Volume II - Evidence (22 July 2009) - Conseil de l'Europe

280 Pages·2009·1.72 MB·English

HOUSE OF LORDS

European Union Committee

19th Report of Session 2008–09

Money laundering
and the financing of
terrorism

Volume II: Evidence

Ordered to be printed 14 July 2009 and published 22 July 2009

Published by the Authority of the House of Lords

London : The Stationery Office Limited
£price

HL Paper 132–II
CONTENTS
Page

Oral Evidence
Mr Desmond Hudson, Chief Executive, Law Society;
Ms Felicity Banks, Head of Business Law, Institute of Chartered Accountants
in England & Wales; Ms Sally Scutt, Deputy Chief Executive, and
Mr Richard Cook, Director of Financial Crime, British Bankers’ Association
Written evidence, British Bankers’ Association 1
Written evidence, Institute of Chartered Accountants in
England & Wales 3
Written evidence, The Law Society 7
Oral evidence, 4 March 2009 19
Supplementary evidence, Institute of Chartered Accountants in
England & Wales 32
Supplementary evidence, The Law Society 34

Mr James Robertson, Head of Financial Crime Team, HM Treasury;
Mr Stephen Webb, Acting Director of Policing Policy & Operations, Home Office;
Ms Gaynor Ithell, Head of Proscription & Terrorist Financing, Office of
Security & Counter Terrorism, Home Office; Mr Christopher Yvon, Deputy
Head, International Organisations Department, Foreign & Commonwealth
Office
Written evidence, HM Treasury 40
Oral evidence, 11 March 2009 45
Supplementary evidence (1) HM Treasury 62
Supplementary evidence (2) HM Treasury 66
Supplementary evidence (3) HM Treasury & Home Office 66
Supplementary evidence (4) Home Office 74

Mr Stephen Webb, Acting Director of Policing Policy & Operations, Home Office;
Mr Mike Kennedy, Chief Operating Officer, Crown Prosecution Service;
Mr Jeremy Rawlins, Head of Proceeds of Crime Delivery Unit,
Crown Prosecution Service; Mr David Thomas, Director, UKFIU, Serious
Organised Crime Agency
Written evidence, Crown Prosecution Service 75
Oral evidence, 18 March 2009 80
Supplementary evidence (5) Home Office 100
Supplementary evidence (1) Crown Prosecution Service 100
Supplementary evidence (2) Crown Prosecution Service 106
Supplementary evidence, Serious Organised Crime Agency 106

Ms Mieneke de Ruiter, General Secretariat of the Council;
Professor Gilles de Kerchove, EU Counter-terrorism Coordinator &
Mr Hans G Nilsson, Head of JHA Counsellors, Permanent Representation
of Sweden to the European Union (formerly Head of Division, General
Secretariat of the Council)
Written evidence, General Secretariat of the Council 109
Oral evidence, 25 March 2009 111
Supplementary evidence, Professor Gilles de Kerchove 122
Mr Philippe Pellé, Deputy Head, Company Law, Corporate Governance &
Financial Crime; Mrs Agnete Philipson and Mr Mariano Fernandez Salas,
DG MARKT (Internal Market and Services; Mr Jakub Boratyński, Head
of Unit on Organised Crime, Mr Sebastiano Tiné, Head of Financial Crime
Sector and Mr Mickael Roudaut, DG JLS (Justice, Freedom and Security)
European Commission
Written evidence 124
Oral evidence, 25 March 2009 133

Professor Peter Alldridge, Head of the School of Law & Dr Valsamis
Mitsilegas, Reader in Law, Queen Mary University of London.
Written evidence, LLM Law of Economic Crime Group,
2008–09, Queen Mary University of London 150
Oral evidence, 1 April 2009 155

Sir James Sassoon, former President, Financial Action Task Force (FATF)
Oral evidence, 22 April 2009 167

Mr Ian Pearson MP, Economic Secretary to the Treasury;
Mr Alan Campbell MP, Parliamentary Under Secretary of State,
Home Office; Mr James Robertson, Head of Financial Crime Team,
HM Treasury and Mr Stephen Webb, Acting Director of Policing Policy &
Operations, Home Office
Oral evidence, 29 April 2009 179
Supplementary evidence (6) Home Office 191

