OKAY, THE BANK PLACED YOUR HOUSE on the market for the past six months and has been unable to sell it.
You spent $1 million building your dream house, then you lost your $7 000 a month job and couldn’t pay the mortgage; you still owe $750 000.
The bank can’t wait any longer. The highest offer they got so far is $400 000 and they have decided to put your property for auction.
Two weeks before the auction, a guy turns up at your door. He is wearing combat boots. For a long moment you are transfixed by the ability of his pants to defy gravity as they seem suspended by some mysterious force around the lower third of his buttocks, leaving you to stare at the boxers festooned with marijuana graphics. He has this ridiculous looking schoolboy backpack. His voice jerks you back to the present. “I buying the house. I could pay down a hundred thousand today and the rest when the lawyer sort out the papers”. He opens the backpack and inside are stacks of crispy Grantleys looking as though they came straight from the Central Bank. So what are you going to do? Hint: don’t call me!
If you are even remotely struggling with this hypothetical scenario, maybe you should at least be aware of the money laundering organism. The money laundering organism can spread in more than one way. The popular concept of money laundering is that of the drug dealer taking cash to the bank for lodgement in an account. However, the infection takes different subtle forms.
Money laundering begins with the commission of the predicate crime. The Proceeds of Crime Act in a jurisdiction will usually list the crimes which give rise to money laundering and these are usually heavily focussed on drugs and corruption. If you agreed to sell the house to the backpack guy and gleefully took the cash to your bank, that could reasonably arouse suspicion of money laundering. Bankers are only required to act on reasonable suspicion and they determine “suspicion” from knowing their customers.
So even if they have not been doing a good job of explaining, when you go to open a non-borrowing account and they ask you what you consider to be irrelevant questions and require utility bills they are only trying to protect themselves by establishing a benchmark against which to weigh suspicious activity.
The money laundering organism manifests in three ways: the conversion or transfer of property, knowing it is derived from a criminal offence, for the purpose of concealing or disguising its illicit origin or of assisting any person who is involved in the commission of the crime to evade the legal consequences of his actions. The concealment or disguising of the true nature, source, location, disposition, movement, rights with respect to do so, or ownership of property knowing that it is derived from a criminal offence. The acquisition, possession or use of property knowing at the time of its receipt that it was derived from a criminal offence or participation in a crime.
In money laundering, you don’t have to do the predicate crime to do the time. That’s why banks get billion dollar fines for stuff that started with their customers. It’s getting worse for banks with the emerging trend of convictions for bank staff. So it is hugely important that they know your business. In subsequent articles we will explore these concepts.
Louis Parris is a certified compliance professional, consultant and publisher of the Caribbean Banking Intelligence Anti-Money Laundering Compliance newsletter.
The second of this three-part series will be published next week.
Email: louisp@caribsurf.com