Anyone opened a bank account of late? Transferred an account? Dealt in cash? Sent money abroad? Have you been sent half-insane by the form-filling and ID checking it involved?
If so, then please point an accusatory finger at people like Jonathan M. Winer a former US Deputy Assistant Secretary of State International Law Enforcement who has written a rather plaintiff article in the Financial Times exhorting the entire world to join him in his campaign against what he calls ‘dirty money’.
The anti-money laundering regime, in which doubtless Mr. Winer was instrumental, sought to scupper international terrorists and drug-dealers by imposing a regulatory regime on all financial institutions requiring them to act as investigators and policemen on the state’s behalf. I have witnessed the absurd results of this first-hand as lowly pensioners from Essex are told to hand over their passport when signing a loan agreement just in case they are really Osama Bin Laden in deep cover.
Added to the humiliation of treating people like criminals, the cost-burden on financial institutions are awesome and let us not forget the many small countries which have been bullied into surrendering their banking secrecy and legal safeguards of anonymity which are the only comparative advantages they possess.
After all that, it is more than a little galling to hear Mr. Winer say:
“Long before September 11, many other victims of wrongdoing have found that global evil-doers are better at taking advantage of the financial infrastructure of globalisation than the world’s police and regulators are at catching them”
Is it just me, or does that sound suspiciously like an admission of failure? I cannot say that I am surprised. I (along with many others) predicted long ago that these regulations would do nothing to stop or even slow down determined terrorists or drug-runners. People who are ruthless enough to fly aeroplanes into buildings are hardly going to be phased by having to practice some sleight-of-hand with a bank teller or two.
Mr. Winer goes on to remind us of just how evil money-laundering can be but, rather hilariously, cites economic woes in countries such as Argentina, Mexico and Albania as proof, while forgetting to mention that these countries were hardly paragons of financial virtue to begin with. But, this aside, there is some refreshing frankness in the article. Mr. Winer admits:
“In practice, even the most sophisticated and best-regulated financial centres have proved incapable of adequately overseeing the global enterprises they license”
You’d think that Mr. Winer might have considered this beforehand because it is screamingly obvious. Asking bankers to become policemen is not only a good way to ensure that policemen get lazy but it is also an attempt to get banks engaged in an activity that is diametrically in conflict with their primary function, like asking a cat to bark.
Mr. Winer goes on to suggest a better method for bringing these terrible terrorists and drug-runners to their knees:
This ‘white list’ is something which banks all over the world could apply to join once they have satisfied all the states criteria of compliance to the very highest degree. Then they could proudly advertise themselves as ‘the best of the best’ and all their competitiors would rush to join for the kudos it would give them. Mr.Winer expects this to be a ‘race to the top’.“But imagine instead a white list, to make compliance a profit centre, rather than a burden on a bank. A white list – and a reward for being on it.”
This is an idea born of hope rather than judgement and is likely to be as successful as his last good idea i.e. a total dud. Complying with the standards required to get on this ‘white list’ would cripple any bank with unendurable profit-eating costs and any that were stupid enough to try would slide dolefully into liquidation while their competitors died laughing.
I am quite pleased that the likes of Mr. Winer are pinning their hopes on this because it is further confirmation that they have lost. That’s what the whole article smacks of really; an almost pathetic, desperate attempt to snatch victory from the jaws of defeat. This may be futile but it is, from Mr. Winer’s point of view, understandable because the ‘anti-money laundering regime’ is not really about drugs or terrorists at all, it is a sordid attempt at self-preservation. The global movement of capital represents a grievous threat to national tax bases, particularly those that demand up to one-half of their citizens earnings. But that little game is up if the citizens in question can move their money beyond their local tax inspectors reach.
All this chaffe about drugs and terrorists is really a vehicle by which the public sector can try to defend itself against the vigour (or what they see as ‘virulence’) of the free market and, in doing so, they are quite happy, indeed almost compelled, into press-ganging every bank clerk and accountant into their fight. But no laws that Mr. Winer can pen will upend the immutable laws of physics and, sooner or later, the international money-laundering regime will be buried in the Graveyard of Grand Schemes.
Mr. Winer’s article is not so much a helpful analysis or even a plea for help so much as notice of his intention to go down fighting.
