Money Laundering Bulletin

Hungary has always been in the vanguard of former Communist Central European states in terms of economic development and was a clear candidate for early entry into the European Union. In keeping with this progressive approach the country was quick to respond to international criticism of deficiencies in its anti-money laundering regime but gaps remain, says Sue Grossey.

Six months ahead of Cyprus’s accession to the European Union, the European Commission has concluded that Cyprus’s legal framework for money laundering is comprehensive and that the second money laundering directive has been largely transposed. Katerina Joannou reports.

What should an MLRO do when a central bank fails to provide confirmation that it wishes to open an account with a UK financial institution? MLB put the question to Sue Thornhill, Director of MHA Consulting and author of the Joint Money Laundering Steering Group Guidance Notes, to Brian Dilley, Head of Deposit Taking and Financial Stability, Enforcement Division, Financial Services Authority and to a group of experienced UK MLROs.

The European Union is set to expand east and south in May 2004 as it welcomes 10 new members. Are these jurisdictions willing and able to play an effective part in the fight against money laundering? Alan Osborn investigates.

The 19th century saw imperial rivalry create the “Great Game”, when Russia and the British Empire vied for hegemony in the region which, after the Bolshevik revolution, became known as Soviet Central Asia. The old Great Game was tied to control of India, and to gems and gold. Today, says Mark Rowe, a new version, involving oil and terrorism, mean that the same territory is, increasingly, the focus of international anti-money laundering efforts.

Enter the UK Money Laundering Regulations 2003…

As the trend continues towards proactive monitoring, financial institutions need to consider carefully automated tools. The trick is to avoid hype and to carry out a full pre-purchase evaluation of the role for automation in countering money..

Concern is mounting in law enforcement circles internationally about the rising incidence of “financial instrument fraud” (FIF), in which victims are promised huge returns on securities such as medium term bank notes and debentures, certificates of deposit or standby letters of credit, all of credible-sounding but spurious origin. These scams relieve both individuals and firms of large sums of money and also provide a mechanism for criminals and terrorists to both generate and launder dirty money, says Steve Cullis of i2, the visual investigative analysis software provider. In this article he outlines some of the approaches, which will be followed up in a forthcoming issue of MLB.

Cash-based economies and a long tradition of hawala banking make anti-money laundering a special challenge for authorities in the Middle East. Joel Ceausu starts his report in Israel.

As this is the festive issue of MLB, it seems appropriate to look at the anti-money laundering regime in Finland. (The more precise of you will no doubt comment that Father Christmas actually lives in Lapland, which is in northern Norway, but as Norway is not a member state of the EU, this is the closest we are going to get to the residence of the jolly red man. It remains to be revealed whether his time-defying cross-border movements at the end of December are in fact a fiendishly clever currency smuggling operation, but we will let you know if any evidence surfaces) – Sue Grossey.

Concerns are raised from time to time about the risk that hedge funds might be seen as attractive vehicles for money laundering purposes. This is primarily a consequence of three factors: (a) money goes in and out of hedge funds fairly steadily in the form of new subscriptions and redemptions of investors’ interests; (b) large amounts of money flow around hedge funds; and (c) such funds have traditionally been subject to limited or no regulatory oversight. In this article, Matthew Jones of Simmons & Simmons looks at the anti-money laundering obligations imposed on FSA-regulated firms in the context of UK-based hedge fund management and examines some of the more important issues which an FSA-regulated fund manager may face when attempting to comply with these obligations.

The reform of the anti-money laundering law in the United Kingdom is progressing, says Felicity Banks of the Institute of Chartered Accountants in England and Wales, with the long-awaited publication of a Treasury consultation on the implementation of the second EU Money Laundering Directive. Draft regulations have been published with the consultation document, which are intended to replace the Money Laundering Regulations 1993 and 2001, broadly duplicating their requirements.The scope of the regulations has been extended to cover the additional sectors required by the directive, and the legal foundation for the registration and enforcement of the requirements on some high risk sectors, by Customs and Excise, is also included. However, the playing field remains far from even.