The major Banks are the organised criminal enemy within!

It is somewhat ironic that on the day when the latest findings of the criminal excesses of RBS are announced, H.M.Treasury should have just published its latest volume of collected wisdom in a document entitled "...Anti-Money Laundering and Counter Terrorist Finance Report 2011-12..."

Reading this document, you would be forgiven for thinking that H.M.Government actually means to do something serious about dealing with money laundering. The language of the Executive Summary contains all the portentous warnings you might expect from a properly concerned agency of control, but when you begin to deconstruct the messages, you begin to realise what a complete bunch of mendacious clowns we now have in Government, because these provisions really mean that even less notice is going to be taken of the Money Laundering Regulations and laws than heretofore.

I say this because the British Government habitually demonstrates that it is not in the least concerned about the realities of this problem. They will talk about it, but If you were to ask the Prime Minister or members of his cabinet what the banks will do about the new money laundering proposals, they would airily observe that the banks will of course do everything in their power to comply with the law. They would say this because I suspect they believe it, and they believe it because they really are that stupid.

They are happy to go along with the fiction that the banks generally, will obey these laws, because to think anything else leaves them in a very vulnerable position indeed. If they were to suspect that the banks had no intention of complying with them, they would have to do something about it, so better to fall in line with the convenient fiction, and state that all is for the best in the best of all possible worlds! So, as a result, we get these pompous proposals being issued by Government, but living as they do in a fantasy la-la world of their own making, they do not understand that the banks have absolutely no intention of implementing these regulations, just as they have not properly implemented the AML regulations in the past.

This is part of the problem we face in the aftermath of the financial scandals of recent times. We have a Government that believes largely what the banks tell it, because too many of the friends of those in positions of power, are in banking and financial services. It is a natural Tory stamping ground, indeed many Tory M.Ps have dabbled in investment banking prior to entering Parliament. We are being very badly served by this present administration because too many of them are too willing to give a lot of support and credence to these criminal banking organisations. 

They are only too willing to protect their vested interests and those of their friends, because they find it impossible to perceive that the banks are a major criminal enterprise. To do so would undermine all their preconceptions about themselves, their class and their place in society, so bank reform doesn’t figure very highly on their list of priorities.

So, I thought I would review the Executive Summary of the new Treasury report to see what we can glean from its contents, comparing what the Mandarins want us to believe, and what the words really mean so we can evaluate its effective value. Try this for size!

"...The effectiveness of supervision to prevent money laundering and terrorist financing has never been so important. The range of threats the UK and other countries face continues to grow...”

Well so far so good, so why is it that the existing money laundering rules are so poorly regulated and banking failures to maintain a good compliance profile, prosecuted so rarely? What standard of effective supervision has the FSA applied in the last ten years, bearing in mind its importance as a Supervisor? It’s all very well the Treasury going on about the need for good supervision, but when the lead regulator is so poor at ensuring that its responsibilities are met, what is the point?

These are driven by the use of new technologies designed for illicit purposes and a range of actors who engage in illicit activity, including money laundering, terrorist financing, circumvention of sanctions and tax evasion.

This paragraph starts with the usual piece of bullshit padding to make it sound like HMT are on top of the job, but it's all pure puffery, because they never specify what they think they mean. They never specify because they don’t know, but they think it is enough to spell out scare stories! What new banking technologies designed for illicit purposes? Spell it out if you have such information, but don't make up stuff like this as if you were some tabloid scandal rag, it demeans you! The latter part is correct, but hang on, isn't Mr Cameron and his little sidekick, Mr Osborne keen on other people's foreign tax evasion? Don't they do everything they can to make foreign funny money feel as much at home, as possible in the UK? How else do you explain the number of non-domiciled ex-pats, Russian oligarchs, East European ‘biznizmenii’, many of whom are wanted in their home countries for fraud, crime and state looting, as well as a host of other wealthy tax exiles who want to make London their home? They are not coming to the UK to start businesses and create jobs, they are coming here to shelter their tax evasion and to hide their criminally-acquired wealth.

As for terrorist financing, well, Afghan terrorist money leaks in and out of the UK at will, thanks to Pakistani corporate exchange control failures, and the willingness of British banks based in the Gulf States, as well as in London, to ignore international laws on money laundering and openly launder as much as much funny money as they can lay their dirty criminous hands on. We have already seen how little HSBC were concerned when laundering drug money from Mexico, or how much notice Standard Chartered Bank took of US sanctions. They took a long hard look at the risks and went for the ‘business as usual’ route!

