If money laundering were legal…


Well, I’m back, having spent a week in the Suffolk countryside, which encourages a slowing of the pace and a contemplating of the navel.  Just before I went away, a fellow AML enthusiast called Dev Odedra posed this question in response to one of my posts: if money laundering were legal, how many financial institutions would allow their customers to do it?  And I’ve been mulling.

I suppose what we’re considering here is whether morality should come into finance.  Money laundering is, after all, the mechanism by which criminals conceal the fact that their money is the proceeds of crime – so decriminalising that mechanism does not mean that the proceeds-generating crimes have not been committed in the first place.  If someone came to your bank or law firm or casino and said, “Look, I’ve made this money by defrauding little old ladies”, would you be prepared – indeed, happy – to take that money and make your profit from it?  (Of course, you wouldn’t be the MLRO at that point; if money laundering is legal, there’s no need for reporting and therefore the MLRO is redundant.  Rather, you’re simply a fee-earner or equivalent in your firm.)  Would it depend on the crime they admitted to – you’re sanguine about drug trafficking, for instance, but you do draw the line at selling pornographic images of children.  Would it matter to you whether the crime was committed in your own community or somewhere more distant?  Would it come down to how profitable the business would be for you?  And what if they didn’t admit to anything at all, but you had your suspicions…

It wouldn’t be the first time that we’ve had to consider the moral dimension of money: we’re all familiar with the tax evasion / tax avoidance / tax efficiency scenario.  The first is illegal almost everywhere and so the situation is simple – you can’t take the proceeds – but I know of several MLROs who are slightly queasy when it comes to tax avoidance, and even some who feel that tax efficiency is just a juicy rationalisation for avoidance.

Personally, I am grateful that money laundering is a crime, and not just because it has provided me with a fascinating career in AML.  People who make a great deal of money from crime can be rather, well, unpleasant and threatening, and I am glad to have the law to back me up when I want to turn them and their money away.  In the same way as I don’t like to see litter in the countryside, because it spoils the view for everyone, I don’t like criminal money contaminating the financial system, because it makes everyone’s assets seem more grubby.  But that’s just my rather po-faced view.  What do you think: if money laundering were legal, how many financial institutions would allow their customers to do it?