Calling him a liar to his face - How Sir John Pease of Standard Chartered has been forced to eat his words about sanctions busting!

One of the less enlightening elements of the way in which large banks and their senior management have responded to the wave of regulatory interventions they have brought upon themselves by their own criminality, has been their use of the PR advisers with their carefully-crafted weasel words, which have been used to down-play the level and degree of culpability which has so exemplified the banking sector's criminal wrongdoings.

It is typical of the way in which these institutions seek to position themselves in the best possible light, and how they refuse to acknowledge that their conduct has been criminal, in order to deceive their clients about their true behaviour, because they know that without these subterfuges and economic truthfulness, it would inevitably open them up to other criticism and contumely.

It is almost as if these institutions believe they have right, indeed, a positive duty, to make as little as they can of the opprobrium which has been heaped upon them, and to seek to find ways of minimising their criminality and their thoroughly dishonest behaviour.

There is a criminological explanation for this kind of behaviour, it is called 'Techniques of Neutralisation'. I intend to rehearse this phenomenon here because I believe that in it, we will find valuable explanations for recent public actions and statements by banksters.

Gresham Sykes and David Matza were two US criminologists who wanted to build upon Edwin Sutherland’s 'Differential Association' theory which states that an individual learns criminal behaviour through;

“(a) techniques of committing crimes and;

(b) motives, drives, rationalizations, and attitudes” which go against law-abiding actions (Sykes and Matza, 1957:664).

 

These techniques reduce the social controls over the perpetrator and are applicable not only to specific juvenile offenders, but also white collar criminals.

Neutralization is defined as a technique, which allows the person to rationalize or justify a criminal act.  There are five techniques of neutralization; denial of responsibility, denial of injury, denial of the victim, condemnation of the condemners, and the appeal to higher loyalties. 

Denial of responsibility is a technique used when the deviant act was influenced by an outside force. This technique goes beyond looking at the criminal act as an accident.  The individual offender feels that they are drawn into the situation, ultimately becoming helpless.  These offenders feel that the environment within which they have to work (in these cases, what they perceive as a degree of over-regulation, or of too many legal requirements with which they have to comply), eventually result in their committing criminal acts.  A common statement used can be often heard;  “It was not my fault.”

 

Denial of injury occurs when the criminal act causes no physical harm to an identifiable victim.  Criminal acts are deemed deviant in terms of whether or not someone gets physically hurt, and it becomes very difficult if not impossible to focus attention on a large group which is hurt financially. Using this technique the offender views certain kinds of fraud such as PPI as merely 'clever business'. “I assumed that a criminal action meant hurting someone, we did not hurt anyone”

Denial of the victim is used when the crime is viewed as reasonable conduct towards persons who are not deserving of better treatment.  This technique may be used by those who treat their clients like 'mugs' or 'muppets'.  “ Anybody this dumb deserves to get screwed.”  Much of this attitude can be seen in the fraudulent selling of interest rate derivative swaps. A common observation under this heading is 'If we didn't take the money, someone else would have done'.

The technique called the condemnation of the condemners, also known as 'rejection of the rejectors', places a negative image on those who are opposed to the criminal behaviour. The offender ends up displacing his/her deviant behaviour on those they are victimizing and also viewing the condemners as hypocrites,of acting outside the scope of their authority. The behaviour of many City commentators, fellow apologists and banksters over the way in which the New York Financial Services Commissioner dealt with Standard Chartered Bank would fall into this category.

Finally, the appeal to higher loyalties technique is used when the person feels they must break the laws of the overall community to benefit their own particular identified group or /institution. This technique comes into play when a bankster gets into trouble because of engaging in significant risk-taking to deliver extra  profit for his institution. The appeal is to other members of his elite group or industry sector, requiring their support for actions which they have all engaged in at one time or another and which are ideally accepted within the special group as being legitimate  for the greater interest of the institution. A common observation would be 'It cannot be criminal, everyone does it'.

These techniques are regularly resorted to by the banksters when they have been caught out cheating, stealing and defrauding their clients, the market more generally, or flouting international laws. They are deeply offensive to anyone who is familiar with the criminology, and they identify the banksters and their culture as being on a level below bottom feeding, swamp-life in the evolutionary scale of development.