All the banks who have recently been fined for money laundering, whether foreign drug money, the proceeds of foreign sanctions busting, or moving the proceeds of their own criminality such as LIBOR fixing or PPI fraud, were acting openly and with full knowledge of their criminal actions. It is an unacceptable piece  of pretty piety to say that these were mistaken activities which were not intended, when they were clearly fully intended, and executed quite deliberately.

Many countries, including the UK, now have a high level of technical compliance with the global standards, set by the Financial Action Task Force (FATF). The focus now needs to shift to ensuring the investment made by governments, supervisors and businesses is used effectively to prevent, detect and disrupt these threats.

Can this be really true, or is this just another piece of spin blurb? What on earth is meant by ‘technical compliance?’ The UK banking sector doesn't give a fig about international money laundering compliance. It may have implemented systems and controls which give the impression of a semblance of ‘best practice’ compliance, but the reality of the compliance level is that it fits where it touches at best.

My experiences of banks and their compliance personnel is that they are only going through the most superficial of motions. We saw the paucity of compliance professionalism in the court hearings of the HSBC –v- Shah case, The banks’ attitude towards AML compliance is exemplified in the findings of the FSA in their high-level report of June 2011.  Such Suspicious Transaction Reports that are made are little more than a lottery, too many disclosures being made on the basis of a defensive posture, but without any real thought or scientific approach being given to the contents.

The banks have absolutely no desire to work in partnership with police or other law enforcement agencies. At a recent City dinner at which I spoke on the issues of AML rules, the overwhelming response from the delegates, all of whom were senior AML Executives from the major banks, was one of total contempt for the actions and workings of law enforcement.

One banker commented, “...we keep asking them to help us regarding those people whom we suspect of defrauding us, but they can’t seem to do anything. Why should we bother to send them any information about our clients...”

It did not seem to be clear to this Jerk that the police are not a free adjunct and a tax-payer funded part of his bank's fraud prevention mechanism, and that his risks were for him to manage, but his words enjoyed a lot of support. When I pointed out that these requirements were part of a legal process which they were legally compelled to comply with, the same banker’s answer was;

“...Fuck ‘em, who is going to enforce the law in these cases. How do they know whether what we send them is any use to them, I am not going to spend money employing a lot of staff to get engaged in all this disclosure analysis, it’s a complete waste of time and money...”

These attitudes were widely shared, as far as most of the major banks present were concerned, money laundering compliance is a total waste of scarce resources and is therefore simply ignored, in the wider scheme of things.

They rest content that the likelihood of the FSA doing anything about this paucity of compliance is negligible! The FSA proposals for closer regulation by the FCA are still awaiting implementation, but in the absence of any meaningful prosecutions for wilful failure to comply with the rules, they will fall into abeyance like all the rest. Themed reviews don't prevent money laundering!

Supervisors and businesses must work together to ensure resources are focused on the small percentage of transactions that present the highest risk and not on the majority of transactions, which are likely to be quite legitimate. This risk-based approach has now been further embedded by the FATF into the revised and strengthened global standards.

Ah yes, the much-trumpeted ‘risk-based approach’. Allow me to assure you that the RBA is a form of words which roughly translated means ‘doing as little as feasibly possible’! It means that regulated banks and other firms who are subject to global AML standards will now spend even less time on engaging with AML issues, reporting, disclosures, analysis, et all, because they can always argue that they are adopting a RBA, and they have perceived no risks! The RBA is the ‘get out of jail card’ for the lazy and incompetent, and criminous, and means that even less AML compliance will be observed than before. This is borne out by the next paragraph in the Executive Summary which reads;

Businesses should feel confident to use their risk analysis skills to make informed judgments about where risks lie and what action they should take to mitigate them. Supervisors should support businesses in this.

In other words, don’t worry too much about compliance, we are tasking your supervisors not to give you too hard a time! Then however, concerned that the message might have become a little too laissez faire, the next paragraphs of the Summary sounds a warning;

Equally, businesses should expect robust supervision and severe penalties, where appropriate, from law enforcement agencies if found to have failed to consider and act on the risks they face in business. The consequences of such failures have included the significant reputational damage rightly suffered by firms as a result of enforcement action. Not only do such failures impact upon those firms, they reflect badly on the reputation of London as a financial centre.

The impact on the City and the UK from such failures, in addition to other recent scandals, should not be underestimated. It is vital that supervisors and businesses work together to protect the reputation, integrity and competitiveness of the UK.

