A new study finds that dirty money remains easy to hide

Banks and corporate-service providers barely differentiate between clean and risky clients

10/16/2021 1:31:00 PM

The global anti-money-laundering system relies on the private sector to weed out dirty money. The study shows this “risk-based” regime to be broken

Banks and corporate-service providers barely differentiate between clean and risky clients

.But to what end? The book’s authors are putting the finishing touches on a study that suggests little has changed. The banks and corporate-service providers (CSPs)—firms that set up companies for others—meant to be in the front line of the fight against financial crime do a terrible job of differentiating between legitimate would-be clients and those waving red flags.

The three academics behind the study—Jason Sharman of Cambridge University and Daniel Nielson and Michael Findley of the University of Texas at Austin—undertook what they call a “mystery shopping expedition”. They registered shell companies with varying risk profiles and then sent more than 30,000 emails to banks and

CSPs in every country of the world to set up bank accounts. The riskiest-looking of these brass-plate firms were domiciled in places with a high corruption risk, such as Papua New Guinea or Pakistan. The safest-looking were from Australia or New Zealand. In between were shells from havens of offshore secrecy like the British Virgin Islands. In some missives the authors and their team posed as legitimate businessmen; in others as dodgier-sounding supplicants or actual miscreants, such as people on sanctions lists. headtopics.com

The global anti-money-laundering () system that has evolved since the 1980s under the Financial Action Task Force (FATF), a multilateral agency, relies heavily on the private sector to weed out dirty money. Banks must follow “know your customer” rules and identify a would-be client’s real, or “beneficial”, owner.

This “risk-based” regime is broken, suggests the study. The authors found that the varying risk profiles made “almost no difference” to banks’ willingness to open an account;CSPs were even less sensitive to risk. (One Singaporean bank, however, deserves credit for smelling a rat, replying “Hey, you’re the Global Shell Games guys!”)

The study shows that the grunt-work ofAMLis being “pushed onto a private sector which can’t or won’t do it,” says Mr Sharman. “Banks are unable or unwilling to make the fine-grained risk judgments the system demands, because they use standardised, generic procedures.”

Although the conclusion fits broadly with previous research by the authors, Mr Sharman says he was surprised by the level of risk-insensitivity, because “some of our approaches were ridiculously dodgy”. Other experts will also be taken aback: scholars surveyed by the authors before they went shell-shopping predicted that the study would show the system to be working much better than it was before the transparency reforms of the past five years. headtopics.com

TheFATFknows the system is far from perfect. Last year its chief, David Lewis (who has since resigned), admitted that nationalAMLlaws were rarely being used effectively. He also implored bankers to “stop just ticking the boxes”. Even before this study the agency was reviewing its approach. More than tinkering is in order.

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Pandora Paper is U.S. government filtered propaganda (and blackmail material) and lack of names of U.S. billionaires n corrupt politicians in the provided material. That's a Devine Comedy (hilariously outrageous) to expect firms that set up offshore shell corporations to also act as a 'first line of defense'.

Who cares ? Money makes the world go round ! Spelling. The spelling of the name of the scandals have changed. That’s it. Every thing is happening under the supervision of FATFNews If it wasn't for brave, ballsy whistleblowers we wouldn't know virtually anything of the underhand business that the government gets up to on the quiet.

Anti money laundering 🙄 Come up with a better term. Take the case of India, no money came in our government Exchequer. It is all sham No hope 💬 We demand safety of Bangladeshi Hindus.✊ SaveBangladeshiHindu SaveHinduTemples SaveHumanRights SaveBangladeshiHindus BangladeshiHinduWantSafety SaveBangladeshiHindus BewareHindu SaveHinduBoys SaveHinduGirls SanatanaDharma BlackdayDurgaPuja2021 PleaseStandWithHindus

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