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#Anti Money Laundering

“Smell Test” You will know it when you see it

International Compliance Association

World Bank

“The Puppet Masters” report issued by the World Bank in November, while lengthy, is a quality source of information and guidance on the ever thorny issue of beneficial ownership. It does take a few minutes to fully load – be patient, it’s worth the wait.


http://www1.worldbank.org/finance/star_site/documents/Puppet%20Masters%20Report.pdf


The report is a really useful reference point for anybody handling the CDD processes for their organisation or in the compliance / AML teams and I would say a  “must read” for anybody studying the ICA Diploma in Anti-Money Laundering.

Don’t you just love the recommendations?

  • Information available and accessible at company registries
  • Service providers collecting CDD and allowing access to it
  • Beneficial Ownership available within the same jurisdiction
  • Abolish bearer shares
  • Strengthened investigative capacity

What a wonderful world it would be if these all happened  tomorrow. Oh what  happy MLROs we all would be.

So why not charities?

Perhaps because they are “probably the worst things in the world” to understand CDD requirements for.

Does the Queen not have a significant influence on a charity that she supports? Would she need to send a copy of her passport? (I don’t think she has one) and what about utility bills in her name?

Does this make the organisation a “PEP” status?

OK we have the Charity Commission website but, as the JMSLG advise, “even if a charity is registered this is not a guarantee of the bona fide of the organisation although it does indicate it is subject to some on-going regulation”.

So what does it come down to?

The quote in the Puppet Mastersreport from the Compliance Officer sums up my thoughts very well - “Any due diligence systems can be beaten.”

The “Smell Test”

Sometimes you just know it ain’t right or, in more formal term, an informal method for determining whether something is authentic, credible, or ethical, by using one's common sense or sense of propriety.

In my view the smell test is still the best tool and worth far more than all the automated systems, databases or Googles in the world.
There remains this grey area, not just for charities, but for all non-personal entities. Don’t be afraid to ask the questions if it does not feel right.

No - MLROs are not business prevention officers. They just work to keep you and themselves out of jail.   And I should know being an ex MLRO!


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