Well, it was reported on Thursday 21st of March that Standard Chartered Bank have been forced into a humiliating apology to US Regulators for comments recently made by the Chairman, Sir John Peace about the bank's recent misconduct over its dealings with Iran.

At a recent press conference on 5th March, dealing with banker's remuneration, questions were asked "concerning individual employee conduct and compensation" following the deferred prosecution agreements in the United States over the Iran sanctions breaking affair.

Sir John had replied, when asked about bonuses for executives: "We had no wilful act to avoid sanctions; you know, mistakes are made – clerical errors – and we talked about last year a number of transactions which clearly were clerical errors or mistakes that were made."

These words, let us state clearly here and now, are deliberate lies, and a classic example of one of the techniques of neutralisation because they are a complete and outright denial of responsibility.

Back in December 2012, Standard Chartered Bank negotiated a deal with US Regulators for their criminal actions in flouting US sanctions against Iran. First, the negotiations which had been dragging on for some months with the New York Department of Financial Services, were finally brought to a head when the Americans threatened to withdraw the bank's licence to do business in New York. Subsequently, the bank entered into a Deferred Prosecution Agreement settlement with the Justice Department, and paid a series of fines amounting to $667 million dollars.

The important issue at stake here is what are the implications of the Deferred Prosecution Agreement (DPA) which the bank entered into to get out from under. The New York state regulator accused Standard Chartered of running a "rogue institution" that conspired with Iran to hide more than $250 billion in illegal transactions for nearly a decade. The bank at the time said the department's findings didn't present "a full and accurate picture of the facts." However, It nonetheless reached a final settlement with the department in September and with the four other authorities in December. 

Under the settlements, Standard Chartered acknowledged it had removed or omitted Iranian information from U.S. dollar wire payment messages, and that it and its employees had engaged in criminal conduct. The agreements Standard Chartered made last year required it to admit wrongdoing over its Iranian dealings and pay fines in exchange for avoiding prosecution. The U.S. can prosecute the bank if it believes the terms were violated. 

Having been privileged to sit in US courts and observe these agreements being arrived at, I can report that the process is both formal and frankly compelling. The person or the institution concerned is asked very clearly whether they admit the truthfulness of the admissions they are about to make. They are told in no uncertain terms that they are not being forced to make these admissions and that if they wish to, they can roll the dice and go to trial. They are warned of the consequences of not abiding by the terms of the agreement, all of which are rehearsed with them, and they are cautioned that the agreement can be rescinded at any time in the deferral period if they violate the deal. There can be no question that they do not understand the entire terms of the process, and no-one who has witnessed the process could accuse the US authorities of 'holding a gun to the head' of the institution. These processes are held in open court or in a Judge's chambers, and they are very formal affairs and intended to be taken seriously.

Having read Sir John's public denial of his bank's wilful culpability in the Iranian sanctions matter, the US authorities have acted swiftly, because Sir John was now in breach of his public undertakings made when the deferred prosecution agreement was entered into. 

Sir John has been a complete fool for making his statement on March 5th, because it flies in the face of the plea agreement made with the Court and denies the truth of the situation admitted in America.

Bur Sir John has been forced to see the error of his ways and has been forced to retract his objectionable remarks in a highly personal and abject mea culpa on behalf of the Bank on Thursday. In a letter to the Stock Exchange, he has been forced to admit saying things that were “legally and factually incorrect”, in other words, they were in breach of the DPA and lies!

“I made certain statements that I very much regret and that were at best inaccurate,” he said, and apologised, personally and on behalf of senior executives. For good measure, he had to get down on bended knee and accept “on behalf of the bank and its employees, for past knowing and wilful criminal conduct in violating US economic sanctions laws and regulations, and related New York criminal laws, as set out in the deferred prosecution agreement”. 

So, there you have it, this humiliating episode is a perfect case study of the techniques of neutralisation and also in the implications of the way in which British bankers seem to believe that despite whatever important agreements they come to with foreign regulators, they can come home and seek to lie and dissemble about the activities to which they have just made vitally important admissions in a U.S.Court hearing.

It is quite incredible that this has happened, this is the arrogance of these people writ large. It says quite openly, 'we don't give a flying fuck for the Americans or their laws', but this is the state of affairs in the UK, where members of the Great and Good will lie themselves blue in the face about their wrongdoings, sooner than admit the plain unvarnished truth, which is that they are a bunch of lying scumbags!

