Absolutely: we really must have very strict regulations about who can transfer money where. For people might avoid tax. There\’s no downside to this at all of course: just pile the regulations onto the banking and money transfer system and there are no costs to this at all:
Some of the world’s poorest countries are losing billions of pounds because their migrant workers are being charged double the transfer fees to send funds home compared with migrants from developed nations.
Workers from sub-Saharan Africa are charged on average 20 per cent of the amount of money they want to transfer, compared with 9 per cent for those moving money to developed nations, according to a report by the United Nations’ Conference on Trade and Development.
Hmm. Excessive pricing perhaps? Possible the result of a near monopoly position?
Recipients in sub-Saharan Africa could have collected an additional $6 billion in 2010 if the transfer costs had matched the global average, UNCTAD said.
Junior Davis, the report’s author, said that part of the problem was that Western Union and MoneyGram, the money transfer specialists, have a 65 per cent share of the market in sub-Saharan Africa because of exclusivity agreements with local banks.
Well, the answer there is obvious: more competition then.
A spokesman for Western Union said that its average fee for transferring money was 5 to 6 per cent of the amount being sent, but that its pricing varied from country to county depending on factors such as security and local regulatory compliance.
But it\’s that regulatory compliance which keeps out the competition. Back when PayPal was getting going, their basic tech was simple enough. Their actual business problems revolved around getting through the thickets of regulation. The same is true of someone trying to set up a payments system now. The regulations about money laundering etc are so oppressive that it\’s just not an easy thing to do. Nor, in fact, all that profitable precisely because of those regulatory costs.
The incumbents are going great guns: precisely because the regulation hampers competition.
Recipients in sub-Saharan Africa could have collected an additional $6 billion in 2010 if the transfer costs had matched the global average, UNCTAD said.
$6 billion nicked off the poorest in the world so that Ritchie can insist that taxes aren\’t avoided.
tbf stealing from the poor is where money is leaving africa.
I thought the money “laundering” regs were more to do with “proceeds of crime” than taxes? That is, you make it illegal to be a sinner (take drugs, gamble, etc), then people set up a black market, so then you need to poke your nose into everybody’s private finances to try to grab the money from the black market, kind of thing.
It is also extremely difficult to set up a bank account at home if you are living abroad. You need proof of address, proof of income, all of which will be in another language.
Meanwhile the criminals have no doubt found great ways to get around the rules. They are after all criminals, so don’t care for rules by default.
Money laundering regulation is so out of control it’s amazing.
When we sold our house recently, we naturally had to submit to money laundering procedures by the solicitors. OK, fair enough.
When some of the proceeds went to HSBC we were rung up and told that in view of the sum involved, we would have to answer a few questions…
When we then opened a Santander savings account, dear old money laundering regs appeared again.
I explained to both HSBC and Santander that their MLR work was superfluous, but I was of course, ignored.
Anyway, it’s pretty obvious that without all this crap the actual cost of an electronic money transfer ought to be somewhere in the “too cheap to meter” price point.
Worth pointing out, this is particularly a UK problem.
I’ve opened bank accounts in both France & Spain on nothing more than a passport & a valid address ( although the french one does require a deposit a/c balance to get a Carte Blue)
I do have a UK bank account but as part of a power of attorney arrangement on a family member there would have been a necessity for me to sign checks. The requirements for POI were bloody ridiculous, particularly as the whole thing was being done through lawyers. They wanted 2 utility bills as well as the passport & as they seem to regard their own foreign banking offshoot as an entirely separate company & seem to have never heard of notaries, I’d have to visit the UK in person. Told them to fuck off & set the thing up another way.
If my experience is anything to go by, it’s no wonder these people are consigned to the clutching grasp of Western Union & its exorbitant fees
I might be wrong here, being at my more speculative, but I presume this is another darned fool idea we got from the USA.
Incidentally & particularly for Ritchie’s fan club’s benefit, the very considerable sums involved will in due course pass to yours truly. At which time they will be out of the clutches of HMRC & into an offshore low tax jurisdiction so fast the little pictures of the queen will be blurring.
