Combatting Money Laundering
They say that if a snake comes into your kitchen you don't feed it, you chop its head off. Somewhat simplistic and pandering to the Hollywood treadmill maybe? To some extent yes, but the argument holds true. For many years it has been considered vital to cut off financial fluidity to those individuals and organisations that feed the terrorists threats. The subject of terrorist financing is huge and one which has been tackled by many of the finest academics, specialists and investigative organisations in the world. It is the sheer size and weight of the topic that is the very problem itself because the time and resources required to monitor and assess the activities of terrorist financiers means that ultimately something has to give. Refinement and efficient targeting is therefore of paramount importance and that, inevitably, means that some activities will slip through the net. It is simply impossible to cover all areas of the network, especially when our enemies continue to develop branches of that network that are nothing more than 'noise' and fabricated to create a diversion of our time and resources. The one saving grace is that at least in this type of battlefield the boundaries are known and we are able to focus on well known, tried and tested means of laundering funds and transferring those funds throughout the network. For example, financial institutions are subject to increasing levels of scrutiny as part of the financial and legal framework within the UK to ensure that as many participants are aware of the significant consequences of not adhering to Anti Money Laundering procedures as possible. In that respect we can use the public and professionals within the banking system to operate within a strict framework, and that can surely only be beneficial in assisting the fight against funding terror.
The intricate and increasingly sophisticated means with which the criminals (not just terrorists) by pass our security measures requires constant supervision.
Here we outline some of the more recent methods and assets used to facilitate this activity and offer some suggestions as to which route the financing road might take from here on in.
The UK has the most robust Anti Money Laundering systems right?
Well, one would think so, but some significant loopholes still exist which actually makes the UK an attractive target for channeling laundered funds and creating a 'noisy network' of elaborate distractions. Probably at the core of the reason for this is the codependent relationship between the City and our Politicians. If our systems are too robust we run the risk of alienating genuine foreign investment and therefore in turn we frustrate those market participants in search of growth. The policy makers on the other hand have to cater for both groups namely the financiers and investment houses as well as the public and politicians wanting action against, what is probably the greater threat out of the two, namely terrorist money laundering. As always they balance tentatively between the two and this, unfortunately, means loopholes will remain un-filled.
A recent example would be the laws and regulations concerning company formations in the UK and their relationship with the offshore businesses. To understand why this is of particular relevance, it would be useful to provide some perspective as to the scale of the problem as it exists now.