Photo credit: ICIJ After the Panama and Paradise Papers, we now have the Pandora Papers and it is safe to conclude that – despite the enormous quantity of information revealed – this might still only be the tip of the iceberg. The good news is that the papers reveal that not all money is dirty money.
Not all wealth mentioned in the papers is ill-gotten, and to use a well-known term: in many cases no red flags are raised over the Source of Wealth. The bad news is that a lot of the money is dirty money. Avoiding taxation on clean money is one thing, but ill-gotten money usually involves criminal activities in one form or another and no legitimate firm wants to be involved with that.
Mandatory UBO (Ultimate Beneficial Owner) registers, banning of offshore accounts, and many other stricter regulations have been implemented and could limit the hiding and money laundering, but is that really going to help? Let’s look at two aspects here.
First, the perpetrators.
People are greedy while reputable and legitimate FIs (Financial Institutions) can do little to prevent these actions or lack of respect for laws, regulations, and integrity in general. That is more an issue for governments and society at large to deal with. Second, what FIs can do is take their job as gatekeeper to prevent serious financial economic crime.
That is, among many other things: do proper CDD (Customer Due Diligence), monitor client activity and transactions, and have adequate risk and alert management systems in place. To check the Source of Wealth of a customer for instance, to have a clear FEC Risk Appetite statement in place that is known and followed throughout the organisation, have employees trained and have operational FEC (Financial Economic Crime) processes managed and controlled well.
What if a FI is not completely sure about the adequacy of processes and controls?
Then you can seek help from Lysis.
Rolf van der Pol Director Lysis Singapore