The money laundering regs as applied by the banks bear rather little relation to the regs as written. The rules contain all kinds of special cases, exclusions, and so-on which the banks completely ignore, just going for a blanket policy of arse-covering. Amongst other things, if a financial services provider cannot verify your identity in the usual way – for example, because you do not receive utility bills – then they have a duty to find an acceptable alternative.
BIS>
So you admit you plan to steal some of the government’s money and keep it for yourself, presumably on such flimsy grounds as that you earned it?
“The money laundering regs as applied by the banks bear rather little relation to the regs as written.”
Don’t they, but.
My cousin tells me he produced his driving licence as ID at his bank & realised the clerk was entering all the details on their system. He protested & requested its return & the info removed, to be told this was ‘required’. Since when was confidential info like this ‘required’? What’s the point of the plastic card/ PIN then? If their system’s hacked the info he’d been required to submit would give the basis for a forged driving licence which would, obviously, match their records. Allowing anyone plunder his account.
No Dave, I intend to steal all of my money on the basis I didn’t earn a penny of it. But nor did they.
Western Union’s claim about 5 or 6% charges may be a bit disingenuous. They have a minimum fee, surely, so the smaller the amount you transfer (and African migrant workers rarely earn megabucks) the larger the % take by the banks.
The fons et origo of AML (anti-money-laundering) law and practice is a shadowy transnational outfit called the Financial Action Task Force, which is a sort of G30 (or thereabouts) of self-appointed goody nations which agree on various aspirations and how they will be implemented into domestic law. This group then audits its members for compliance, as well as non-members wanting in.
In the UK, the FATF’s blandishments have formally been implemented by instruments such as the 2007 Money Laundering Regulations. But yet more insidiously, the detail comes from “guidance” (not law, be it noted) provided by an offshoot of the British Bankers’ Association called the Joint Money-Laundering Steering Group.
The JMLSG’s Guidance comprises several hundred pages of largely repetitive waffle whose primary characteristic is to stitch up institutions and individuals required to have an eye to the Guidance if they are to have any defence to allegations of AML misfeasance (said institutions and individuals can be fined summarily irrespective of whether there has actually been any money-laundering). The result is that compliance department muppets and others who are often arse-covering bureaucrats, design procedures even more “rigorous” than the JMLSG’s, and even more onerous than nominally envisaged by the FATF, in order to, well, cover their arses.
For example, I bought a house a couple of years ago. The estate agent wanted to see my passport for AML purposes. He said it was required of his clients. I pointed out that I wasn’t his client (the seller was). He said his industry body’s own guidance (which, although he didn’t know it, drew on the JMLSG Guidance) nevertheless required it. I checked and indeed it did. I told him his industry body’s Guidance was nonsense (it was), and refused to give him my passport. But I suspect the only reason I got away with this was that he knew I specialised in this area professionally (well, that and the fee he’d get for selling the house). He wasn’t an expert. No reason why he should be. He just followed what his industry body told him, not unreasonably. It, not unreasonably, wants its members to think that it is protecting them, etc. etc.
In other words, arse-covering all the way down creates a ratchet effect all the way back up.
Oh, and it’s not “fair enough” that your solicitors require you to comply with their AML checks. It’s an outrage.
My cousin tells me he produced his driving licence as ID at his bank & realised the clerk was entering all the details on their system. He protested & requested its return & the info removed, to be told this was ‘required’.
It’s certainly worth money – the data that is. I get very arsey when people do things like that and do not-playing-the-game things like take my custom elsewhere. But then I’m not sure why I bother; there’s so much data kept on everyone now that it sometimes seems pointless to bother complaining. And even where it is legally required there is no guarantee whatsoever that it can’t be bought for a song because the person in charge of keeping it safe is not paid very much and therefore rather corruptable.
I sometimes think we should go the other way and flood the system with pointless data so that it all gets lost in the noise.
that’s ‘the system’ in the same vague sense as the one that you smash, and ‘The Man” etc.
*takes off tin-foil hat*
another post which you’d ridicule if written by lefty on a similar topic.
1. 65% of the market for two largest players is hardly a monopoly, are you sure lack of competitors is a quantitatively important problem in this market? Why are local banks signing exclusivity agreements, what makes you think they would stop doing so if there were a few more entrants to the market?