Thankfully, the US Regulators, who are presently smarting under the lash of the new Senate hearings in which serious questions are being asked about how best to deal with such banks in future, have got the message and have forced Pease into a humiliating acknowledgement of his failings.

Whether Sir John's capability to carry on in his role of Chairman of Standard Chartered is in any doubt, is a matter for the relevant authorities and the shareholders. Some, like myself, believe that he should go, resign now to prevent the public face of Standard Chartered from being held up to any further ridicule for having a confirmed liar on its Board.

The problem is that all his City mates will be quietly clustering around him, patting him on the back and saying "...there, there old boy, could have happened to any one of us, don't worry about it, who do the bloody Yanks think they are anyway..."

And all the British press will be slagging off the Americans and accusing them of using their powers to bully Britain because they are jealous of us as a financial centre. 

And the usual apologists will be crawling out from under their stones to rally round the flag, I expect to see BoJo at any second! 

And that, my friends, is really a big part of the problem!

Covering up the truth - Quis custodiet ipsos custodes? How the Banking Commission is denied access to important evidence on banking crime!

The Parliamentary Commission on Banking Standards issued a call for evidence in July  2012 . 

  
The terms of reference of the Commission were to consider and report on:

a) professional standards and culture of the UK banking sector, taking account of regulatory and competition investigations into the LIBOR rate-setting process;

b) lessons to be learned about corporate governance, transparency and conflicts of interest, and their implications for regulation and for Government policy;

 In the wake of the LiBOR scandal, the Commission was set up to be led by Andrew Tyrie, who also chaired the Treasury Select Committee (TSC). He said: "Recent scandals have shown how much we need higher standards in banking … perpetrators of wrongdoing should be held fully accountable..."

Since that day, the Commission has sat virtually every week, and has received a vast amount of evidence from a wide variety of informed sources. I have watched many of the hearings on the Internet, and the Chairman has repeatedly asked witnesses the same questions.

"...'Why has no-one been prosecuted for financial crimes committed by the banks and financial entities which have been so prominently in the news, and what proposals are being made to rectify this situation so we can get to the truth in the future..."?

It is the tradition of such Commissions to call for evidence from the public and interested bodies, and to invite selected persons with special knowledge to come and give live evidence to the Commission.

As you would expect, a wide cross section of interested parties were invited to present evidence, and just about anyone in the banking, regulatory and academic establishments submitted evidence and many of them were invited to give evidence. Their names and the details of their evidence are attached in various addendums on the Commission's web pages.

I too submitted evidence to the Banking Commission on 22 August 2012 in a document entitled;

 "...Response to the Parliamentary Commission on Banking Standards - Professional Standards of the UK Banking Sector..."

The document was submitted in a formal academic style and its Summary laid out the terms of the evidence which was being submitted. It stated;

"...This paper makes the assertion that the British Banking Industry has become identical with an Organised Criminal Enterprise...

It examines the nature of the criminogenic personality and determines the kind of person who is more likely to break the criminal law and why.

It asserts that this state of affairs has been allowed to develop because of the failure of the regulatory process to develop the necessary skills and knowledge of the conduct of criminals to enable them to deal professionally with the misdeeds of the banking sector and the reluctance of the regulators to use their statutory powers effectively.

It defines why there needs to be a far greater degree of criminal prosecution brought against financial practitioners and explains why such processes are among the only penalties that such practitioners truly fear..."

I had deliberately focused on these topics because I was only too well aware that they would be highly unlikely to be covered by anyone else providing evidence to the Commission.

What follows is an exact reproduction of the facts as they happened to me over this issue.

My evidence was submitted in time together with the relevant covering letter requesting that I be permitted to attend and give evidence in person.

And I waited.

Then, in or about late 2012, when the Commission was in full swing, and having heard nothing from the Commission, I rang Ian Fraser, who will be known to many of you and asked him if his evidence had been accepted. He told me that he had been forced to ring the Office of the Commission and complain because his evidence did not appear in the list of submitted written evidence. He agreed that his evidence had subsequently been included in a second list of written evidence and published on the website, but only after had had been forced to complain!

I searched the website but could uncover no evidence of my evidence appearing in any list, so I rang the office of the Commission.

I spoke to a young woman and explained my position and asked her why my evidence had not been acknowledged on the website.

