标题: 2001.04.12 银行在打击洗钱 [打印本页] 作者: shiyi18 时间: 2022-3-2 05:30 标题: 2001.04.12 银行在打击洗钱 Through the wringer
Banks are doing more than ever before to clamp down on money laundering. But is it enough?
Apr 12th 2001
NEW YORK
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IN MARCH, politicians in both Britain and America expressed dissatisfaction over their countries' efforts to tackle money laundering. An influential committee of British members of parliament said that “the government should take co-ordinated, coherent and properly resourced action to fight money laundering if the United Kingdom, through the City of London, is to maintain its reputation as one of the most important international financial centres.”
In America, meanwhile, a report on money laundering by Senate Democrats criticised some of America's biggest banks, including Citigroup, J.P. Morgan Chase, Bank of America and Bank of New York. In particular, the report criticised Citigroup, the financial-services giant that has done most to attract wealthy customers in far-flung corners of the earth, for failing to crack down adequately on money laundering by some of its Argentine clients. The bank subsequently admitted to “embarrassment” over its failure. “Too many banks in the United States, including some of the biggest, have been asleep at the switch,” claimed Carl Levin, the senator behind the report.
Revelations of what the British committee dubbed “the worst excesses of kleptocratic states” continue to undermine confidence in the determination of banks, and the ability of governments, to tackle the problem. In February, for example, Citigroup was caught up in the corruption investigation surrounding one of its wealthy customers, Joseph Estrada, the ousted president of the Philippines.
On the other side of the Atlantic, in March, 15 as-yet-unnamed banks operating in Britain were found to have significant weaknesses in their money-laundering controls. A report released by Britain's Financial Services Authority (FSA), the main industry regulator, claimed that these banks had allowed some $1.3 billion to pass through accounts linked to the family of General Sani Abacha, a former military ruler of Nigeria. Even that was rather less than the £2 billion ($2.9 billion) that Slobodan Milosevic and his entourage are alleged to have slipped through banks in Greece, Cyprus and Switzerland during his time as leader of Yugoslavia.
Such high-profile cases have laid to rest any lingering doubts that money laundering—best defined as the processing through the banking system of the proceeds of crime, in order to disguise their illegal origin—is something that involves only drug dealers and unknown banks in banana republics, though such banks are certainly part of the story. Whether wittingly or not, many of the world's best-known banks have become a central element in the process by which crooks clean up their ill-gotten gains.
Despite the recent blaze of adverse publicity, there is evidence that big banks are taking money laundering more seriously than ever before. Most of them can show that they are doing a great deal more than they did (even as recently as two years ago) to prevent the fruits of crime passing through their systems. The resources devoted to the task have grown rapidly, particularly the spending on technology to sift through money-transfer data for unusual activity. Citigroup, for instance, now has a 50-strong operation in Miami that is constantly watching out for suspicious activity.
Any further tightening up on money laundering faces big obstacles. Banks understandably want to protect the privacy of their customers, and they face fierce competitive pressure not to ask too many questions. Moreover, new technology (such as anonymous electronic cash) may be making money laundering easier. Even worse, attempts to crack down may fall foul of genuine differences of opinion between regulators around the world about what, for money-laundering purposes, actually constitutes a crime.
Global business
Putting a value on money laundering is, by its very nature, a matter of ill-informed guesswork. The International Monetary Fund reckons that the amount of dirty money being cleaned through the world's financial system is huge—between $500 billion and $1.5 trillion a year, equivalent to some 1.5-5% of gross world product.
Laundering has grown hand-in-hand with globalisation, and particularly with the lifting of capital controls and the development of international payment systems. These allow money to be shifted in seconds between banks in different parts of the world that may not even be aware of each other's existence. The sums of money being transferred are huge. Bank of America, for example, sees nearly $1 trillion pass through its internal wires every day. As Alan Greenspan, the chairman of America's Federal Reserve Board, has put it, the international payment system is “crucial to the integrity and stability” of the world's financial markets. But it also provides big opportunities for crooks to hide their money by shuffling it around the globe.
Private banking is the laundering channel that has received most attention. Private banking's clients tend to be wealthy people who want their affairs handled with discretion—not least because they need help in exploiting opportunities to minimise their tax bills. Traditionally, a bank that asked too many questions would find its customers taking their money elsewhere. So a “don't ask; don't tell” culture developed, in which money laundering was able to thrive.
The revelation in 1999 that the Bank of New York had become a conduit for billions of dollars of suspect Russian money drew attention to an arguably more serious issue, the use in money laundering of “correspondent banks”—banks that have their own account at another bank. Dirty Russian money was washed through the Bank of New York's systems via its correspondent banks, including one called Inkombank.
