is no way that law enforcement seizes more than $4 billion a year in actual drug trafficker assets. Even if they achieved that, it would translate to 1% of the estimated yearly revenue from drug trafficking. I share the view of the former Executive Secretary of FATF, David Lewis who said, “Everyone is doing badly, but some are doing worse than others”.

There are many core issues for our poor performance in AML/CFT, but one of the major challenges is that “the good guys” are out resourced. Given the decades of success criminal organizations have had laundering their fortunes, they have an ever-increasing ability to corrupt politicians, law enforcement, military, judges, and more. The reality is, too many nations are clearly narco-states that are starved for the rule of law and justice. Criminal organizations own the will of presidents, senators, heads of law enforcement, and military leaders in more countries than many people realize.

A fact many can’t accept is that criminal organizations are serviced by armies of dirty bankers, businessmen, financial service providers, lawyers, and others that are extremely sophisticated. They often wrap themselves in cuddly blankets of plausible deniability and hold their noses as they service dirty money. Law enforcement should be targeting these facilitators, but the global law enforcement community has failed to develop a comprehensive global plan to identify and prosecute these high-level launderers.

Law enforcement in general is reluctant to apply the necessary resources to attack sophisticated money launderers on a continuing basis. This occurs because law enforcement budgets are driven by statistics (numbers of arrests, numbers of seizures, etc.) Investing big resources in a high-risk initiative to identify and prosecute highly sophisticated launderers is often shunned in exchange for going after the low hanging fruit – smaller, less sophisticated criminals. There are exceptions to this phenomenon, such as the remarkable achievements of DEA’s Special Operations Division (SOD), but they are a very small portion of DEA and the entire law enforcement community.

Regulators and some in the private sector commit inordinate resources to a “tick the box” mentality thought to protect the corporation, rather than focusing on risk assessment and devoting meaningful initiatives to address account relationships that clearly carry the greatest risk. Spending millions on software that pumps out tons of SARs that overwhelm the system, while hiring a small army of inexperienced personnel to address compliance issues, is window dressing. If you look at the Deferred Prosecution Agreements filed over the past decade or so, you’ll find a hoard of institutions that admitted to willful criminal offenses to facilitate the movement of illicit funds. That goes to the core of institutional will, not falling victim to sneaky sophisticated accountholders.

There is far too little information sharing and cooperation between law enforcement, regulators and compliance professionals. I can’t count the number or times a compliance officer has told me, “We sent in SARs on this issue and we never got any feedback from the government. It was like sending information into a black hole.”

There is no incentive in the private sector to reward an account relationship manager for blowing the whistle on an account that appears to morph into a customer that appears to be involved in high-risk transactions that may relate to illicit activity. Until management rewards a concern for corporate integrity by a sales person that blows the whistle on an account that otherwise brought that sales person high commissions, account relationships managers will more often see the glass half-full and claim “it’s compliance’s job”. Management can fix this.

The poor AML performance by some nations, especially some in the middle east, isn’t properly addressed because those nations are needed by the western world as strategic partners on issues totally unrelated to AML. Assessing and addressing AML threat needs to be done on an even playing field. One need only look at the ICIJ’s Pandora Papers reporting to see how AML failures in some nations are ignored.

I could go on about many more reasons why I agree with David Lewis about the state of affairs relative to money laundering. The real problems are problems that are endlessly ignored. In my opinion, we don’t need the next new product that is supposed to do miracles. New technology is only one small tool in a potentially very large toolbox.

We need to stop ignoring the elephants in the room and improve the fundamentals. We need to more broadly embrace risk-based analysis, reward people on the sales side of business for truly embracing compliance, develop initiatives enabling a more robust and meaningful dialogue between the private sector and law enforcement, and establish a global law enforcement initiative focused exclusively on identifying and prosecuting the most sophisticated money launderers on this planet.

This law enforcement initiative needs to resume using long-term undercover operations that put solid evidence before juries, enabling courts to put corrupt professionals behind bars for decades at time. Simply fining institutions and accepting a claim that billions got laundered because of a systems failure feeds the fundamental reason we never see 99% of the underworld’s fortunes until they buy the rule of law and political will of another country. Let’s redirect our willingness to do the right thing, take off the gloves, and attack the elephants in the room.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
Budapest Central European Fashion Week Kicks Off
U.S. Celebrates Labor Day
Hungarian National Team Captain Scores Epic Goal
EU is getting aggressive: Four AfD Candidates Die Unexpectedly Ahead of North Rhine-Westphalia Local Elections
×