She said she would look, and when she returned she stated that they did not appear to have received any evidence from me. I expressed great surprise and made it clear to her that I had submitted evidence in time and in due manner and that nothing had been returned. I asked her to look again or enquire of someone else who perhaps might have had more knowledge of the workings of the system. She agreed to do so and said she would ring me back within 48 hours.

Needless to say she did not ring back.

Beginning now to smell a rat, (or at least a Crown Servant), I rang again, and this time I spoke to a young man. I outlined my concerns and explained that I had already spoken to the young woman, and he almost immediately said he would go and look again for my submissions.

Now, I imagine that all such submissions are entered on to a database and it should not take long to check. When the young man returned quite a few minutes later, he re-confirmed that no evidence had been received from me and that in any case, not all evidence received was selected for use  by the Commission. However he said he would ask his manager and get back to me later with an answer.

He did not call back.

Having given evidence to a previous Parliamentary Sub-Committee for Trade and Industry, I was aware that all evidence received is logged and recorded, even though, truthfully not all of it may be relevant, and if so, then it is not used, but it is recorded.

By now, the rat had grown in proportion and I was beginning to smell that most typical of British civil (government) servant aromas, the odour of 'cover up', of 'official obfuscation', of 'sweep under carpet time' and having smelt that pong before many times, I knew it was pointless continuing to ring the Commission Office.

So I wrote to Andrew Tyrie, the Chairman of the Committee! His office told me that I could email him but in his capacity of Chair of the Commission. I sent the following email on 22nd January 2013;

"... Dear Mr Tyrie,

I am writing to you in the hope that I can alert you to evidence which I had hoped would be allowed to be given to the Commission on Banking Standards.

I recently watched the hearings on 17th January 2013 when questions were asked by yourself about the reasons why no-one has been prosecuted or convicted for criminal offence arising out of the recent banking scandals.

I submitted evidence to the putative Commission back in August 2012 in a paper which dealt with issues of banking culture, workplace standards, conduct of business and treatment of clients, and I sought to draw comparisons between their similarities to organised criminality.

I raised issues of ways in which truly effective sanctions can be imposed on bankers who break the criminal law (as indeed so many of them have done), and I sought to set out an explanation for their criminogenic culture.

This arises out of academic work I have completed in recent years, as well as on the basis of my many years in the enforcement of financial legal issues, as a lawyer, a former Metropolitan Police Detective, a financial regulator, and a financial legal consultant.

I spoke to the Commission office today because I had received no response to my submissions, and I was told that they did not believe my submissions had been selected for consideration. They are subsequently checking this fact.

I am aware that my submissions were very hard-hitting and indeed, possibly unpalatable to many, but my many years of experience in dealing with financial crime had made me realise that what bankers and their apologist bodies will say in public, and what they will really do in private and away from public gaze, are two entirely different things.

I have very strong views on banking criminals and the way in which they should be treated, as well as the ways in which this country has been so badly served by the actions and responses of its financial regulators in recent years. I can give direct evidence of an investigation I was commissioned to undertake for H.M.Treasury into money laundering in the City of London, and the attitudes of the FSA towards dealing with its effects, as far back as 2001, and I can assure you that very little has changed in the interim.

I am very concerned that your Commission might not have the chance to at least be appraised of the content of my findings prior to your final deliberations. I should like to give evidence to you because I believe it would be very valuable, but in the absence of any information as to whether or not your Committee will even see the evidence I submitted, I am at a loss to know how to proceed, apart from taking the responsibility to write to you directly..."

I received no acknowledgement of this email, but I did not expect any, as it would be difficult for Andrew Tyrie, as Commission Chairman to make any comment on the record.

I left the matter for a week and then I rang the Commission office again and spoke again to the same young man.

'...Oh Mr Bosworth-Davies, I was just about to call you. Your evidence has just been discovered, it was here all the time. My Principal is deciding how to deal with it, but she's in a meeting right now, but I will call you back, when I know what she intends to do with your evidence, but don't hold your breath...'

Quite what he meant by that I cannot say, but yet again, he did not call back. So I rang again the following day.

'...Yes, your evidence is still being appraised upstairs by one of our senior people, and promise I will call you back...'

This time, he did, at about 6.15pm on a Friday evening.

'...Your evidence will be circulated to the Commission and they will all have a chance to read it. However, my principals want to redact certain parts of the report before it is published...'