Correspondent banking is crucial to the international payment system. But if money is paid into a foreign bank's correspondent account at, say, Citigroup, it can be harder to find out about the source of the money (and its legitimacy) than if it comes through the private-banking route. This is especially true when there is “nesting”—ie, when a foreign bank opens an account at another foreign bank which has a correspondent relationship with, say, an American bank. A nested bank may gain the advantages of correspondent status without the American bank even being aware of it.
Three-quarters of the big banks surveyed in the American Senate report had over 1,000 correspondent relationships apiece. The two biggest (which were not American) had 12,000 and 7,500 respectively. As of mid-1999, the five American banks with the most correspondent accounts held $17 billion of assets in those accounts; the top 75 banks had assets of $35 billion.
To understand the complexity that this can give rise to, consider the difficulties of America's Department of Justice during the recent “Operation Casablanca”, as described in the Senate report. Investigators found that funds allegedly laundered by illegal drugs traders had been wired to a bank account outside America. They asked the government of the bank's country for assistance, only to discover that the bank and account to which the money was transferred were actually located in another country. Officials in that country then tried to seize the assets, but found that the bank had no buildings or branches there. The assets securing the bank's obligations were once again outside the country. In the end, it turned out that the money was sitting in the bank's correspondent account at a big American bank in New York.
For all the recent focus on big banks in established financial centres, banks in so-called offshore centres are still the main targets of anti-money-laundering efforts. As of 1998 there were around 4,000 offshore banks licensed by nearly 60 offshore jurisdictions. Some 44% are in the Caribbean and Latin America, 28% in Europe, 18% in Asia, and 10% in the Middle East and Africa. They control an estimated $5 trillion in assets.
Offshore banks are more likely than onshore ones to be used by crooks. Many governments of small countries license banks largely because they are tidy revenue earners. They do not want to regulate these banks in a way that scares off customers. The recent Senate report in America raised particular concerns about those offshore banks that are not subsidiaries of banks that have well-regulated onshore operations.
The worst offenders are “shell” or “brass-plate” banks, which have no physical presence in any location. Some 75 of the Cayman Islands' 570 licensed banks are either shell banks or unaffiliated to any onshore regulated bank; so are 65 of the Bahamas' 400 banks. Both of these jurisdictions now say that they no longer issue shell bank licences. Most new ones are now created by more fringe jurisdictions, such as the Pacific island of Nauru, which has issued 400 licences, and the Yugoslav Republic of Montenegro, which is selling private bank licences over the Internet for just $9,999.
The new whitener
America passed the world's first law explicitly directed at money laundering in 1986. The Money Laundering Control Act made it a crime for a person knowingly to engage in a financial transaction involving the proceeds of a “specified unlawful activity”. Ever since, America has been leading the global fight against it.
The recent report to Congress has stimulated fresh discussion of new legislation in America, but the chances of any new laws making it on to the statute book are slim. Phil Gramm, chairman of the Senate Banking Committee, recently boasted that “I killed the (Clinton) administration's anti-money-laundering legislation last year”—which would have banned dealings with banks in certain outlawed jurisdictions. He added that reform was “not on my agenda”, because America has strong laws already.
Britain, too, has been increasingly active, though its regulators have hitherto lacked the power to discipline offending banks. The FSA will get new powers later this year that will turn it into a criminal prosecuting agency, broaden the definition of money laundering to include the proceeds of all crimes (not just illegal drugs and terrorism), and allow it to write the rules defining what counts as money laundering.
The action is most intense, however, at the multilateral level—which is hardly surprising, for there is a limit to what can be done by a single country acting alone. Money laundering is intrinsically global. Cracking down on domestic banks, if it is not copied by jurisdictions elsewhere, may do little more than make those banks uncompetitive in the global marketplace.
Some of the multilateral moves have come from within the banking industry itself. Last October, 11 of the world's biggest banks, including several embarrassed by past money-laundering revelations, signed up to the so-called “Wolfsberg AML Principles”, named after a Swiss town in which they were drawn up. These are a set of basic guidelines to avoid money laundering in private banking. The Basle committee of national bank regulators, which sets common international standards for bank supervision, recently said that it would also draw up agreed procedures for banks to use when deciding whether to accept a customer, and to help them in monitoring the activity taking place in their accounts.
The greatest progress, however, has been made by the OECD's Financial Action Task Force (FATF), which was established in 1989. Last July, it published a blacklist of 15 jurisdictions, ranging from Russia and Israel to the Marshall Islands, that are “non-co-operative” with its anti-money-laundering efforts. These efforts are based on 40 recommendations, which are in the process of being updated to take into account the growing involvement in money laundering of lawyers, securities firms, accountants and real-estate agents.
The British parliamentary report in March echoed the FATF when it expressed concern at “the under-reporting of suspicious transactions by certain professional groups, in particular lawyers and accountants”, who are “often prime targets for money launderers”. Of 14,129 suspicious transactions reported in 1998, a mere 0.7% came from accountants. Of the country's 12,500 solicitors, only 57 submitted a report.
