The dirty money governments recover isn’t worth the paperwork
SUSPICIOUS ACTIVITY
This past week I have been in the Bahamas, attending a very interesting conference organized by the Central Bank of the Bahamas on money laundering. I met up with some old friends and made some new ones, which was great (and I went snorkeling). I mentioned a couple of the conference papers in last week’s newsletter, and this week I want to highlight an interesting presentation by Aretha Campbell of the University of the West Indies, comparing the costs of complying with money laundering regulations between small and large countries.
She argued that, since most requests for information come from large countries (members of the OECD, the European Union or others) while the cost of answering those requests is covered by small countries, there is a mismatch in who is paying for anti-money laundering work.
- “The overall conclusions drawn from these findings are that [anti-money laundering] initiatives undertaken in The Bahamas, Bermuda, the BVI and the Cayman Islands and the costs associated with them serve to benefit mainly OECD and EU countries, with the larger benefactors being the European Union, the US and UK,” her paper states (it’s the fifth on this list).
I’m sort of sympathetic to this argument, although my sympathy is tempered by the fact that all four of those countries make a decent living out of helping citizens and companies from large countries to avoid taxes, so I’m also sort of not sympathetic. But there was an interesting discussion afterwards about the part of her presentation dealing with Suspicious Activity Reports (also known as Suspicious Transaction Reports), which are the means by which professionals that handle money report any concerns to the authorities.
In some countries, professionals report huge numbers of SARs/STRs, while in others they report very few. So, which is better? Does a large number mean there’s a lot of money laundering because professionals are reporting so much? Or does a large number mean there’s not much money laundering because professionals are so suspicious? Or does it mean something else entirely? Or nothing at all?