Mr John Ringguth, Executive Secretary, MONEYVAL (Council of
Europe Committee of Experts on the evaluation of anti-money laundering
measures and the financing of terrorism)
Written evidence 194
Oral evidence, 29 April 2009 208
Supplementary evidence 215

Mr Sean McGovern, General Counsel; Ms Louise Shield, Head of
Communications; and Mr Andy Wragg, Senior Manager, International
Regulatory Affairs Team, Lloyd’s
Oral evidence, 13 May 2009 218

Written evidence

Association of Chief Police Officers (ACPO) 226
Professor Iain Cameron, Uppsala University 229
Eurojust 234
Europol 239
Financial Action Task Force (FATF) Secretariat 243
Financial Services Authority (FSA) 250
Jonathan Fisher QC 253
FIU-NET Bureau 254
Fraud Advisory Panel 256
Lorna Harris 267
Professor Andrew Haynes, University of Wolverhampton 268
Information Commissioner 271
Jonathan Leslie, Partner, Travers Smith 272
Solicitors Regulation Authority 273
Taylor Wessing 274

NOTE:
The Report of the Committee is published in Volume I, HL Paper 132–I.
The Evidence of the Committee is published in Volume II, HL Paper 132–II
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Minutes of Evidence
WEDNESDAY 4 MARCH 2009
Present Avebury,L HodgsonofAstleyAbbots,L
Dear,L Jopling,L(Chairman)
FaulknerofWorcester,L Marlesford,L
GardenofFrognal,B Mawson,L
HannayofChiswick,L Richard,L
MemorandumbytheBritishBankers’Association(BBA)
TheBritishBankers’Association(BBA)isgratefulfortheopportunitytosubmitevidenceaspartoftheSub-
Committee’sinquiryintoEUandinternationalcooperationtocountermoneylaunderingandthefinancing
ofterrorism.
ThefocusoftheSub-Committee’sinquiryisintothenatureandextentofMemberStates’cooperationinthe
globalresponsetomoneylaunderingandterroristfinancingandnotthelegalobligationsimposedonMember
States,creditandfinancialinstitutionsandrelatedprofessionsbytheanti-moneylaunderingframework.
CooperationwithandbetweenFinancialIntelligenceUnits(FIUs)
HoweffectiveiscooperationamongFIUs,andbetweenFIUsandotherauthorities?Whatarethepracticalresultsof
thiscooperation?
Unabletocomment.TheBBAanditsmembersarenotinvolvedinthecooperationarrangementsamongFIUs
andbetweenFIUsandotherauthorities.
How does the private sector feed into this cooperation? To what extent is satisfactory feedback to the private sector
requiredbyinternationalstandards,andwhathappensinpractice?
BBAmembers,aspartofthereportingsectorundertheProceedsofCrimeAct,discloseinformationtothe
UKFIUbyfilingsuspicioustransactionsreportsandotherreportsprovidedforbyrelevantlegislation.BBA
members also provide information in response to further requests from the FIU’s. The Serious Organised
Crime Agency (SOCA) reports that in 2007–08 the BBA’s members submitted over 145,000 Suspicious
Activity Reports (SARs) to the UK FIU, sought consent on 5,238 occasions and submitted 838 SARs
specificallyonterroristfinance.
Requirements on FIUs to provide feedback are established by the Financial Action Task Force (FATF)
standardsandthethirdAnti—MoneyLaunderingDirective.FATFRecommendation25dealswithfeedback.
TheFATFhasproducedadocumententitled“BestPracticeGuidanceonProvidingFeedbacktoreporting
FinancialInstitutionsandOtherPersons”.Accordingtothisguidance,theFIUshouldpubliclyreleasereports
that include statistics, typologies, and trends as well as information regarding its activities. Competent
authorities should establish guidelines that will assist financial institutions and designated non-financial
businesses or professions (“DNFBPs”) to implement and comply with their respective AML/CFT
requirements.Ataminimum,theguidelinesshouldgiveassistanceonissuescoveredundertherelevantFATF
recommendations, including (i) a description of money laundering (ML) and terrorist financing (TF)
techniquesandmethods,(ii)anyadditionalmeasuresthattheseinstitutionsandDNFBPscouldtaketoensure
thattheirAMLmeasuresareeVective.
