The Sanctions & Anti-Money Laundering Bill

January 24, 2018 3 minute read

Hot property – the UK’s Sanctions & Anti-Money Laundering Bill

The Sanctions & Anti-Money Laundering Bill will lay out how the UK will create and implement sanctions once it has left the European Union. Today, the bill will have its final reading in the House of Lords, the last chance it has for amendments before it moves to the House of Commons. The bill has attracted a heated debate in the Lords, which has resulted in two important concessions that will affect UK corporate transparency. A proposed amendment which would have required the government to compile a register of the beneficial owners of UK property has been pushed back until 2021. Another proposed amendment which won’t make the final Bill, was designed to reveal the owners of shell companies registered in British Overseas Territories – a blow for transparency campaigners.

As the bill moves to the Commons, we can expect further debate on larger constitutional questions. Crucially, what roles should the executive and legislative play when constructing an effective and efficient sanctions regime? Watching from the sidelines, the EU will be trying to ascertain if the UK is planning to pursue an equivalence model, which would bolster both regimes. If not, Europe will be at risk of losing its most valuable source of intelligence and resources for constructing sanctions.

Miami’s vice – drugs, gold & laundered money

The market for illegally mined gold in Latin America is worth billions of dollars, in Peru and Colombia it is more valuable than the cocaine trade. It can offer indigenous communities a viable income but more often than not, it is used by militant groups and cartels to raise funds and launder money, all the while destroying the local environment. Last week, The Miami Herald released an in-depth investigation, uncovering the vital role Miami’s gold trade plays in this puzzle.

Here’s what they found out. The Sinaloa cartel would take the dirty cash it generates from selling cocaine in the US (around $100 million) and uses it to buy gold jewellery in Miami. Next, the cartel would smelt down the jewellery into bullion, using a gold producer who was in on the scheme, and sell it on to banks, jewellers and tech companies. Income from these seemingly legitimate sales would then be wired to cartel-owned shell companies in Mexico, giving the cartel its money back, clean.

This investigation has uncovered a textbook example of using high-value goods to launder the proceeds of crime. It should serve as a reminder to governments and regulators who are worried about the money laundering potential of virtual currencies, that often the best methods to launder money still rely on the oldest stores of value.

Strong and stable? An international approach to crypto-regulation

A week ago the director of Germany’s central bank publicly called for a global approach to cryptocurrency regulation. He argued that for rules to be effective they would have to be internationally-led as the resources of states alone are too limited. Yesterday the IMF joined in chorusexpressing its belief that crypto rules need to be implemented at a global scale to ensure that consumers are protected from risks that come with high levels of volatility.

All very interesting and probably wise. However, with such divergence in the current approach to cryptocurrency regulation it is hard to see how regulators will come together any time soon. In an increasingly multi-polar world, the question is who would win out? The Chinese with their total ban? Or more progressive countries who are looking at bringing digital currencies under AML/CTF regulation? Additionally, would it matter either way? The pace of change in the cryptocurrency world sees new currencies and stores of values being created nearly every day. As the compliance community are all too aware, domestic, let alone international regulators move at a much more conservative pace, making it hard to imagine a world where not only crypto-regulations were globally aligned but also timely enough to remain relevant.