2. part of the problem is lack of competition, because of exclusivity agreements, opines the report author – some of that 6bn of extra costs will reflect various costs of doing business in SSA that have nothing to do with regulation.
but you attribute the whole 6bn to those interfering regulations preventing entry
Ian B (#2) said “I thought the money “laundering” regs were more to do with “proceeds of crime” than taxes?”
Tax evasion being a crime, money that has evaded (rather than just avoided) taxes is (in part) the proceeds of crime and so subject to money laundering rules.
O paid in a cheque the other day, to a UK High Street bank, and was told “since this is a large cheque (it wasn’t; 4 figures) you’ll have to answer a few questions”.
Then he said, “oh, no you won’t; it’s a business account.”
“I sometimes think we should go the other way and flood the system with pointless data so that it all gets lost in the noise.”
I’ve certainly made it a practice of supplying corrupted personal information wherever possible for years now. I’ve 4 dates of birth & 3 versions of my name. That’s for the stuff where the name isn’t totally fictitious altogether. It’s done primarily to stop correlation across databases & prevent fraud. Obtaining my personal data will not give you access to my bank account, for instance. But if more people did it, the databases would be useless.
“I sometimes think we should go the other way and flood the system with pointless data so that it all gets lost in the noise.”
I do precisely that. On one government survey I’m Chinese. On the next I’m Samoan. My religion varies from Jedi to Jewish to Atheist. I have entered garbage for socioeconomic data (I read the Guardian one day, the Daily Mail the next). I earn nothing, am a home maker, and make £100K.
All good crap to congeal between the teeth of the cogs of the machine that grinds us.
Apparently the best way to launder money is to buy a major football club and then sell it again.
Nope, James, that’s the 2nd best way to lose money. The best being to hang on to the football club.
I think we’re all clear on the disadvantages of data collection, but no-one ever mentions the benefits. A company like Google has every reason to protect your data if it’s commercially valuable – and the more data they collect, the more valuable it is, and the more reason they have to keep it secure. As people become more aware of the issues, it’s going to become absolute commercial suicide for a company to allow data to be leaked – as, if we’re being fair, it already is for the banks (who in general have a very good record of not giving out customers’ details).
That’s a side issue, though. The main benefit, and it is a benefit, is the ability to target advertising accurately. Only a small minority of ads are truly untargeted global branding efforts, which means that almost all the other ads you see are not targeted at you. At a stroke, those could be wiped from your world, and that’s just the start. Even well-targeted ads by current standards have a very low success rate and corresponding low value; when they can be targeted such that you will be made aware of something you want to buy as you want to buy it, the value of each individual ad will go through the roof. A single well-targeted ad in a year could more than replace all the revenue from the thousands of banner ads and so-on all over the internet.
People have no problem paying a personal shopper and then giving them all their information – so why do people object when Google wants to provide the same service for free?
I seem to recall that years ago people used to use casinos to launder money because the great thing about casino chips is that being fully fungible you can buy them with dirty cash and then exchange them for clean.
I am therefore waiting for the same thing to happen to the Bristol Pound, Brixton Pound, Lewes Pound, &c.
“A company like Google has every reason to protect your data if it’s commercially valuable”
Think you’re missing the point there, Dave. The data’s indeed valuable. Because it can be sold. But the commodity being traded is your personal data. If you’re being paid for that data, maybe by a service Google’s supplying in return, it’s a fair trade you’re agreeing to. It’s the data harvesting without permission or fair return is the problem. Why should Carphone Warehouse, for instance, feel it’s entitled to harvest your data simply because you buy an item from their store?*
*Which is why Mr G Brown of London SW11AA was such a good customer of their Queensway branch, couple years back.
The phishing gangs were certainly using London casinos to launder funds in about 2006 – I spotted it and we were able to have 12 of them arrested (for the original fraud not for the money laundering). However, the casinos also have MLR requirements.
The estate agent stuff mentioned upthread is outrageous, as is the failure of UK banks to recognise equivalent jurisdiction rules in BiS’s case.
But keeping a record of (validly requested) AML ID – a photocopy of your passport, or your drivers’ license details – is both required by law and obviously sensible.
The only other option would be to allow “yes officer, we totally saw the ID at the time, honest” as an answer, with no requirement for evidence that anyone actually did.