ItisimportanttonotethatunderArticle35ofthethirdAML/CFTDirective“MemberStatesshallensure
thatwhereverpracticabletimelyfeedbackontheeVectivenessandfollow-upofsuspiciousreportsonmoney
launderingandterroristfinancingisprovided”.Moreover,“MemberStatesshallensurethattheinstitutions
and persons covered by this Directive have access to up-to-date information on the practices of money
launderersandterroristfinancersandonindicationsleadingtotherecognitionofsuspicioustransactions”.
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2 money laundering and the financing of terrorism: evidence
Therefore,thefollowingtypesoffeedbackhavetobeprovided,accordingtotheDirective:
— Feedbackonsuspicioustransactionsreports,toinformthereportingentitiesabouttheirfollow-up;
thiscase-by-casefeedbackshouldbeprovided“whereverpracticable”.
— Feedbackonmoneylaunderingandterroristfinancingpractices(trendsandtypologies).
BBA members recognise the necessity to provide feedback on specific cases does not imply the need of a
systematiccase-by-casefeedback,ieoneachandeverydisclosurefiledbyreportingentities.Indeed,according
totheDirective,informationontheoutcomeofparticularreportshastobefedback“whereverpracticable”.
However, the volume of cases receiving direct feedback from the UK FIU is currently extremely low in
comparisontothenumberofSARssubmittedbyBBAmembers.Feedbackcanbereceivedinwriting,along
withindirectfeedbackbywayofaCourtOrder(althoughthereneednotbeadirectcorrelationbetweenthe
SARandtheOrder).Directfeedbackisveryoccasionallyreceivedalsointheformoftelephonecallsorletters
of thanks from individual oYcers, although again volumes are very low. It has been known that at the
conclusion of a major investigation that involved SARs being a submitted a de-briefing session is held for
interestedparties.
TheUKFIUdoesproducearangeofinformationandalertproductsthatseektoprovidegeneralfeedback
to the reporting sector on money laundering/terrorist financing typologies. While helpful such information
productstendtoconfirmpriororexistingknowledgeofmoneylaunderingandterroristfinancingtypologies.
TheBBAhascalledupontheUKFIUtoinvolvethereportingsectormoreregularlyinthedevelopmentand
draftingofinformationproductstoensuretheseaddvaluetorecipients.
Whatistheextentofthefeedbackandinputonterroristfinancingissuesfromintelligenceandsecurityservices?
Unabletocomment.TheBBAanditsmembersarenotawareofanyfeedbackandterroristfinancingissues
fromtheintelligenceandsecurityservices.
WhataretherespectiverolesofEuropolandEurojustincounteringmoneylaunderingandterroristfinancing?
The BBA understands that Europol fulfils a role in the system of exchange of information between EU
authoritiesonSARsincounteringmoneylaunderingandterrorisstfinancing.Eurojust’sroleistoimprove
cooperation and coordination between the competent judical authorities of the member States when
investigatingandprsosecutingtransnationalorganisedcrime.
MonitoringImplementation
WhatEUmechanismsexistformonitoringimplementationoftherelevantlegislativemeasures,andwhatresultsinterms
offormalcomplianceandeffectiveimplementationhavesofaremergedfromtheuseofthosemeasures?
Other than the European Union’s general infraction proceedings, the BBA is unaware of any formal
mechanismsformonitoringimplementationoftherelevantlegislativemeasures.Undertheumbrellaofthe
EuropeanBanking Federation,nationaltrade associationsincludingthe BBAdoshareinformation onthe
statusofimplementationofrelevantlegislativemeasuresineachMemberStaterepresented.
HasconsiderationbeengivenwithintheEUorbytheFATFtowhethertheoverallresultsderivedfromthepresent
systemjustifytheburdensplacedontheprivatesector?
TheBBAisunawareofanysuchconsiderationbutwouldwelcomesuchanexercise.
Are there plans to review the existing EU legislation or international standards in a manner which would be more
sensitivetothepositionoftheprivatesector?
TheBBAisnotawareofanysuchplansbutwouldwelcomesuchadevelopment.
RichardCook
