Be Aware and Beware

It’s Anti-Money Laundering awareness week…and over the last couple of weeks there has been a clutch of examples where AML awareness may have served some people well.

The major consequence, for individuals and for firms, seems to be the reputational impact, although there can be some hefty fines and restrictions on operations as well.

September highlights include:

  • The National Crime Agency highlighted money laundering as a £90bn problem in the UK, and at the same time warned private schools to be more vigilant that payment of school fees could be an example of laundering.  The selling point for private schools is usually around their reputation.
  • Roman Abramovich, the Russian oligarch owner of Chelsea Football Club, was denied Swiss residency because of suspicions of involvement in money laundering.  Swiss federal police said that he represented a risk to the country’s reputation.
  • Germany’s financial regulator, BaFin, has appointed auditors to monitor Deutsche Bank’s implementation of anti-money laundering controls, as they were unhappy with progress.  This is a big deal as it is the first time the regulator has done something like this (Deutsche already paid out $630m to settle US and UK investigations).
  • Danske Bank’s chief executive, Thomas Borgen, resigned over one of the largest money laundering scandals ever uncovered.  Around €200bn of questionable money flowed through its small Estonian branch; these flows were so profitable that Borgen did not want to review or potentially reduce them.  Danske used to be one of the most respected banks in Europe, not anymore.

The amounts involved may be large or small (e.g. school fees), but the reputational impact may be huge. Having effective controls is a relatively easy mitigation against a potentially serious reputational consequence.

Sources:   The Independent, The Financial Times, The Economist


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