HM Treasury will maintain a focus on the effectiveness of supervision, in particular, for improving transparency and accountability. We will do this by continuing to work closely with the full range of supervisors, including Government departments and professional bodies.

These latter paragraphs are an intellectually dishonest form of words which meet the needs of the Treasury’s requirements to publicise these new provisions, while using the language of responsibility and legality.

In reality, they mean nothing, nor are they intended to. If the UK Government was really worried about the reputation of the London financial market, they would have taken a lot more trouble over ensuring that the banks in the City could not have behaved in this way.

They did not do so, but now they do not have the integrity or the will to hold the banks to account and make them pay for their crimes. The effect of this failure is to have turned the banks into an enemy within!

On paper, we have a legal regime designed to prevent and forestall money laundering. It is a global standard of legal best practice and it is underwritten by all the signatories to the FAFT concordat, of which the UK is one such. As part of that legal structure, the banks are required to act in partnership with the law enforcement agencies, to report and disclose transactions which they suspect are the proceeds of criminal conduct.

The banks have been given legal protections from civil suit at the hand of their clients for complying with these rules, and as they stand, they are frankly not an unreasonable set of standards, and designed to help, prevent and forestall international organised crime, including drug trafficking.

There is absolutely nothing preventing the banks from complying with these rules to the fullest and most proper extent. The only thing that causes them to draw back from this co-partnership requirement is their conditioning and their criminogenic culture which informs them that to share such information with law enforcement would be to work against their commercial interests and minimise their likelihood of making profits.

Let us be very clear. The banks do not care one iota about the possibility of likelihood that they might be handling the proceeds of criminal money. This, they will say, is not their concern, they are nor detectives or law enforcement agencies, let the police deal with those issues, but let us get on with the business of making money.

Trying to make the banks willing co-partners in the anti money laundering campaign has been an abject failure, one which we should have recognised all along. They are the most two-faced, hypocritical, perfidious group of individuals who will talk the language of best-practice compliance to regulators and government agencies, while in private they will cut the budgets for AML compliance to the bone, and only recruit those people who are going to knuckle their foreheads and do as they are told, which is not to ask any awkward questions. This is why they have to be forced to comply, and forced to undertake remedial exercises, spending money they do not want to spend.

When the banks are openly committing the level of crimes they have been guilty of in the recent past, when they are providing full service bank facilities for the Mexican drug cartels, when they are manipulating the LIBOR market, defrauding their clients in a wholesale manner, laundering sanctioned money in direct confrontation of the laws, then they have become the target for police action and focus. Interpol, Europol, SOCA, and the other agencies of investigation should now be positively targeting these bastards, with a view to using the most powerful legal weapons to prosecute and convict them!

They are no longer just making a few mistakes, they are an organised criminal enterprise in their own right. They are worse than the Mexican Cartels, the Cosa Nostra, the criminal gangs from Asia, the Russian Vory, they are worse because they are state-sponsored criminals, legitimised by their governments and underwritten by their tax-payers.

We must lobby to force Governments to understand that these enterprises are beyond the reach of reason, and that they must be brought down. The demise of a few criminal banks will not cause the collapse of Western capitalism, it will strengthen it in the longer term, and the time has come to see these mafioso locked away behind bars for as long as it takes.

Just in case you might have overlooked some of the offences these criminal gangs have committed recently, and the fines they have paid, refresh your memory with these.

1. $1.9 billion, HSBC, December 2012. Charge: Accused of money laundering activities tied to drug cartels in Mexico, and  terror-linked groups in Saudi Arabia.

2. $667 million, Standard Chartered, August and December 2012. Charge: Violating US Sanctions on transactions with Iran, Burma, Libya and Sudan.

3. $619 million, ING Bank NV, June 2012. Charge: Covering up fund transfers in violation of U.S. sanctions against Cuba, Iran.

4. $536 million, Credit Suisse, December 2009. Charge: Allowing clients in Iran, Libya, Sudan, Myanmar and Cuba to conduct financial transactions in contravention of international sanctions.

5. $470 million, Barclays, November 2012. Charge: Rigging electricity market pricings

.

6. $450 million, Barclays, June 2012. Charge: Manipulating Bank Libor Rates.

7. $350 million, Lloyds TSB Group. Charge: Allowing Iranian and Sudanese clients access to the U.S. banking system.

8. $298 million, Barclays, August 2010. Charge: Allowing client payments from Cuba,

Sudan.

9. $233 million, Royal Bank of Scotland, June 2012. Charge: Manipulating Bank Libor rates.