Director,FinancialCrime
3February2009
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money laundering and the financing of terrorism: evidence 3
MemorandumbytheInstituteofCharteredAccountantsinEnglandandWales(ICAEW)
WrittenevidencesubmittedinFebruary2009totheHouseofLordsSelectCommitteeontheEuropeanUnion
Sub-committeeF(HomeAVairs)inconnectionwiththeirinquiryintoEUandinternationalcooperationto
countermoneylaunderingandthefinancingofterrorism.ThisevidencewaspreparedfortheCommittee,and
isitsproperty.
Introduction
TheInstituteofCharteredAccountantsinEnglandandWales(ICAEW)welcomestheopportunitytoprovide
writtenevidencetotheHouseofLordsSelectCommitteeontheEuropeanUnionSub-committeeF(Home
AVairs),inconnectionwiththeirInquiryintoMoneyLaunderingandtheFinancingofTerrorism.
TheICAEWhasbeenaleadingcontributortothedebateondevelopinganti-moneylaunderinglegislation,
sincethedevelopmentoftheProceedsofCrimeAct,beforeitwaspassedin2002.KarenSilcock,thechairman
of the ICAEW’s Money Laundering Committee is a member of SOCA’s Suspicious Activity Reporting
RegimeCommittee,selectedbySOCAtorepresenttheaccountancysectorinthishighlevelgroupestablished
bytheSOCAboardwhichoverseestheoperationoftheregime,andtheICAEW’sHeadofBusinessLaw,
Felicity Banks, represents the Consultative Committee of Accountancy Bodies on the Treasury’s Money
LaunderingAdvisoryBody.Theanti-moneylaunderingguidance,issuedbytheCCAB,hasbeenapproved
bytheTreasuryforapplicationbyallaccountancyserviceproviders.
ThisresponseismainlyaimedattheimplementationoftheThirdMoneyLaunderingDirective,no2005/60/
EC,whichdirectlyimpactsICAEWmembersinpracticeandpractisingfirms.
Unlessclearfromthetext,inthispapertheterm“moneylaundering”shouldbereadtoencompassterrorist
funding.
MainPoints
DifferencesinImplementation—PredicateOffencesandDefinitionsofMoneyLaundering
1. TherearesignificantdiVerencesintheimplementationofthemoneylaunderingdirectivesintheUK,as
comparedtootherEUmemberstates.
2. TheICAEWbelievesthattheUKhasbeenexemplaryinitsspeedandthoroughnessofimplementation.
ThedirectiveshavealsobeenimplementedintheUKinawaywhichhasledtoaverylargenumberofmoney
laundering suspicious activity reports (SARs) having been made to SOCA, with an expensive and
sophisticated system for their recording and use. For example, through our work with the European
Federation of Accountants (FEE—www.fee.be) we understand that although practising accountants in the
UKsubmitover8,000SARsayear,theaccountancyprofessionsinothermemberstatehavesubmittedno
morethan100inanyyear,andsomemuchless.
3. Some other member states have been slow and reluctant to implement the money laundering directives.
However, the ICAEW does not believe that inadequate implementation represents the most significant
diVerencesintheoperationofthesystemsintheUKandothermemberstates.Rather,thediVerencesliein
therigourandenthusiasmwithwhichtheimplementeddirectivesareinterpretedandenforced,inthewaysin
whichoptionsinthedirectiveareimplementedandtheunderlyingcriminaloVencesareframed.Thegreatest
diVerencesseemstoliein twoparticularcharacteristicsoftheUKlegislation,whichare oftennotreflected
elsewhere.Theseare:
— Allcrimesreporting.
Underthedirectives,thedefinitionof“criminalactivity”islimitedtoinvolvementinthecommission
ofaseriouscrime,withtheeVectthatthelaunderingoftheproceedsoflessseriouscrimescanbeleft
outoftheSARsreportingregime.ThatisnotthecaseintheUK.
— Proceedsofowncrime.
The definition of money laundering in the directives is framed firstly in terms of conversion or
transferofcriminalproperty,andsecondlyinitsconcealmentordisguise.Thethirdelementofthe
definitionistheacquisition,possessionoruseofproperty,knowing,atthetimeofreceipt,thatsuch
propertywasderivedfromcriminalactivity.Manyjurisdictionshaveinterpretedthisasindicating
thatatleastonetransactioninthecriminalpropertymusttakeplaceformoneylaunderingtoexist.
In the UK, the simple and passive possession of the proceeds of an oVender’s own crime also
