Could Banks do More in the Fight Against Money Laundering?

Viri Chauhan, Global Head of Governance, Risk and Compliance, International Compliance Training Ltd, UK

The purpose of this paper is to examine if banks could do more in stopping laundered money entering into the banking system and if so, to what extent. Even with the vast array of AML provisions implemented globally, money laundering is still prolific and abuses continue in many forms. The distinction between illicit financial flow and money laundering is blurred and it could be argued banks play a role in this grey and ambiguous area. In the past banks have allowed money laundering to occur through poor AML practices despite a rhetoric that promotes a strong compliance culture to money laundering. The strongest evidence that banks are exploited for money laundering and that they should do more to restrict being a vehicle for facilitating the proceeds of crime is in the secrecy and confidentiality laws. This combination provides protection for individuals and corporations to transfer illicit financial capital. Allowing the proceeds of crime into the banks through the combination of the UK and associated territories actually makes up a significant amount of the offshore capital held globally, and the UK and its territories have the highest combined scores of secrecy and lack of transparency. The Crown Dependencies which include Guernsey, Isle of Man and Jersey where the Queen is head of state with powers to appoint government officials and Islands’ Legislatures are inspected by the UK Ministry of Justice to safeguard against conflict with international obligations or fundamental constitutional principles. This is the same for what is known as Overseas Territories which include Anguilla Bermuda, British Virgin Islands, Cayman Islands, and Gibraltar.