Having neither driving licence nor passport I always have fun with banks and solicitors when needing to prove ID.
Most commonly use my blue badge for parking as photo ID in such situations. Except with the council.
“But keeping a record of (validly requested) AML ID – a photocopy of your passport, or your drivers’ license details – is both required by law and obviously sensible.”
Are you sure about that JohnB? A passport, for instance, is not the property of the owner but the issuing authority. So one cannot, in fact, technically give permission for the details therein to be copied. I do know the big French owned hotel group was requiring guests to submit to their passports being copied. Justified by anti fraud & amazingly anti-money laundering regs, they claimed. That practice was terminated whilst a friend was a manager. Which was how I knew about it.
It’s also a dispute I’ve had with out lawyers, who asked for the same. The PO website says the document *may* be copied at the discretion of the holder. But the essence of POI is to verify the individual at a point in time. I am me & this document proves it. Even he says there’s no legal requirement for him to have a copy but it’s ‘practice’. Whatever that means.
“The only other option would be to allow “yes officer, we totally saw the ID at the time, honest” as an answer, with no requirement for evidence that anyone actually did.”
That’s a problem for the other side of the transaction & their relationship with the law, not the holder’s. Can see where they might want to cover their backs but does the law actually require it?
Whole thing sounds like mission creep.
Sorry , but should have specified in the above; the passport was required in their UK operations. In France, of course I’ve been happily checking in the group’s hotels, with no ID whatsoever & paying cash, for years.
what exactly are the anti-money laundering regulations that pertain to money transfers from rich nations to poor?
how exactly do you “launder money”, but which I understand converting ill gotten gains into what looks like legitimate income, by sending a small cash transfer to Africa?
Is there some upper limit on the size of cash transfers they companies can conduct?
“how exactly do you “launder money”
Suggest you have a chat with a Pakistani or Chines shopkeeper in one of your major cities. They’re infinitely helpful & provide cheap & reliable services 😉
BIS>
“Why should Carphone Warehouse, for instance, feel it’s entitled to harvest your data simply because you buy an item from their store?*”
In the first place, let me stress that the entire system’s not so much in its infancy as pre-natal. A business like CW shouldn’t really have much of a role in data collection – they’re much more on the consumption side. At the moment there’s no real system, so CW hope to collect useful data more cheaply than they could buy it; in theory that brings down their prices ever so slightly.
For any business ever to act ‘entitled’ to anything other than what has been contracted is bad customer service.
The exchequer probably makes a good cut on money laundering, the whole purpose is to make it look legitimate.
Luis Enrique, there are (as far as I am aware) no money-laundering regulations dealing specifically with transfers from rich to poor countries. Our elites are far too shrewd in their micro-management to get bogged down in that kind of detail since it would open up all sorts of loopholes.
In the UK, the primary regulations are the 2007 Money-Laundering Regulations (http://www.legislation.gov.uk/uksi/2007/2157/contents/made), augmented by the Guidance I referred to above (http://www.jmlsg.org.uk/jmlsg-guidance). Ordinary civilians, as well as finance professionals would do well to be acquainted with sections 327 et seq. of the Proceeds of Crime Act 2002.
For the purposes of your question, what it tends to boil down to is that transfers of cash in excess of about £10k are typically investigated by the facilitators of those transfers, unless the people or institutions making them do so so frequently that further questioning would obviously be pointless. But there is no limit on the size of transfers that can be made, subject to the aforementioned investigations.
As to how you launder money, well there must be hundreds of different methods, but let me give you an example: Smith imports a kilo of coke and sells it to Ahmed for £600k. Smith wants to spend his £600k but knows he can’t just plonk it in a bank account without difficult questions arising. So he trawls round London jewellers buying Rolexes for cash, £600k worth. He then pawns them. He takes a hit, of course, reducing his £600k by perhaps half, but he now has dozens of lovely receipts for pawned Rolexes to explain the origins of his £300k. It’s not a perfect scheme, and of course they get more elaborate, but you get the general idea.
BiS, yes it’s mission creep. That’s the point I was trying to make above. But the authorities love it. It turns half the population into secret policemen.
