Anti Money Laundering farce

[mc2fool]

When that happens I contact the bank and explain the problem and ask them to redo the check without "Flat". Sometimes they do so straight off, but most often I get a reply along the lines of "if computer says you have to provide paper ID then you must do so", to which I reply that if they are willing to put me through the hassle and cost of paper ID when they could avoid inflicting that on me by simply redoing the electronic check, then I will take that as an indication of their level of customer service, and give them the choice of redoing the check or cancelling my application. Has worked every time so far....

If you tried that with me then I would decline as I would take it as an indication of the type of customer you would be and would let you walk away.

Not every customer is right, and particularly those who ‘blackmail’ junior staff into overriding security protocols.

Thankfully you are not a bank, but if you were you would (or should) know that it's not "overriding" security protocols but getting them correctly applied.

You have a legal right to ask checks to be redone if there is new/changed/misinterpreted information, and just about every time it's happened I've been contacted by an obviously more senior person apologising and saying that the check should have been redone on my initial request. In one case they even talked about "retraining" the person who refused to do it.

The bottom line is that the check failed in the first place 'cos of a deficiency in the system and not 'cos of any fault of mine. Putting it the way I do if it isn't corrected on the first request has the effect of escalating the matter upwards.

And besides, why would you force a potential customer to trek off down to a branch with passport etc in hand (or go get and send in certified copies), when you could avoid them having to do that by simply making a small change to their address and clicking to redo the check?!? As I say, thankfully you are not a bank....

[AF62]

When that happens I contact the bank and explain the problem and ask them to redo the check without "Flat". Sometimes they do so straight off, but most often I get a reply along the lines of "if computer says you have to provide paper ID then you must do so", to which I reply that if they are willing to put me through the hassle and cost of paper ID when they could avoid inflicting that on me by simply redoing the electronic check, then I will take that as an indication of their level of customer service, and give them the choice of redoing the check or cancelling my application. Has worked every time so far....

If you tried that with me then I would decline as I would take it as an indication of the type of customer you would be and would let you walk away.

Not every customer is right, and particularly those who ‘blackmail’ junior staff into overriding security protocols.

Thankfully you are not a bank, but if you were you would (or should) know that it's not "overriding" security protocols but getting them correctly applied.

You have a legal right to ask checks to be redone if there is new/changed/misinterpreted information, and just about every time it's happened I've been contacted by an obviously more senior person apologising and saying that the check should have been redone on my initial request. In one case they even talked about "retraining" the person who refused to do it.

The bottom line is that the check failed in the first place 'cos of a deficiency in the system and not 'cos of any fault of mine. Putting it the way I do if it isn't corrected on the first request has the effect of escalating the matter upwards.

And besides, why would you force a potential customer to trek off down to a branch with passport etc in hand (or go get and send in certified copies), when you could avoid them having to do that by simply making a small change to their address and clicking to redo the check?!? As I say, thankfully you are not a bank....

Sorry, but I still consider you are wrong because of the 'blackmail' stance you took with the junior member of staff.

No matter the merits of your case, you lost all the moral high ground by adopting that attitude.

[Clitheroekid]

At the risk of getting back to the question, what you are going through is just another example of the incompetence and stupidity that epitomises contemporary conveyancing.

As I've said many times before, conveyancing used to be dealt with by solicitors. It is generally now dealt with by people who call themselves `conveyancing executives', `paralegals' or some such term, but the three things they have in common are (1) that they are generally completely unqualified; (2) they have little or no legal knowledge; and (3) they have as much common sense as the average bluebottle.

Their request is utterly absurd. As you say, it's entirely reasonable to assume that whatever AML checks that were needed in 2013 were done, and there is therefore absolutely no need at all to establish the source of funds for that transaction.

AML checks are supposed to be a risk-based process - in other words the `relevant person' (in this case the conveyancer) is supposed to carry out a risk assessment of the individual concerned and the type of transaction and tailor the level of due diligence accordingly.

Quite clearly, assuming you are not a `Politically Exposed Person' and just a normal private individual with no criminal record or other red flags then you should be classed as a low risk. Likewise, the type of transaction is also extremely low risk - it's not even as though you're introducing new money into the equation. The combination of a low risk individual with a low risk transaction means that only very basic AML checks are needed. These would certainly not include asking for the source of funds in a 2103 transaction.

