On July 7th
, we hosted our webinar on current trends in anti-money laundering (AML) and counter-financial terrorism (CFT) with the participation of a distinguished panel of experts.
Our panelists included:
- Hon. Roy Cullen, P.C., C.A., Senior Public Policy Consultant, Canada
- Dr. Nicholas Ryder, Professor in Financial Crime, UWE Bristol, UK
- Stefan D. Cassella, Asset Forfeiture Law LLC, USA
The moderator was Marios Siathas, General Manager, European Institute of Management & Finance (EIMF).
For those of you who missed it, we’re excited to announce that the event’s full transcript is now available and can be downloaded below.
Here are some of the event’s main questions and highlights. Hope you find this information useful!
How would you define money laundering and financial terrorism?
“Money laundering is a method used to disguise the origin of funds, …almost always from illicitpurposes, criminal activity, corruption, tax evasion…so it's a way of disguising the original origin of the money because the origin of the money was either criminal or illegal.”
“Money laundering to me is a very elastic term…It could mean simply trying to hide money so that its connection to a particular event or a particular person is disguised and then the money can't be found. It could also mean—in a term that I call reverse money laundering—that rather than trying to disguise the origin of the money, the effort is being made to disguise its purpose.”
What's the estimate on money being laundered per year around the world?
“In the UK, the most recent statistics were published in October  by the National Crime Agency and...it's somewhere between 35 and 90 billion pounds per year…The estimates are very broad and very wide-ranging…Between 1.5 and 2.5% of global GDP would be some of the normal figures according to the IMF and the Financial Action Task Force.”
What are some of the major trends in AML and CFT these days?
Stefan Cassella: “Money laundering methods are becoming more creative and more complex…There's a lot of money laundering through shell corporations that are incorporated in countries that don't require the naming of beneficial owners…There are also several recent examples of laundering by Russian organized crime that are very sophisticated. The mirror-trading example, which involved parallel securities transactions in both Russia and the UK. The Russian laundromat, which involved false debts created in foreign courts and then enforced by foreign judges who were corrupt.”
Roy Cullen: “One of the particular issues that I've been working on is the question of beneficial ownership…Even though you have a public declaration of beneficial ownership, that gives people opportunities to challenge that, it still sort of poses the question: how good is that beneficial ownership information? So if you make a declaration of beneficial ownership, there must be sanctions if it ultimately shows that that beneficial ownership declaration was false or misleading.”
How is information technology helping money laundering?
Nicholas Ryder: “I just think it's natural progression…it's just another example of how the money launderer is using new forms of technology to transfer funds possibly in less regulated areas…I think that the UK is still trying to find its feet a little bit and help tackle the e-money and virtual money and virtual currency in terms of money laundering as well.”
Stefan Cassella: “In other parts of the world, in parts of Africa, payments are often made by having stored value on telephones and the processing is through the phone company, and if you want to be aware of the money laundering activity going on in that part of the world, you have to be focusing on an entirely different industry, different technology and different methods of payment.”
Roy Cullen: “I think there might be a prospect that technology can actually help in the fight against money laundering in certain respects…You look at the Panama Papers and the way that that information sort of digitally spread around the world…if you look at social media, if there are public declarations of beneficial ownership, suddenly you can get a lot of chatter on social media saying the beneficial owner declared here is X-Y-Z, but this doesn't make any sense because we know that…so it gets that discussion going and then can build on that and perhaps shed some light on some phony declarations.”
What is KYC (Know Your Client) and how should this policy best be implemented?
Nicholas Ryder: “Part of the concern from the UK banks has been the sheer amount of KYC from money laundering and terrorist financing…Cost has been a huge issue and research suggests that compliance costs in the UK have dramatically increased over the last five to six years where costs could be, based upon estimates last year, up to 5 billion pounds per year.”
Stefan Cassella: “If I had it my way, the KYC rules would require knowing not only the originators and the name of the corporation, but knowing the beneficial ownership. There's a movement to try to extend, though, your customer's role beyond financial institutions to…law firms and other gatekeepers…One has to not only know one's customer but also know one's customer's payer. There should be some rules regarding receipt of money from persons with whom you had no business association.”
Roy Cullen: “My view is that inherently there's a conflict of interest and that has to be managed right at the top of an organization to make sure that someone isn't just going through the motions of doing the due diligence and then gives a report to their boss saying, “Well, I've checked it out as best I can and seems to be all okay,” and someone signs off and a $100 million check is deposited.”
How can we have official AML rules to ensure the world is clean without stifling business transactions?
Stefan Cassella: “There is a concern…that a lot of financial institutions follow the rules by engaging in box ticking. They want to know what is the minimum they're required to do to avoid sanctions and they'll do just that. In other words, they’re interested in not so much in detecting the crime and advising law enforcement of its existence, but in making sure that they do not suffer their own liability…one of the major difficulties is to continue to encourage the financial institution to be partners with law enforcement and governments and regulators and not adversaries.”
What are some useful regulations or tactics in combating money laundering?
Stefan Cassella: “One of the most effective tools that governments have in the money laundering and terrorist financing area is asset forfeiture…It's all well to have KYC programs and to detect crime and to enforce those, and it's all well to be able to prosecute money launderers criminally, but frequently we have found the money, but we have no ability to lay hands on the perpetrator, because he's a fugitive, he's unknown, he's in a foreign country…But, through non-conviction based, or civil forfeiture, governments can seize those assets and make sure they're not used for an unlawful purpose and force the owner of the money to come forward and appear in court and defend his ownership of that money.”
How are terrorists using social media platforms to fund their operations?
Nicholas Ryder: “What we're beginning to see is terrorists beginning to use Twitter, Facebook, other forms of Instagram…to actually ask for donations…The US State Department in 2014 and 2015 has identified some ISIS financiers who use Twitter and Facebook to attract finances by social media. And so they are now part of the sanctions list. But what we found was that when the social media company takes action and removes them from the public forum, they can simply set up another account in a matter of minutes. And in some of these instances, those named by the US Department of State and Treasury still have 150,000 followers on Facebook, for example…We've now seen more lone wolf terrorist financiers, and recently reports have concluded that anybody with a cell phone or a tablet can be an international terrorist financier. And I think that raises some concerns about how can the law actually prevent them.”
Other questions included in this event were:
- How will the recent legislative measures introduced in the UK, such as the provision of Criminal Finances Act 2017 and the Money Laundering Regulations of 2017, help prevent terrorist financing?
- What sorts of mechanisms are in place by both the IRS and the Securities Exchange Commission to counter money laundering? What does the Foreign Corrupt Practices Act entail?
- How can parliamentarians contribute in the fight against money laundering?
- What are the changes brought about in the EU’s Fourth AML Directive?
- What have the authorities done or are doing to prevent the use of bitcoin to finance illicit activities or the purchase of illegal goods? What sort of problems have emerged from the need to regulate a currency that in spirit was designed not to be regulated?
- How is money laundering used for tax evasion and avoidance purposes?
Check out the full transcript HERE
for more information!