representsmoneylaundering.Thisdrawsintothemoneylaunderingreportingnetmanyinstances,
likemuchtaxevasion,wherenoactiveconcealmentormoneylaunderingtakesplace.
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4 money laundering and the financing of terrorism: evidence
CostEffectiveness,anditsMeasurement
4. Thecostsoftheanti-moneylaunderingregimeintheUKareundoubtedlyveryhigh.However,theexact
quantumofthecoststhatareincurredexclusivelyonanti-moneylaunderingarediYculttojudge.Theclient
duediligenceprocedureswhichareperformedprimarilyforanti-moneylaunderingcompliancepurposesare,
for example, undoubtedly also useful in reducing risks for accountancy firms in accepting inappropriate
clients,orthosewhosebusinessrationaleisunclear,withconsequentreputationalrisks.
5. Probably,overtheprofessionasawhole,morecostsareincurredintheareaofclientacceptanceprocedures
and due diligence than in the systems for suspicion evaluation and reporting. Since implementation of the
directivesappearstohavebeenlessvariableinrequirementsforclientduediligencethaninthedefinitionand
reportingrequirementsforsuspectedmoneylaundering,costsarelikelytobehighthroughoutEurope.
6. Thebenefitsoftheanti-moneylaunderingreportingregimeareevenmorediYculttojudge.IfeVectively
fedintothelawenforcementprocess,andusedeYciently,SARswillprovideusefulintelligenceandthusenable
criminalinvestigationstobecarriedoutmorecheaplyandwithbetteroutcomes.AneYcientlawenforcement
system has significant benefits in terms of better public trust and safety, fairer commerce and economic
progress and improved international reputation. Partly due to the secrecy necessary to much criminal
investigation,however,thebenefitsarelikelytobediYculttoassesswithaccuracy,eveninasinglecase.This
isevenmorethecaseforsuspectedterrorism.However,theoverallcost/benefitbalanceintheUKdoesappear
tobeimprovingovertime,asshownbytheincreaseduseofreportingintelligenceacrossawiderangeofserious
andviolentcrimeaswellasbeingusedforrestraintandconfiscationofcriminalproceeds(evidencedbythe
mostrecentreportfromSOCAontheoperationofthereportingregime).Giventhehighcosttotheregulated
sectorofcompliancewiththedirectives,anallcrimesreportingsystemfeedingintolawenforcementteams
focussedonextractingvaluefromthedatawouldseembettertojustifythecostandextractrealbenefitforthe
communitythanasystemthatrequiresamassiveinvestmentinsystemsandproceduresbutproduceslittleof
intelligencevalue.
7. SOCAareconsciousoftheimportanceoffeedbackaboutitswork,andcontinuetodiscussthisissuewith
membersoftheaccountancyprofessionandotherstakeholdersonimprovingit.TheICAEW’sperceptionof
thesituationisthatwiththeincreasedresourcesbeingmadeavailabletoSOCA,andtheimprovementsmade
totheirsystems,theeVectivenessofthesystemhasimprovedandwithititscosteVectiveness.
8. It is the ICAEW’s belief that, although the costs of implementation in the UK, for the accountancy
professionatleast,maybehigherthaninotherjurisdictions,theverysignificantimprovementinthecontrol
ofillegalactivitiesthatresultsmakestheregimecosteVective.Thoughcostsmaybelessinotherjurisdictions,
the ICAEWbelieves thatthe costswhich areincurred aremore likelyto bewasted, dueto themuch lower
benefitintermsofthecontrolofcrime.Thatis,thehigherbenefitsjustifythehighercostsincurred.
9. Ultimately,thebenefitofavertingevenasingleseriousterroristoutrageisextremelyhigh.
ResponsestoSpecificQuestions
CooperationwithandbetweenFinancialIntelligenceUnits(FIUs)
HoweffectiveiscooperationamongFIUs,andbetweenFIUsandotherauthorities?Whatarethepracticalresultsof
thiscooperation?
How does the private sector feed into this cooperation? To what extent is satisfactory feedback to the private sector
requiredbyinternationalstandards,andwhathappensinpractice?
10. TheICAEWcanprovidelittleevidenceontheeVectivenessofcooperationbetweenFIUs,thoughweare