You therefore need to escalate the dispute to someone with more than one brain cell, assuming there is such a person (which may not be a safe assumption!) Make these points to them and say that their request is unreasonable and unnecessary and will potentially cost you money if the deal collapses because of it.

You don't need - yet - to say you'll refer it to their regulator if they persist in their stupidity, but you can certainly hint at it. However, you should say that if they don't act reasonably you will contact the lender – their client - to make a formal complaint. The prospect of losing a no doubt lucrative contract might persuade them even if common sense doesn’t.

If you really can’t make any progress then in a last attempt contact whoever runs the firm personally, and also contact the lender itself, as they may be unaware how stupid the firm is being and that it's potentially costing them business.

[mc2fool]

Sorry, but I still consider you are wrong because of the 'blackmail' stance you took with the junior member of staff.

No matter the merits of your case, you lost all the moral high ground by adopting that attitude.

Informing a company that if you get bad customer service you won't become (or stay) a customer is neither "blackmail" nor the moral low ground.

It's a free market consumer choice (and their choice too), and if more people were prepared to vote with their feet when they got crap service it would benefit everybody.

[bluedonkey]

I suspect that escalating the query may not be successful, sadly. The potential penalties for getting AML procedures wrong is a criminal trial; it's a big incentive for the other party to "just say no".

[stockton]

Has anyone ever been tried for getting AML procedures wrong ?

[Mike4]

Has anyone ever been tried for getting AML procedures wrong ?

It probably works the other way around (rather like the gas regulations do). When Mr Big gets caught or even just the finger of suspicion falls on him, I suspect they'll look also to prosecute people who their investigations indicate enabled him, even if unwittingly, and I bet the AML regs are fertile ground for this. His solicitor, bank, accountant etc probably all fall under the microscope. Or it might even be a Mrs Big.

With the gas regs there is no routine policing or enforcement, only prosecutions AFTER a gas incident or fatality. Then they go after the last person to attend the gas installation that caused the problem and try to prove they breached one or another of the gas regs. I suspect the AML regs are applied in a similarly retrospective way.

[dealtn]

Has anyone ever been tried for getting AML procedures wrong ?

It probably works the other way around (rather like the gas regulations do). When Mr Big gets caught or even just the finger of suspicion falls on him, I suspect they'll look also to prosecute people who their investigations indicate enabled him, even if unwittingly, and I bet the AML regs are fertile ground for this. His solicitor, bank, accountant etc probably all fall under the microscope. Or it might even be a Mrs Big.

With the gas regs there is no routine policing or enforcement, only prosecutions AFTER a gas incident or fatality. Then they go after the last person to attend the gas installation that caused the problem and try to prove they breached one or another of the gas regs. I suspect the AML regs are applied in a similarly retrospective way.

It works both ways, proactively and retrospectively.

If "something" happens then the trail is followed backwards to see what was done and whether any guidelines weren't followed. There are also regular audits to check samples of applications etc. These might indicate the guidelines weren't followed, or that the guidelines aren't sufficient and need amending. (I suspect guideline that are overly strict or inappropriate are amended with less frequency than the other way round though).

Institutions, and individuals that work for them, are rarely "tried" in the traditional "going to court" sense, but regulators will often fine institutions, and punish individuals to the point of excluding them from the industry.

(Ex Bank Employee and frequently frustrated by the internal workings of a Compliance Department!)

[stevensfo]

They all have some rules on source of funds. I had to provide some information for my regular solicitors who have bought and sold a couple of properties for me (after doing that). AML is a bit of a mess, but it is best to make sure that you are in a position to comply. I have successfully argued that people can be IDed over a video call which makes some part of the process a lot easier.

I think primarily it is an OECD thing.

Interestingly, I've just opened a bank account with one of the new(ish) "challenger" banks and this is how they identified me.

This bank operates with no branch network at all and their ID process involved me texting them a photo of my driving licence and a video of myself taken on my phone saying to the camera "My name is Mike4, please identify me". Took five minutes. What a contrast to the rigmarole I went through the previous time I opened a bank account, with conventional high street bank.

So it can be done with not even a video call, just a video.

Yes, I've been through this as well, and I had a live video link to open my N26 account. I had to answer some questions and hold my passport open so they could be sure it was me. Electronic money organisations like Revolut, Transferwise etc don't require live video calls but do insist on good photos/videos of ID and face. Proof of residence is way down on the list, for good reason. People in the EU are more mobile these days, especially those retired, with feet in a few countries.