One of the things that really disturbs me about it all is that it means that the authorities get to define me as me, when the fact is I’m Lud, E, and always will be irrespective of whether the government’s given me a document in support of the fact and irrespective of whether a bank accepts the veracity of that document.
But isn’t the next question (from #36) “where did you get all those Rolexes?”
I thought traditionally the way to launder money was to buy a laundry (or, these days, a pub; somewhere with mostly cash income) and inflate your takings.
Expensive, because it’s then declared taxable income, but it looks clean.
Up here, it is tanning salons …
Fish and chip shops were always a popular choice too, Richard. If it’s a field where you can pay for your supplies in cash too – in my younger days I packed pallets of frozen fish that were dickered for in cash, we were told to put a bunch of low grade stuff in the middle with some good stuff round the edges to spice it up – then you can inflate your outgoings too to minimise the tax hit.
@john b: “The estate agent stuff mentioned upthread is outrageous, as is the failure of UK banks to recognise equivalent jurisdiction rules in BiS’s case.”
No comment about estate agents, but the bank stuff is obvious. My Bank In UK is different from My Bank In Germany, even if they trade under the same name. They are different companies operating under slightly different rules or interpretations.
My Bank In UK does not trust My Bank In Germany. If you wish to fix that you require laws or interpretations that permit trust.
“But keeping a record of (validly requested) AML ID – a photocopy of your passport, or your drivers’ license details – is both required by law and obviously sensible.
The only other option would be to allow “yes officer, we totally saw the ID at the time, honest” as an answer, with no requirement for evidence that anyone actually did.”
It is not the only option. Imagine.
Richard # 38, for sure.
But there’s probably no method of money-laundering that doesn’t come up against that problem sooner or later.
It is also extremely difficult to set up a bank account at home if you are living abroad. You need proof of address, proof of income, all of which will be in another language.
This. Two ways around it: lie through your arse and tell the bank what they want to hear, and produce as many BS documents as you can get away with; or go to Geneva and open a proper bank account.
In France, of course I’ve been happily checking in the group’s hotels, with no ID whatsoever & paying cash, for years.
Not so in Belgium: when I checked into an Accor Group hotel there last summer, I was told it was Belgian law to have my ID details registered. I handed it over, but only after saying “Sorry fella, I’m from a free country where this sort of Soviet stuff isn’t required.” It was wasted on a Belgian. No wonder the EU is HQ’d there.
No comment about estate agents, but the bank stuff is obvious. My Bank In UK is different from My Bank In Germany, even if they trade under the same name. They are different companies operating under slightly different rules or interpretations. My Bank In UK does not trust My Bank In Germany. If you wish to fix that you require laws or interpretations that permit trust.
No, as someone who has carried out AML checks in my professional capacity for overseas clients of multiple firms, you are wrong.
UK AML law expressly allows you to recognise the AML checks carried out by third parties in equivalent jurisdictions, which is a legal definition that includes all EU & EEA countries as well as overseas ones with compliant regimes (e.g. Australia, USA).
If you are a customer of Bigbank Germany AG, then Bigbank UK plc is absolutely allowed to rely on the AML check that its German affiliate has carried out. If that process doesn’t happen, it’s either because the person on the counter is a fuckwit who doesn’t know what they’re doing, or because the company’s internal systems are so buggered that they can’t access the data.
BiS: the difference is, staying in a hotel is absolutely not a service covered by AML know-your-client checks; nor are hotel guests required by law to prove their identity in the UK.
A passport, for instance, is not the property of the owner but the issuing authority. So one cannot, in fact, technically give permission for the details therein to be copied.
See point 8 in this official guidance document: passports in general are subject to Crown Copyright, but IPS grants individuals the unlimited right to make copies (and to authorise others to make copies) of their personal details page. You’re right that if that right were not expressly granted, then it wouldn’t exist.
JB
If your read my post, you’d note I made exactly the same observation further down. It passes the discretion to the holder. Which doesn’t imply there’s a law saying it should be copied*. Which a great many requesters do assert.
My attitude is; given the right is granted to me, it is my obligation to ponder with great seriousness whether I should allow the copying of something which is not mine.**
*In absence of a specific law saying it should, of course.
**Because I’m a difficult obstructive bastard.