aware of the existence of the Egmont Group of FIUs and we believe it to be operating satisfactorily. For
example,wehavereceivedassurancesfromSOCAthatsensitivereportsofsuspicionsprovidedbyICAEW
members will only be released to overseas jurisdictions through a member of the Egmont Group, with the
resultthatICAEWmembersneednotfearirresponsibledisclosureormisuseoftheirconfidentialinformation.
11. CooperationbetweentheUKFIUandotherauthoritiesappearstobeextensive,andtheevidenceofour
ownrelationshipwithSOCAsupportsthisconclusion.Feedbackoperatesinbothdirections,increasingtrust
betweenthevariouspartiesinvolved,andhencetheeYciencyandeVectivenessofthesystem.
12. Theprivatesectorfeedsintothiscooperationthrough:
— the Money Laundering Advisory Committee, led by HM Treasury and the Home OYce, which
includesrepresentativesofkeyelementsoftheregulatedsector,lawenforcementandGovernment
Departments;
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money laundering and the financing of terrorism: evidence 5
— theAnti-MoneyLaunderingSupervisorsandRegulatorsFora,whereAMLsupervisors(including
bothpublicbodiesandprivateprofessionalbodies)discussmattersofconsistencyandconcernwith
eachotherandwithSOCAandGovernmentDepartments;and
— theinclusionoftrustedindividualsfromtheprivatesectorinSOCAconsultativebodiesheadedby
theSuspiciousActivityReportingRegimeCommitteebutalsoencompassingthe“VettedGroup”
whichworkswithSOCAtoshare sensitiveintelligencewiththereportingcommunity,andspecial
focusgroupssuchasthosesetuptoprovideprivatesectorinputintothedevelopmentofinformation
managementsystemswithinSOCA.
13. Inaddition,SOCAruntheirowntrainingeventsformembersoftheprivatesector,andprovidespeakers
forprivatelyruntrainingevents.Theseeventspromotetwowaycommunication,withquestionsfromthefloor
allowingconcernsandcommentsoneVectivenesstobeexpressed.
14. AnexampleoftheeVectivenessoffeedbackandcooperationisintheareaoftheconfidentialityofSARs.
In the early years after the implementation of the Money Laundering Regulations 2003, we received fairly
frequent reports of the disclosure to the clients of our members that their accountant had made a SAR,
revealingasuspicionthattheclienthadactedillegally.Thismostfrequentlyoccurredthroughadministrative
carelessness, or to assist the eVectiveness of questioning (by indicating the seriousness of evidence of
wrongdoingtoasuspect).TheeVectontheclient/accountantrelationshipcouldbecatastrophic,andledto
markedreluctanceinotheraccountantstoreporttheirsuspicionswhentheseinstanceswererevealedinthe
press.However,sincefeedbackwasgivenoftheseriouseVectsthattheselapsescouldhaveoncooperationby
the accounting profession, and (we believe) a more eVective relationship between SOCA and the Law
EnforcementAgencies,thereportsofbreachofconfidentialityhaveradicallyreducedandarenowveryrare.
15. BothEUDirectivesandtheFATF“Recommendations”requirefeedback totheprivatesector,butare
not specific about how or what feedback should be given. Members of the accountancy profession would
prefer more feedback, at a number of levels, both to help firms and the accounting professional bodies to
manageriskandtoprovidefeedbackontheusefulnessofreports.TheICAEWisawarethatSOCAisworking
onincreasingtheamountandusefulnessofthefeedbackthatcanbegiven.
Whatistheextentofthefeedbackandinputonterroristfinancingissuesfromintelligenceandsecurityservices?
16. TheICAEWunderstandsthatSOCAhasgoodlinkswiththeintelligenceandsecurityservices,andthat
terroristandfinancingissuesformasizeablesectionofthetheirwork.
17. FeedbackgiventotheICAEWbySOCA(fordisseminationtoselectedmembers)includesinformationon
areasofgrowingillegalactivitywhichcouldbeassociatedwithterrorism,andwhereitisbelievedthathigher
awarenessofthesebyourmemberscouldimprovetheintelligenceavailabletoLawEnforcementAuthorities,
bythemakingofmoreandbetterrelevantSARs.
Towhatextentarealternativeremittancesystemsappropriatelycoveredbyobligationsofcooperationinthiscontext?