'...Which parts...' I asked.

'...Well, the parts where you call the banks criminals, we think that the use of such words might upset them, might send the wrong impression, particularly as no-one has been convicted of any crime...'

'...But those are the facts, you can't escape them...' I said. '...That is the whole point of the Chairman's repeated question, they want to know why no-one has been convicted of criminal offences...Using the phrase criminal doesn't have to mean they have been convicted...If a bank launders money like HSBC has done, then they are money launderers. .If they were to be convicted in court then they would be convicted money launderers...so why do you need to redact anything from the report...'

He had no answer.

I am now informed that my evidence has been circulated around the Commission and it will be ultimately published on the website. I have no means of knowing whether this is true or not, we shall have to wait and see!

What truly infuriates me about this whole episode is the way in which civil (or government) servants are the ones to decide what evidence is submitted to such a Parliamentary Commission. These non-elected apparatchiks decide what will and what will not be seen by the Commissioners.

By what right do they give themselves these powers, by what possible provision do they have the right to determine what the Commissioners will and will not see or read. What right do they have to redact evidence if it is given in a lawful fashion, just because it might be irritating to one or more of those being reviewed.

Perhaps most importantly, how much other evidence has been quietly marginalised and pushed to the side and quietly forgotten, evidence which might have contained important information which the Commission might have usefully received, but which they have been denied by these bureaucrats, either because it is inconveniently positioned for the banks, or is just too awful to contemplate.

The Commission staff have knuckled their foreheads, and bowed down to the interests of the banks and their apologist agencies, the Big 4 Consultancies and all the other members of the institutional Great and Good, but, as in my case, they have censored the right of others to bring their honestly-held and properly acquired evidence to the Commission.

I am aware that my evidence was hard-edged, it was irritating, it was not happy reading and it made some very unpleasant allegations, all of which I stand by. My evidence was based on long experience of the financial markets and based on years of involvement with the financial sector and it deserved to be considered with greater consideration. How else will we ever alert our political representatives to what is really going on if all they ever see is what their apparatchiks want them to see, because it suits their perverse version of events. I have no doubt if I had not written to the Chairman, my evidence would have continued to languish in some black hole behind the arrass.

All the time we have government servants busily knuckling their foreheads to the interests of the financial sector and standing in the way of those of us who want to let in a bit of light to illuminate some grubby dark corners, we shall continue to suffer from these miscarriages of public administrative justice.

We must await the final report with great anticipation, but I fear that little will really change very much!   If no-one tells the Commissioners what they really need to know, how will they ever find out?

Watching the Detectives! The ‘FSA’s AML/CTF Twenty’. Interpreting the findings provided by Timon Molloy of 'Money Laundering Bulletin'.

When giving evidence to the Home Affairs Committee on 30 October 2012, Lord Turner, Chairman of the Financial Services Authority said, “the number of people operationally devoted specifically to anti-money laundering, which includes things to do with PEPs as well as drugs or terrorism, is only 20.”

I was not unduly surprised.

Annoyed, yes! Perturbed, yes! Surprised, absolutely not! And why?

Because the regulatory regime in the UK has never considered it to be any part of their responsibility to investigate financial crime. In fact, if the financial crime remit had not been specifically written into the Financial Services and Markets Act 2000, the FSA would have done even less than they have done up to now.

What is so astonishing is how these so-called, hyper-intelligent people who are chosen to run the regulatory agencies cannot seem to appreciate that financial crime is a natural concomitant of financial regulation, in fact, it is probably the biggest issue which faces regulators in their day-to-day control of the financial markets.

But these elitist protectors of the financial environment refuse to sully their hands with such grubby issues such as financial crime. There is safety in obscurity and they would much rather spend their time dealing with matters of high policy, which is much safer than taking on a bunch of criminals who want to manipulate the market or use the market to help launder criminal money. When you take on the top financial criminals, your balls are literally, on the line, and it very quickly becomes clear whether you have got any, or not!

Hence the reason why they have not, in the past, bothered to train their staff in financial crime case studies to enable them to understand the historical context of the financial criminal milieu! It had to be left to Lord Lawson to suggest that perhaps it might be a good idea if FSA staff received such training, to better inform their awareness of signs of financial crime, and hopefully, to make them better informed more generally. According to Lord Adair Turner, he agreed, although he hadn't hitherto ever considered the matter. Honestly, this man is supposed to be so intelligent, but frankly, just listening to him makes me tired!

