Beware of thieves making beguiling promises!

One of the many things the City of London does brilliantly is the way in which it consistently lobbies Government to mitigate the effects of regulatory requirements which it finds inconvenient. The lobbying industry is kept busy throughout the year and they have no shame. No matter how appalling or dishonest the conduct of their client constituency; regardless of how many crimes they commit; despite all their mafia-like conduct, the lobbyists will continue to buttonhole civil servants, MP’s and ministers to minimise some rule or requirement which is getting in the way of profit. The thieves they represent can always be depended upon to come up with some beguiling promise to the future (which of course they have no intention of keeping)!

The latest scam which the bankers are hoping to perpetrate is to get George Osborne to amend the money laundering rules which are designed to prevent large quantities of mainstream criminal money from finding a safe-haven in the UK.

What they are hoping to achieve is to water-down, to a state of complete ineffectiveness, regulations which are designed to prevent corrupt foreign Heads of State, their immediate families, their political supporters and their dishonest facilitators from finding a safe home for the vast amounts of money they have sequestered from their home state coffers. These rules also apply to foreign corruptors, drug profiteers, arms-dealers, people-traffickers and foreign warlords who rape third world countries to steal their natural resources, and then stash the money in safe banking environments, like the City of London, Zurich and New York.

How does the City intend to achieve this desirable state of affairs?

By encouraging the usual bunch of lick-spittle toadies, poltroons and other Tory Members of Parliament, coupled with the usual suspects and apologists for banking criminality like the British Bankers’ Association, to support calls for the ‘cutting of red tape’ as a means of helping British business.

They will make it sound so benign that you could be forgiven for thinking that there was a shelf-full of law books out there, all crammed full of texts and designed to deliberately obstruct British business from achieving its full potential! No-one will ever bother to explain to you that these laws are specifically designed to put the greatest pressure on major foreign criminals to make hiding their ill-gotten loot as difficult as possible.

If you were to listen to the bankers and their prostitute advisers and enablers, you could be given cause for thinking that the banks were being unreasonably denied access to this money. No-one would even bother to stop and suggest that the whole pint of these rules was to prevent major criminals from profiting from the proceeds of their crimes.

This is where politicians become so two-faced!

Those of you who may have read previous blogs in this series will know that I have often commented on the reasons why the Government appears to refuse to enforce the laws dealing with financial crime, money laundering and many other forms of economic skulduggery!

Why, for example, when HSBC was outed as being a serial money launderer for the Mexican mafia drug cartels, did David Cameron not step in and demand that the laws on money laundering be enforced? 

David Cameron and George Osborne must know perfectly well why we have such laws. 

Even if they find it difficult to understand, they have any number of Government lawyers and advisers who can explain to them the purpose of these laws and how they work. Yet, they insist on pandering to these deliberately ill-spun misinterpretations that such laws are just an encumbrance to British business and enterprise!

The laws which British banks are now moaning and bleating about deal with what are called ‘politically exposed persons’ and are sensible, well-intended, and not difficult to obey or apply. They require banks to submit any applicant for business who comes from or appears to come from a range of State-oriented functions to special identification procedures, in order to be able to ensure that he/she is properly identified, and any untoward concerns about him/her or their source of funding is recognised or identified.

Quoting from the handbook published by the global supervisory agency the Financial Action Task Force, the following reasons are relevant;

“...A politically exposed person (PEP) is defined by the Financial Action Task Force (FATF) as an individual who is or has been entrusted with a prominent public function. Due to their position and influence, it is recognised that many PEPs are in positions that potentially can be abused for the purpose of committing money laundering (ML) offences and related predicate offences, includingcorruption and bribery, as well as conducting activity related to terrorist financing (TF).

This has been confirmed by analysis and case studies. The potential risks associated with PEPs justify the application of additional anti-money laundering / counter-terrorist financing (AML/CFT) preventive measures with respect to business relationships with PEPs.

To address these risks, FATF Recommendations 12 and 22 require countries to ensure that financial institutions and designated non-financial businesses and professions (DNFBPs) implement measures to prevent the misuse of the financial system and non-financial businesses and professions by PEPs, and to detect suchpotential abuse if and when it occurs...”

So, it can be immediately seen that such requirements are put in place to avoid the likelihood that a client might be engaged in a wide range of crimes, including facilitating the proceeds of terrorism.

The banks must simply submit such applicants to another layer of due diligence before dealing with them, and the main board has to approve their being taken on as a client. These rules really are not onerous, but they can take time to complete and this is where the banks are unwilling to engage.

They know that some former dictator of some tin-pot republic may want to hide his ill-gotten loot in a hurry, and if they have to wait for weeks while the requisite regulatory requirements are completed, he may get anxious and seek other support from another bank. That is why our banks hate having to comply with these particular regulations, because they can mean serious criticism and even regulatory sanctions from a regulator if they are not complied with, but at the same time, the client is getting twitchy, particularly if there is a likelihood that he may be facing a UN or US investigation about his conduct!

And this is why these banks must not be allowed to influence Government in order to get them to amend these laws. This is why we have to expose the double-standards and the deliberate untruths which the apologists for the criminal banking industry are deliberately adopting.

Right now, as it is reported, ministers are looking to cut red tape in the government’s anti-money laundering regime, only a matter of a few weeks after David Cameron promised Britain would not be a haven for dirty money! 

This is what I mean about two-faced political standards. He makes these statements fully knowing that City of London is awash with foreign criminal loot!

