Author: Doug Hopton
ISBN No: 0 566 08639 5
Review date: 16/12/2025
No of pages: 192
Publisher: Gower
Year of publication: 11/09/2012
Brief:
Money laundering is more than another box to tick, and it applies to more than banks, according to a guide to the subject.
The clue is in the sub-title; ‘A Concise Guide for all business’. Doug Hopton kicks off with the traditional definition of laundering: ‘a process by which criminals attempt to hide the origins and ownership of the proceeds of their criminal activities’. But, as he adds, money laundering today does not have to involve money: “One must also not overlook the fact that you do not have to actually move the criminal proceeds to launder them.” It’s as much about disguising ownership of property, as it is about converting, or washing, criminal property, he says.
Directives, laws
Doug Hopton then takes us through European directives, US and (mainly) UK laws and regulations – largely the Proceeds of Crime Act and the Money Laundering Regulations 2003. Yes, it is a subject for financial institutions – a bank and others regulated by the Financial Services Authority will have a MLRO (money laundering reporting officer) that staff can report concerns to. Hopton, who was with Barclays for 37 years – he is now a consultant – used to be the banking group’s MLRO. As the law, printed in black and white in long appendices at the end of the book makes clear, guarding against laundering is also for real estate people, lawyers, casinos, and any company that does business with anyone. For instance, what if the ‘dirty’ ill-gotten money, that a PEP (a ‘politically exposed person’ – a government minister, or civil servant, say) is trying to make legitimate, has come from fraud or bribes to do with your company, or a customer of yours? In a word, KYC (‘know your customer’). Hopton devotes a chapter to KYC, which is another phrase for client due diligence: “It is the fundamental basis of customer relationships and is also the basis on which compliance with the money laundering legislation is built.” Not only ought you to make sure that the customer is who he says he is; is that customer legitimate? And how do you verify someone if you never meet them and do everything over the internet? Also, a check is not merely something you do before you start a business relationship – you keep on checking. And what if you suspect something, but lack the proof? The law speaks of ‘reasonable grounds to know or suspect’ and as Hopton reports (the book is up to date enough to speak of 7-7 and 21-7), UK courts have yet to test what ‘reasonable grounds’ are. Another tricky area: what if a member of staff discloses anything to a client that might prejudice a police investigation – and tip off the suspect?
Risk-based approach
Doug Hopton talks of a risk-based approach, and not treating all your customers the same: “You must risk-assess all products so as to identify and differentiate between those that have a low money laundering risk and those with a higher risk potential.” He ends with a short chapter on training, and awareness. To sum up, if your business does transactions that may involve money laundering, you could fall foul of the regulations and laws – and as Doug Hopton makes plain from the start, this is serious stuff after 9-11 and terrorist financing – whether by crime or donations – for travel, training and so on.
