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Isn’t all this stuff about global organized criminal activity a bit of an exaggeration?

In fact probably exactly the opposite is true: numerous organized crime groups are active in the UK and on a global basis – the successful ones are being run as effectively as normal businesses. Amongst these groups are Colombian drug cartels, Mexican drug cartels, Russian criminal groups, Japanese Yakuza, the Italian "Mafia", Chinese Triads, Turkish and Kurdish Gangs, West African fraudsters and gangs from the Balkans. As David Blunkett, the UK Home Secretary said in November 2002, "Organized criminals are more organized than we are."

Are there any businesses that are particularly susceptible to money laundering?

Yes there are – so much so that clever launderers have in the past created "dummy" businesses just as a front to launder funds. Traditionally these have been in businesses that have a large cash turnover such as bureau de change, bars, night clubs, fair grounds, car parks and petrol garages.

Where is it easiest to identify potential money laundering activity?

It is actually getting more and more difficult because criminals are becoming increasingly clever in how they wash dirty money. However there are some basic steps that can be taken to deter money laundering through mainstream locations and facilities. Two essential anti-money laundering procedures are that companies (such as banks and other financial institutions) and professional advisors (such as lawyers and accountants) must firstly know their customer – by taking identification and carrying out checks on the customer. Yes, if you are a genuine customer this can be extremely tedious but there is a good reason for doing it. Secondly banks (and professional advisors) should actively look for "red flags" that signify money laundering, such as unusual transactions, large cash payments and movements of funds that have no real logic. There is a but though…whilst such "red flags" may identify money laundering there is no guarantee that they will spot terrorist funding, as 9/11 and other terrorist outrages have shown us that the frontline terrorists achieve their aims with very small amounts of money.

What about professional advisors – such as lawyers and accountants – shouldn’t they be able to spot money laundering by their clients?

Yes – but all historical data tell us that these professions have not previously done a very good job. They have generated a very low level of reports of suspected money laundering to the police. This is particularly strange as their core businesses centre on money and detailed knowledge of complex financial systems, products and structures.

Why are offshore financial centers always mentioned in relation to money laundering?

Offshore financial centers (OFC), offshore jurisdictions, tax havens – call them what you will, have always played a vital part in money laundering. However we shouldn’t forget that if you are not a UK citizen, London (and the UK as a whole) is an important offshore financial centre. OFCs have in the past (and still do, to a reduced extent) provided products and services in which the actual account holder is anonymous thus making money laundering and the hiding of assets easier.

Is the financing of terrorism the same as money laundering?

No – but since 9/11 this topic has become strongly linked to money laundering. Traditional ideas of money laundering do not necessarily apply to terrorist financing. The basic premise of criminal money laundering is to wash large amounts of dirty money: however terrorist funding can, and does, operate on a shoestring. That being said terrorist funding can involve large amounts of money. The funding of terrorism – generating the funds as opposed to supplying them to front line terrorists – involves donations, fake charities, front companies, criminal activities and other supply mechanisms. All of this money has to be washed and "hidden" in the world’s financial systems. However, as with "traditional" money laundering there is mounting evidence that this is being increasingly achieved outside the banking system – through such methods as informal exchange systems (such as hawala and hundi), diamond trading and online share trading (to name but three). A further key problem is that because the amounts involved in mounting a terrorist operation are, as we have seen, very small it is not necessarily feasible or possible for banks (or other relevant institutions) to identify terrorist "customers" by analysing their financial transactions. Or to put it in simple terms, a frontline terrorist bank account is more likely to have very small sums of money it, rather than large transfers and transactions.

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