Yes, AML is a bit of a mess. Just Google your bank's name a bit and you'll soon find out who the culprits are. Hint - it sure ain't the customers!

Steve

[Mememe]

I’m an ex head of compliance for an investment manager and also headed up the financial crime/AML section (and my head was on the regulatory chopping block where not only could the business be fined for failing but they could come after me personally).

Everything is done on a risk based approach, what might be ok for a bank account may not be for another product or service.

In terms of this example, the fact that someone may have run to source of funds/wealth checks 7 years ago is totally irrelevant for the new company. Imagine you are money laundering and end up getting caught. The police call the MLRO of the conveyancing company to determine what checks were done. But they didn’t do any because the client had told them checks were carried out 7 years before by another firm. That just doesn’t fly.

Also if you’ve been aggressive or flippant over the AML checks then this is a big red flag and may mean things have been escalated internally as this is often how money launders try to bully their way through the checks (I’m not saying you have I’m just giving examples of things that happen in that kind of work). If someone reacted badly to checks with my staff, what may have been fine with a decent explanation for source of funds as has been given in this thread, would then need proof and I would not budge

I won’t go into much detail on how electronic checks work but what’s been said in this thread isn’t exactly how it works. Also the databases cover 70 to 85% of the population so it depends if you are part of them.

Ultimately if you aren’t happy then go elsewhere.the checks are there to try and make the financial system as clean as it can be that ultimately benefits everyone. Each company has to make its own call on what they will and won’t accept based on the interpretation of the rules. It’s annoying for some but when you carry the regulatory controlled function for financial crime for the company, your career, your freedom and your personal money is on the line upsetting them odd person isn’t a big deal

[Alaric]

. Each company has to make its own call on what they will and won’t accept based on the interpretation of the rules.

Why is that so? Why is it not possible for industry bodies to get together with Government to hammer out a set of common standards? At the very least this would inform the general public of what long term records they needed to keep as to the source of their wealth and funds. I'm thinking in particular of the Selftrade debacle, where if for example someone said that part of their wealth had been inherited from their parents, then they may have been required to demonstrate where the parents got it from.

It's only required to keep records for tax purposes for six years, so someone who bought a house longer ago than that may quite legally have destroyed past records. That may well have included a note of which payments came from where within the UK financial system.

[Lootman]

. Each company has to make its own call on what they will and won’t accept based on the interpretation of the rules.

Why is that so? Why is it not possible for industry bodies to get together with Government to hammer out a set of common standards? At the very least this would inform the general public of what long term records they needed to keep as to the source of their wealth and funds. I'm thinking in particular of the Selftrade debacle, where if for example someone said that part of their wealth had been inherited from their parents, then they may have been required to demonstrate where the parents got it from.

It's only required to keep records for tax purposes for six years, so someone who bought a house longer ago than that may quite legally have destroyed past records. That may well have included a note of which payments came from where within the UK financial system.

Yes, and the irony is that some clerk ticking off check boxes is never going to catch a serious money launderer anyway. If I wanted to launder serious amounts of money I would use cash, diamonds or other kinds of fungible, anonymous stores of value. Or else some type of barter/offsetting service like Hawala.

I was in a London bureau-de-change a couple of years ago and some guy walked in with a suitcase full of cash, in a currency I didn't recognise. He handed it over to the clerk who gave him back bundles of US dollars, whereupon the guy stuffed them back into his suitcase and left. AML, my tuchus.

All these AML checks really do is what Mememe described - provides CYA comfort for the clerks that administer these pointless checks.

It is a good reason for never closing an account, though. 40 years ago you could walk into a bank and open an account by merely giving a name and address. I still have my NatWest account from the 1970s. No AML worries there, although I did get a phone call when 400K was wired into it. The guy offered me their "private banking service". Total joke.

Oh, and the new one is if you withdraw a lot of cash from a bank, the clerk asks you (pretending to be interested in your life) what you are going to use it for. I usually answer "a celebration", leaving the clerk to wonder whether it is a family birthday or a night of debauchery featuring recreational drugs and a small flotilla of ladies of the night.

[JonE]

It's only required to keep records for tax purposes for six years, so someone who bought a house longer ago than that may quite legally have destroyed past records.

