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Banks and illicit money transfers: Is it an issue of misplaced anger?

Thursday, July 05, 2018 — updated on December 31, 2020 - 6 min read

Most large banks have sophisticated systems that flag suspicious activities. FILE PHOTO | NMG

Corruption is not new to this country. In fact, our economy continues to bleed as new and different scandals take centre stage every other day. We cannot downplay the negative effects corruption has had on our economy.

Worse still, our taxes keep rising and this could unfortunately mean that we may continue to give muscle to the vice.

So how can banks protect themselves? Under POCAMLA, a bank may raise as a defence the fact that it had reported the suspicious transaction under the terms set out in the Act. The UK legal and regulatory environment has what may be a better approach that addresses the legal nightmare for banks in trying to balance between their responsibilities under the law and their responsibilities to their clients. Banks in the UK are permitted to submit a request for a Defence against Money Laundering (DAML). How this works is that where a bank has reasons to believe that the transactions relate to illegal activities, they could still continue with the transaction but only after obtaining consent from their FRC equivalent to carry out the transaction. This DAML then provides a buffer against dealing in illicit proceeds where there was inaction by the intelligence unit and relevant enforcement agencies. Obtaining consent does not necessarily release a reporting entity from discharging its regulatory obligations. Perhaps a similar provision in POCAMLA should be considered by regulators.

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Banks and illicit money transfers: Is it an issue of misplaced anger?

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