Cameron knows he will be severely criticised if his government fails to get the balance of these demands right, not least because of his recent vow: “London is not a place to stash your dodgy cash.”

Mr Cameron said on a visit to Singapore last month that properties in London were “being bought by people overseas through anonymous shell companies, some with plundered or laundered cash”.

Cameron knows only too well that thousands of dubious foreign criminals, tax evaders, corruptors, and bribe merchants look upon the UK as a safe home for their looted money, and he knows that this makes London complicit in the handling of the proceeds of these foreign crimes, despite the fact that we have serious laws designed to prevent such activities. 

But what is he to do when his ministers come whining to him that their friends in the banks are getting antsy because they are being required to comply with some inconvenient regulatory demands.

Sajid Javid, business secretary, recently announced a review to reduce complexity in the system to ensure the rules were not “unintentionally holding back” British business.

What an exercise in ‘doublespeak’ – what a masterpiece of civil service weasel words! It’s all there: ‘Complexity holding back British business’!

Companies and banks have complained to ministers that rules intended to stop black money flowing into Britain have also imposed extra costs and time burdens on innocent companies and individuals. Critics also say that the crackdown carries an unintended humanitarian cost by adding charities and non-governmental organisations to the ranks of the “de-banked”.

But, the minister insists the review — part of the government’s plan to save businesses £10bn by cutting red tape — would not weaken the UK’s fight against money laundering.

Mr Javid said the review would look at the implementation of existing legislation by national regulators such as the Financial Conduct Authority and HM Revenue & Customs: it was not about scrapping rules.

Well, he has got to say that hasn’t he? The fact is, that once he starts making these sensible rules easier, it will mean that even more dirty money will flood into the City, but with far less chance of interdiction this time.

It will also make life a whole lot easier for the other ranks of criminal money facilitators, on the lawyers, estate agents, accountants, and company formation agents. Once the important rules on politoically exposed persons are watered down, they will be free to continue facilitating the movement of foreign criminal proceeds without let or hindrance.

Ministers also say they are concerned about the complexity of the system and the differing interpretations among regulators. This is yet another piece of ministerial wabble-babble, trying to give the impression of wanting to maintain the best standards while making it easier to do business at the same time. The problem is that when it comes to dealing in foreign ‘funny money’ you can’t have it both ways. 

But never say a British politician won’t try and engage in a triumph of hope over experience.

“This new review is about making sure the rules we have to protect our strong financial services industry from abuse are not unintentionally holding back new and existing British business,” Mr Javid said.

What is this stuffed suit talking about?

As a former career banker with time spent working in both South America and in the Far East, he will be well versed in the schemes and machinations of the money movers who spend their time rolling the ball of hot black money around the world. He will know all too well what will help to prevent that dubious mazuma from finding a safe home, and he will talk the same language as the dodgy bankers and their oily PR people when they seek interviews with him.

Others of course know only too well that removing these important protections will lead to increased criminality..

“The problem with anti-money laundering regulations in the UK is not the content of the regulations but the fact they aren’t properly enforced,” said Stuart McWilliam, senior campaigner at Global Witness.

Mr Javid said the review of financial regulation was one of six chosen in the first wave of a government programme to save £10bn from red tape costs for business.

Harriett Baldwin, City minister, another career banker whom you might assume would know about the money laundering regulations, came out with the usual series of ministerial bromides, written no doubt by some teenage special adviser, when she claimed Britain was “leading from the front” in the protection of the “integrity” of its financial centre, but then admitted the regime needed to be made more effective.

You see, it’s all the same message being orchestrated by Whitehall.

‘Oh look how good we are at dealing with foreign criminal money, but how can we loosen the impact of regulations so we can let even more dirty money into the system?

The British Bankers’ Association inevitably welcomed the initiative,( well they would wouldn’t they), saying it looked forward to seeing the details. “We want to make sure the system is targeted against criminals while not impacting disproportionately on genuine customers.”

The CBI also welcomed the review. Matthew Fell, CBI director for competitive markets, said there was evidence to suggest that the anti-money laundering rules were acting as a big barrier to companies getting the trade finance they needed to export to new markets.

It’s all very well making these unsustainable statements to populate a press release, butI call upon Matthew Fell here and now to produce even a scintilla of evidence to prove how the AML rules act as a big barrier to obtaining trade finance. 

“We need to boost the number of UK firms exporting their products and services around the world to sustain our long-term growth and access to finance is critical to that effort,” Mr Fell said.

It is well known that many terrorist groups help to finance themselves through dodgy trade finance arrangements, but then it is the responsibility of the bank putting up the finance to demonstrate that it knows its customer, and knows what kind of business the customer is engaged in. Again, this isn’t difficult, it just needs honest application, and an intention to act honestly.

If you know how to read ministerial statements, you will know that this new regime is already virtually a done deal already.

The main message is about making Britain’s regulatory systems fit for purpose, while not getting in the way of business.

Once and for all, the AML rules are there to stop countries from taking a free ride on the back of other international rules, and profiting from a wilful ignoring of the laws designed to prevent and forestall money laundering.

Once these provisions have been repealed, the City of London will have nothing standing in its way to prevent all the dirty money in circulation from ending up here, which is of course, what the bankers want. They don’t care about reputation because they have none, well alright, they have one which is of the worst kind.

If this reform does happen, and I have every expectation that it will, we should be thoroughly ashamed of ourselves.!