So, sooner than bother to employ staff who are properly trained and who have serious experience in investigating serious financial crime, the FSA simply doesn't bother. In this shocking recognition, all their intellectual arrogance, their complacency, and yes, let us admit it, their class-based prejudices are laid bare.

Investigating crime is a class-based issue! Our society has always been willing to leave the regulation of the criminal class to the Police, because for the rest of the upper-socioeconomic group, crime is a working-class phenomenon, and they want nothing to do with it.

So while City bankers will vociferously demand that the people from the streets who burgle their houses, mug their nannies, or nick their cars, should be dealt with using the full force of the criminal law, they will just as stridently demand that people from their class who commit equally-egregious criminal offences, insider dealing, LIBOR manipulation, drug money laundering, or PPI fraud, should be dealt with by regulatory methods of control.

It is an unconscionable state of affairs where some City wide-boy can steal hundreds of thousands of pounds from a client's account, or lose fortunes through acts of false accounting, but then walk away from his crimes, after having been subject to a 'regulatory' penalty. Yet this has happened on a number of occasions. The individual may end up being banned from the City for life, but what the hell, he will always make another living selling double glazing or second hand cars.

This blog has repeatedly compared the punishments handed out to single mothers on benefits who fail to disclose the existence of their life partners, and who inevitably end up in prison, as compared to those who commit the crimes of the powerful, and almost inevitably walk away free. When crime is allowed to go unpunished using socially-recognised methods of control, arrest, charge, trial, acquittal or conviction, followed by sentencing, cynicism for the rule of law floods in, and sends all the wrong messages to the sector subject to supervision.

Such a state of affairs does not bode well for a free society, but it is continuously perpetrated by the FSA in the way in which they handles financial crime allegations. In so doing it perpetuates the scandal that there is one law for the rich and powerful and one for the poor and socially excluded. Such a recognition creates a growing gulf between the haves and the have not's in our society, and provides for an wholly false set of values, a state of affairs which continues to be exemplified by every action of the financial sector. Every pay deal, every bonus settlement, every threat to move to other jurisdictions if bankers don't get their way, these are all symptoms of an extremely dysfunctional sector of our commercial life, and they are all based on the two shibboleths of money and class.

This is why it is so important that the FSA should be capable of delivering the highest standards of criminal jurisprudential management and its failure so to do should be a matter of censure against Adair Turner and the others who have so nonchalantly appeared before the Banking Commission and drawled their elitist drivel in front of the Commission members. We should be eternally grateful for the acerbic comments of the Chair and Lord Lawson among others, who excoriated some of the witnesses, including Lord Turner, for their apparent inability to recognise the reality of their situation, and their incapability to identify the need to change!

This egregious social prejudice arises directly out of the professional inability to act coupled with the lack of confidence on the part of the FSA to conduct criminal investigations. There is virtually no attempt made by the Board to give any recognition to the skills possessed by former law enforcement officers, whose skills should be routinely deployed within the financial crime division of the FSA or whatever new portion of alphabet soup we will soon inherit as a regulator.

So, we must examine with care the findings identified by Timon Molloy in his research for Money Laundering Bulletin, where he required the FSA to identify the qualifications of the financial crime team.

I am reporting those findings as reported to him directly because they contain, yet again, a remarkable degree of arrogant insouciance, and a reluctance to identify the need for a root and branch reform. This is taken directly from his report and I gratefully acknowledge his permission to quote from it.

"...The Financial Crime Operations Team comprises 19 non-administrative staff with varied histories according to FSA: “Ten have regulatory backgrounds, with the FSA, its predecessor regulators and/or similar organisations like the Financial Ombudsman’s Service...”

So, over half of the team have merely transferred their services from one failed regulatory agency to the next. Why do I say this? I say it because every predecessor agency has been identified as failing the public need - the DTI, the SIB, now the FSA. These agencies have all been branded with a culture of civil service bureaucratic rigidity, nit-picking inertia and a cultural resistance to thinking laterally or outside the box.

"...Two come from law enforcement; another two are legally trained; two more are from financial services; one was recruited from a government department and another two are secondees – one with a background in financial services hails from an overseas regulator while the other is from a ‘Big 4’ consulting firm..."