The FATF is now mulling over how to punish the countries on its list, whether to add new countries to it, and, more happily, whether to remove from it those that have done what the FATF asked of them. Its decisions will be made in June. The group's actions have, however, already had a striking impact. Since the blacklist appeared last July, the number of filings (by banks operating in America) of suspicious activity reports (SARs)—ie, a significant money transfer whose legality the bank is unsure about—relating to the 15 jurisdictions have doubled. At the same time, many of the blacklisted jurisdictions have fallen over themselves to do whatever might get them delisted. Only four countries have made no serious attempt at co-operation: Lebanon, the Philippines, Nauru and, by far the most significant, Russia. Although an anti-money-laundering bill has been tabled in the Russian parliament, it is not clear that it amounts to much.
The Cayman Islands, which proclaims itself a serious financial centre increasingly used for institutional rather than private banking, is lobbying furiously to be removed from the list. It has introduced strong anti-money-laundering laws, and is now trying to convince a somewhat sceptical FATF that it is serious about implementing them. David Ballantyne, the Caymans' tough-talking Scottish attorney-general, recently submitted a detailed plan to the FATF of how this would be done. His emphasis is on prosecuting offenders: it is now possible to go to jail for up to 14 years for money-laundering offences on the Cayman Islands.
Know your customer
There remain many obstacles to cracking down still further on money laundering. The first may be President George Bush. His administration seems more sceptical than its predecessor about the value of participating in multilateral initiatives. It remains to be seen whether this change of tone will lead to a real difference in approach, however. Second, there is the sheer difficulty of detecting money laundering. An official report in 1995 observed that looking for evidence of money laundering is not merely like looking for a needle in a haystack, but rather for “a needle in a needlestack”.
Increasingly, regulators think that merely reacting to their requests is not enough. They want banks to play a proactive role in rooting out money laundering—which, say some critics, could “turn banks into cops”. At the heart of this is an innocuous-sounding regulatory requirement to “know your customer”. This means finding out who it is that wants an account before they open it, where the money has come from, and what happens to it afterwards.
One obvious problem is that customers may not wish to be known in such a close fashion by their bank. In America, there is typically a political outcry whenever know-your-customer legislation is proposed, on the ground that it is a breach of privacy. Public opposition led to the withdrawal of such legislation in 1999. However, much of the thrust of the proposed laws was achieved anyway—through guidelines issued by the regulators last year.
Outside America, for instance in Switzerland, the need for privacy in banking is often seen as even more essential—though it is a sign of changing attitudes that last year Austria decided to scrap its anonymous bank passbooks so as to avoid suspension from the FATF. Where the line between fighting crime and protecting customers' privacy should be drawn is likely to be much debated over the next few years.
The cost of searching for money launderers also imposes a limit on what can be done. Some staff are putting in so many extra hours at banks affected by recent scandals, trying to get to know their customers better, that they are getting to know their families less. Even trickier, the concerns raised about correspondent banking have created a new, and more elusive goal: to know your customers' customers.
At the same time, technological developments may be making it harder for banks to know their customers, even if they try. Regulators are increasingly worried about the potential of anonymous electronic cash. So far, there is not much evidence that crooks are exploiting it. But, according to one New York bank regulator, there is growing concern about a Mondex smart card in use in Europe which allows money to be transferred without leaving an electronic trail.
Looming largest of all is the lack of a consensus, even among the world's richest, most powerful countries about what, for the purposes of fighting money laundering, should count as a crime. It may now be relatively easy to get such countries as Switzerland or even the Cayman Islands to co-operate in tracking down revenues from the illegal drugs trade or terrorism. But they may prove less helpful if the target is revenue from, say, Internet gambling—a big bugbear of the Senate report. And with some justification. Who are, say, the Americans to decide that an online bet took place in America, where it is illegal, just because the gambler used a computer in, say, Salt Lake City, when the company and the server taking the bet may be in a country where the gamble is legal? Should those countries be obliged to go along with America's claim that any revenue generated by Internet gambling is a fruit of crime?
This question is even more acute when it comes to tax evasion or avoiding government-imposed controls on capital movements, the two main reasons people have traditionally used offshore centres. Should taxes evaded be treated by banks as the equivalent of profits from crime? Some critics reckon that the hidden agenda behind the attack on money laundering is for big countries to make it much harder for their citizens to evade taxes by cutting off those offshore centres that offer low taxes from the international payment system.
As the banks increasingly become an arm of law enforcement, nobody should forget that much of the money flowing out of badly run countries may be genuine flight capital, not stolen cash. History counsels against too rigid a commitment to enforcing other countries' definitions of crime. Those Jews able to get their money out of Germany during the 1930s broke the capital controls that were then in place. It would be sad if future victims of oppression were prevented from getting at their money by a wall of bankers-turned-sleuths.
