Richard Brooks\’ Private Eye money laundering piece

All rather fun really, the big piece that Richard Brooks had in Private Eye about money laundering.

Fun as in Brooks entirely misses the logic of the story he\’s telling.

The first is that this Nigerian governor stolle loads of cash. The conclusion from this is of course that we shouldn\’t allow politicians anywhere near society\’s cash box: minarchist state here we come.

The second is that it\’s all about how appalling it is that such money laundering goes on. How we\’ve got to stop it, the City must be cleaned up, offshore must go.

Yet, umm, these guys got caught, tried and jailed. So whatever the system is what they were doing was already illegal and the mechanism to catch them was already in place. And seems to have worked too.

So, err, what\’s wrong with the system that caught and jailed them?

12 thoughts on “Richard Brooks\’ Private Eye money laundering piece”

  1. “How we’ve got to stop it, the City must be cleaned up, offshore must go.”

    Which in practice would mean any swarthy looking chap walking into a bank would be assumed to be a crook and sent packing. How soon before we’d hear about racist banking practices?

  2. It seems a common solution to those on the left to say that something isn’t working so needs more regulation even if existing regulation already exists. It’s like they haven’t actually researched the subject and just come out with the same argument every time. The two Dicks (Murphy and Brooks) are peas in a pod.

  3. Dennis The Peasant

    “So, err, what’s wrong with the system that caught and jailed them?”

    How about this: Then Richard Brooks would have nothing to write about, and… would have to find a real job to support himself.

    No doubt Mr. Brooks sees that as a serious problem.

  4. Blimey Tim, did you read the article or just skim it?

    The specific issue:
    One Nigerian governor and his accomplice a UK lawyer brought to justice. None of the other people who facilitated it, e.g. the bankers involved who didn’t do proper checks etc, brought to justice.

    The wider issue:
    Lots more money laundering going on, bankers not doing what they are supposed to be doing (proper checks) but not being brought to justice. Other facilitators of money laundering not being sorted out. Police need more resources – quote from policeman (from memory), “If I had 100 more men we’d still be busy.”

    It seems a common solution to those on the left to say that something isn’t working so needs more regulation even if existing regulation already exists.

    I gave my copy away, so I can’t check, but I don’t think Brooks called for “more regulation”, except in regard to ‘tax havens’, he called for the regulations to be enforced.

  5. “quote from policeman (from memory), “If I had 100 more men we’d still be busy.”

    That applies to any activity not involving police boots interacting with pavement, so ignorable.

  6. @ukliberty, so long as the politicians keep on creating new laws by the dozen every second the police will always need 100 more men to just keep up with normal policing. So prioritisation will always take place. In this case those who benefited the most out of the crime are the ones who are targeted.

    Yes, the banks should do something to stop money laundering, but there is a limit to how far they go. Should they go as far as ISPs go in stopping copyright theft. Should they ban all transactions by Nigerians like ISPs ban all interaction with The Pirate Bay?

    And what is money laundering? In American terms it’s any transaction that uses US dollars that doesn’t go through a US branch of a global bank.

  7. The case Brooks focussed on is that of a Nigerian state governor James Ibori, who was paid the equivalent of £4k a year but somehow bought a house in Hampstead for £2m in cash (among many other expensive goodies). As I recall, he went a bit too far in ordering a $20m private jet.

    The claim is that some banks do not do what they are legally required to do. Brooks didn’t suggest (1) there should be no limit on how far banks go, (2) going as far as IPs in stopping copyright theft or (3) banning all transactions by Nigerians.

    In 2011, the FSA published a report on “How banks deal with high-risk customers (including
    politically exposed persons), correspondent banking relationships and wire transfers”. Case studies of high risk relationships from page 77.
    http://www.fsa.gov.uk/static/pubs/other/aml_final_report.pdf

    Our review found no major weaknesses in banks’ compliance with the WTRs [wire transfer regulations]. On correspondent banking, there was a wide variance in standards, with some banks carrying out good quality AML [anti money laundering] work, while others, particularly smaller banks, carried out either inadequate due diligence or none at all.

    Our main conclusion is that around three quarters of banks in our sample, including the majority of major banks, are not always managing high-risk customers and PEP [politically exposed person] relationships effectively and must do more to ensure they are not used for money laundering. Despite changes in the legal and regulatory framework a number of the weaknesses identified during this review are the same as, or similar to, those identified in the FSA report of March 2001 covering how banks in the UK handled accounts linked to the former Nigerian military leader, General Sani Abacha. We are concerned there has been insufficient improvement in banks’ AML systems and controls during this period.

    Serious weaknesses identified in banks’ systems and controls, as well as indications that some banks are willing to enter into very high-risk business relationships without adequate controls when there are potentially large profits to be made, means that it is likely that some banks are handling the proceeds of corruption or other financial crime.

    And what is money laundering?

    Money laundering is generally defined as the process by which the proceeds of crime, and the true ownership of those proceeds, are changed so that the proceeds appear to come from a legitimate source.
    http://www.lawsociety.org.uk/productsandservices/practicenotes/aml.page

  8. I fell foul of “money laundering” laws. I went into the bank where I have had an account since my father opened one for me in 1943 and wrote a cheque for £1200 cash. They would not give it to me unless I produced my passport or driving license. (I had produced my bank card) They even had the cheek to ask what I wanted it for.

    “I’m not a little boy asking for more pocket money” I said “I want it because it’s mine”.

    They assured me, of course, that it was all for my own protection.

    Didn’t Private Eye say what you have said to the Leveson enquiry? All the things the enquiry was looking into were already illegal, so all that was required was enforcement of existing law – but I bet we get a whole dollop more, just to show that Leveson was on the case.

    I

  9. I don’t recall Brooks calling for new legislation – except perhaps larger fines, but I might be conflating that article with something else. I recall him saying there should be better enforcement.

    And yes, banks will ask longstanding customer Edward Spalton about his £1000, but not new customer Mr Nigerian state governor about his millions.

    Quite right about Leveson – the same point, better enforcement is needed, not new laws. In fact, a couple of years ago we could have said there wasn’t any enforcement at all. The eight(?) people charged are just the tip of the iceberg, so not evidence the system works.

  10. “The case Brooks focussed on is that of a Nigerian state governor James Ibori, who was paid the equivalent of £4k a year…”

    There’s a mistake there. Nigerian politicians are paid – legtimately – some of the highest salaries in the world, when you include the hundreds of allowances. Of course they vote for their own salaries, but they are legal. Senators earn in the region of $1.5m per year officially, and there are over 100 of them!

  11. There may be a mistake with the salary, I don’t know, but if so Brooks isn’t alone in making it.

    But two much bigger questions hover over the whole trial.

    First, when a man who has an official salary of £4,000 a year buys a house in Hampstead worth £2.2m, why did no-one smell a rat?

    Second, why did some of the best known banks in the world not ask questions about where the cash he deposited with them came from?
    http://www.bbc.co.uk/news/world-africa-17739388

    At Ibori’s sentencing hearing, Wass told the court how Ibori – once a “petty thief with his hand in the till” at the DIY store Wickes – amassed a portfolio of six properties outside Nigeria worth £6.9m at a time he was being paid £4,000 a year as state governor of the Delta region.
    http://www.guardian.co.uk/global-development/2012/apr/17/nigeria-governor-james-ibori-sentenced

  12. sackcloth and ashes

    ‘So, err, what’s wrong with the system that caught and jailed them?’

    The system should never have allowed someone as blatantly corrupt as James Ibori to use British banks to stash money looted from a desperately poor country.

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