Some caution is required if completely trashing records. Retention periods can't really be expressed that simply and the clock doesn't necessarily start ticking from the date of the document or the end of that year.

If you sell a house then that disposal may be a taxable event requiring a CGT computation and for that you should still have the records relating to acquisition, capital expenditure, PPR elections and so on. You would then need to retain the records supporting the CGT computation for the required minimum period after disposal (or choose to keep them indefinitely in digital form).

For IHT purposes you should keep records of PETs at least until they fall outside the 7-year window. Same applies to records supporting claims that gifts were made out of surplus income.

There isn't a universal 6-year retention period for all taxes and all classes of tax-payer (non-trading individual, sole trade, partner, etc.).

Cheers!

[Clitheroekid]

IIn terms of this example, the fact that someone may have run to source of funds/wealth checks 7 years ago is totally irrelevant for the new company. Imagine you are money laundering and end up getting caught. The police call the MLRO of the conveyancing company to determine what checks were done. But they didn’t do any because the client had told them checks were carried out 7 years before by another firm. That just doesn’t fly.

But that doesn't reflect the reality of the situation. The current solicitor isn't just being `told' that AML checks were carried out 7 years ago. It’s not as though the client has come in with a suitcase full of cash. The solicitor is actually dealing with the sale of the house that was bought 7 years ago.

And if it isn't reasonable to assume that the solicitor who acted in the purchase did the AML checks then I’m afraid virtually every solicitor in the country (with the possible sole exception of the idiot in the OP's case) is facilitating money laundering, as I don’t know of any solicitor who would look into where the 2013 purchase money had come from.

As I said in my earlier post - and I'm pleased to see that you agree - it's all about risk assessment, and that implies the intelligent use of that increasingly rare commodity, common sense.

The solicitor has to assess the risk that his client used laundered money to buy a house 7 years ago; that the purchasing solicitor did no AML checks; and that his client has somehow managed to avoid the attention of the authorities for the whole of that 7 years. If his client appears to be just a regular person then the risk is absolutely minimal, and does not justify the sort of hassle that the OP is being subjected to.

Also if you’ve been aggressive or flippant over the AML checks then this is a big red flag and may mean things have been escalated internally as this is often how money launders try to bully their way through the checks (I’m not saying you have I’m just giving examples of things that happen in that kind of work). If someone reacted badly to checks with my staff, what may have been fine with a decent explanation for source of funds as has been given in this thread, would then need proof and I would not budge

I really can't agree that this is a valid approach to risk assessment. For a start, the last thing a genuine money launderer would do is to draw attention to himself by kicking up a fuss. I have come across money launderers and they are highly skilled professionals, who know exactly what they need to pass AML checks, so they’ll ensure that everything is forged beautifully to your complete satisfaction. They will bend over backwards to co-operate with you. It's the people who pass every single test without any issues that you need to look at really carefully.

But someone like the OP is entirely justified in his irritation at the stupidity of the solicitor. I'd be equally annoyed, and I'd also object. Yet by your standards that's enough to condemn me to your `no budge' approach. I'm afraid this sounds more like punishing someone who’s questioned your authority than risk assessment!

[AF62]

Interestingly, I've just opened a bank account with one of the new(ish) "challenger" banks and this is how they identified me.

This bank operates with no branch network at all and their ID process involved me texting them a photo of my driving licence and a video of myself taken on my phone saying to the camera "My name is Mike4, please identify me". Took five minutes. What a contrast to the rigmarole I went through the previous time I opened a bank account, with conventional high street bank.

So it can be done with not even a video call, just a video.

A report in The Times today on how Monzo has made a statement in its accounts that it is reviewing the quality of its financial crime controls and warned that the outcome could have a significant impact on its finances. (sorry paywall - https://www.thetimes.co.uk/edition/busi ... -z8n3jp83n)

[malkymoo]

Oh, and the new one is if you withdraw a lot of cash from a bank, the clerk asks you (pretending to be interested in your life) what you are going to use it for. I usually answer "a celebration", leaving the clerk to wonder whether it is a family birthday or a night of debauchery featuring recreational drugs and a small flotilla of ladies of the night.

My understanding is that the reason for this is that someone drawing out a lot of cash may be in the process of being defrauded. Depending on the answer given, the bank may be in a position to offer advice to prevent a customer being scammed.