We should be grateful that there are at least two former law enforcement members there, but what roles are they tasked to fulfil? As for the rest, well, we may realistically assume that whatever legal training they have received, it will not have given them the in-depth criminal knowledge and understanding possessed by trained detectives. One comes from a Government Department, while two are secondees, one from abroad, and one from, wait for it, yes you're right, a 'Big Four' firm. As we know the relationship between the FSA and the Big 4 is nothing short of symbiotic - they undertake a large volume of investigations for the FSA, the ones they cannot undertake themselves, which does little more than put a vast amount of money into their consultancy fees.

I long ago came to the conclusion that the closeness of the relationship between the FSA and the Big 4 is entirely unhealthy, especially considering the fact that the Big 4 carry out so much work for the regulated sector. The capacity for creating huge conflicts of interest between regulators, regulated and consultants should be a matter of significant concern, particularly as it assists in providing a number of well-heeled and cushy jobs for former regulators when they pass through the revolving doors of the FSA at the end of their time there!

"...Asked about ongoing training provision, FSA noted that “all staff are required to pass standard AML training”, adding that “much of the team’s training is ‘on the job’ with more senior and experienced members of staff coaching relatively new joiners and more junior staff.” The regulator said that “many of the team have passed or are currently studying for ICA [International Compliance Association] diplomas or certificates on money laundering and/or financial crime.” Staff also regularly attend conferences and share the knowledge they gain. The intention, said FSA, is to review the training on offer once the Financial Conduct Authority assumes responsibility for AML/CTF supervision in April this year..."

There are many who may share my views that attending training at the ICA, a commercial training company, whose certifications possess no more academic or intellectual weight than any other commercial training provider, would hardly be thought to be a proper substitute for intellectually rigorous and examined periods of study carried out through the auspices of a university (such courses do exist); while what benefit may be gleaned from attending most public conferences where the tendency is for the industry to speak words of comfort to itself, a kind of 'the blind generally leading the blind' is debatable in the extreme.

So, thank you Timon for accessing these answers. They are no more and no less than I expected. They paint a shocking picture of an under-resourced and under-skilled department with a very limited underpinning by properly-trained former law enforcement personnel. I remain grateful that they at least are in post because they will be available to share their knowledge and their skills, if asked. I hope they are asked regularly!

As for the rest of the team, I have absolutely no doubt that to a woman and a man they are doing the very best of which they are capable. I have met some of them and they are good people, trying to do a very difficult job under even more difficult circumstances. It is not their fault that their management fails to recognise and understand the importance of dealing with financial crime in a positive and dynamic manner.

You may ask why I am so angry about all this?

I am angry because it is nothing more than a repeated self-fulfilling prophecy. I have been a regulator and I saw, many years ago in the aftermath of the Financial Services Act, just how little emphasis was placed on having criminal legal knowledge, training and understanding. I witnessed at first-hand how those of us with policing or detective skills were routinely derided and ignored, until such time as our skills were desperately needed, and even then our best efforts were criticised and defamed. (This story will be told in another blog)!  I have watched while criminals have been allowed to get away with major organised crime in the financial sector, while we have witnessed a level of PPI fraud rapidly approaching £20 billion in value, but no one has gone to prison for this institutionalised level of industry fraud. We have witnessed the LIBOR scandals, and listened while so-called expert regulators have opined that there were no laws to deal with LIBOR scamming, when all the time there were perfectly good laws waiting to be used aggressively. We have observed how HSBC decided that drug money laundering was a major business enterprise and set about creating a vehicle to launder billions of dollars for the Mexican drug cartels. Then we listened while some ermined apologist tried to defend the FSA by saying that they could not regulate a Mexican bank, when all the time it was a British Bank doing the laundering! We have witnessed other UK banks engaging in sanctions busting, false accounting, wholesale fraud, and no-one has ever been prosecuted for these crimes.

I am angry because like a vast number of good people in this country and elsewhere, I am sick to death of watching this country get a reputation for allowing every crook, spiv, wide-boy, loblolly man and bankster to operate with impunity, I am tired of London being the Money Laundering Capital of the world, and I am heartily sick of all the financial crime that is being perpetrated through our apology for a regulated market, while all the time, people in positions of authority continue to wallow in their comfortable offices telling each other that the situation is under control.