WhatwillbetheimpactoftheimplementationbyMemberStatesoftherelevantprovisionsofDirective2007/54/EC
inthisregard?
18. Alternative remittance systems are by their nature informal, and not highly organised. Many money
servicebusinessesarenotmembersoftradebodiesandmanymaynotbeawareoftheirobligationsunderthe
MoneyLaunderingRegulations.HMRC,aswellasSOCA,areactingtoincreaseawarenessinthissector.The
ICAEWhasnospecificviewsonthelikelyimpactofDirective2007/54/ECinthisregard.
EUInternalArchitecture
19. TheICAEWhasnoviewsonthismatter.
InternationalCooperation
WhathavebeentheresultsofthethirdroundofmutualevaluationsofEUMemberStatestodatecarriedoutbythe
FATF and MONEYVAL, with particular reference to the effectiveness of international cooperation (including as
betweenFIUs)?
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6 money laundering and the financing of terrorism: evidence
20. TheICAEW’sexperienceoftheprocessofmutualevaluations islimitedmainlytoourcontributionto
theFATFevaluationoftheUK.Thisleadsustobelievethattheevaluationsaretakenseriouslybyboththe
jurisdictionsubjecttotheevaluationandtheteamofevaluators,withgreateVortmadetojustifythewaysin
which compliance has been achieved and to understand this justification. This gradually spreads
understandingofdiVeringapproaches,adoptionofthebestandconsequentlyincreasedtrustandcooperation.
Thisis,however,aslowprocess.
Towhatextenthastheformalframeworkforcriminaljusticecooperationinthisareabeeneffective?
21. TheICAEWhasnoviewsonthismatter.
Towhatextentarethesesystemsusedtoenforcecompliancewithnationaltaxobligations?
22. The ICAEW’s knowledge of the use of the AML system to enforce compliance with tax obligations is
mainly limitedto the UK,where SARs aresubmitted in relationto suspected taxevasion, and areused by
HMRC.
23. NotalljurisdictionsconsidertaxevasiontobeapredicateoVenceformoneylaunderingpurposes.
EU-UNCooperation
24. TheICAEWhasnoviewsonthismatter.
MonitoringImplementation
WhatEUmechanismsexistformonitoringimplementationoftherelevantlegislativemeasures,andwhatresultsinterms
offormalcomplianceandeffectiveimplementationhavesofaremergedfromtheuseofthosemeasures?
WhataretheimplicationsofthoseresultsforcooperationwithintheEU,andmorebroadly?
25. BesidestheformalEUmechanismsformonitoringcompliancewiththemoneylaunderingdirectives,the
professions and some trade groups have pan-European associations which also monitor implementation,
particularly as it aVects their members or stakeholder groups. An example of this is the ICAEW’s work
withFEE.
26. Global professional associations also work to monitor compliance in various jurisdictions on a global
basisandadvisetheirmembersonexpectations,whenactingoverseasorinacrossbordercontext.Agood
example of this is the useful site that the International Bar Association has set up at http://www.anti-
moneylaundering.org, which gives a comprehensive guide to anti-money laundering legislation and
compliance,throughouttheworld.
HasconsiderationbeengivenwithintheEUorbytheFATFtowhethertheoverallresultsderivedfromthepresent
systemjustifytheburdensplacedontheprivatesector?
27. TheICAEWisnotawareofcomprehensiveexerciseswhich havebeenundertakenbyeithertheEUor
FATFtomeasurethecosteVectivenessofthepresentsystem,butseeaboveunderourmainpoints,forour
commentsonthediYcultiesofmeasuringcosteVectiveness,andthevalueofthesystemintheUK.
Are there plans to review the existing EU legislation or international standards in a manner which would be more
sensitivetothepositionoftheprivatesector?
28. FATFhasrecentlyintroducedguidanceontheapplicationofariskbasedapproachtocompliancewith
itsrequirements,bytheprivatesector,whereaspreviouslyamorebureaucraticsystemhasbeenappliedinits
interpretationofitsrequirementsandinmutualevaluations.TheICAEWsupportsthismove,andthefurther
extension of a risk based approach to implementation, which we believe will lead to a more cost eVective
system.