Michele Sciurba - Anti-Money Laundering State Mechanisms

Michele Sciurba

International Experiences,

Current Issues and Future Challenges

Afterword by Ben Emmerson

Monograph

© 2018 Edition Faust, Frankfurt am Main

All rights reserved, including the right of reproduction in whole or in part in any form.

Designed by Bayerl & Ost, Frankfurt am Main

Printed in Germany

druckhaus köthen, Köthen (Anhalt);

circulation 800 copies signed to print on 12 February 2018

Michele Sciurba

Anti-Money Laundering State Mechanisms: International Experiences, Current Issues and Future Challenges: Monograph / Public Administrative Law / Michele Sciurba / Edition Faust Academic, 2018. – 160 pp.: Annex – Afterword: pp. 123-160 .

Executive editor/Leitende Lektorin: Sarah Schuster

Bibliografische Information der Deutschen Nationalbibliothek

Die Deutsche Nationalbibliothek verzeichnet diese Publikation in der Deutschen Nationalbibliografie; detaillierte bibliografische Daten sind im Internet abrufbar über < http://dnb.d-nb.de>

German National Library Cataloguing in Publication Data

A catalogue record for this book is available from the German National Library

UDC 35.08 (082+083)

ISBN 978-3-945400-55-5

eISBN 978-3-945400-62-3

Preface

I.Theoretical and Methodological Aspects of Anti-Money Laundering State Regulation: The US Experience

I.1Brief History of Combating Money Laundering

I.2The Bank Secrecy Act 1970: A Model for Modern AML Regimes

I.3The Current AML Regime in the US

I.4The USA Patriot Act

I.4.1The USA Patriot Act’s Effect on Financial Institutions

I.4.2Consequences of the New Sanction Regime under the USA Patriot Act: BNP Paribas and Commerzbank

I.5Conclusion

II.The Global Financial Crisis’ Worldwide Impact on the Implementation of Anti-Money Laundering Standards in the OECD Countries

II.1The Extension of International Anti-Money Laundering Objectives

II.2Combating Tax Evasion under the Anti-Money Laundering Framework

II.3The EU AML Regime’s Development Subsequent to the 4th AMLD in View of Future Regulatory Challenges

II.4Conclusion

III.Anti-Money Laundering and Counter-Terrorist Financing State Mechanisms in the European Union

III.1The Fight against Organised Crime in the European Union

III.2The Unfinished Task of Harmonising EU Criminal Law

III.3The Significance of Article 82 TFEU for the Cross-Border Prosecution of Financial and Organised Crime

III.4Conclusion

IV.The Fourth Anti-Money Laundering Directive: EU Policy Undermining The Rights To Privacy and Data Protection of EU Citizens

IV.1The 4th Anti-Money Laundering Directive

IV.2The Current AML Regime in the EU

IV.3Inefficiencies of Current Anti-Money Laundering and Counter-Terrorism Financing State Mechanisms in the Prevention of Terrorist Attacks

IV.4The Latest Issues for the EU Anti-Money Laundering Regime: Brexit and the Fifth Anti-Money Laundering Directive

IV.5Conclusion

V.Human Rights Violations and Discriminatory Side Effects in the Fight against Terrorism: Current Anti-Money Laundering and Counter-Terrorism Financing Policies in the UK

V.1The Principle of Confidentiality and Loyalty

V.2Progressive Abrogation of Banking Secrecy

V.3Areas of Discrimination under the Current AML and CTF Mechanisms: Evidences from the UK

V.4Applications of AML and CTF Rules in Breach of Human Rights Law

V.5Conclusion

VI.International Institutional Cooperation and Standard Setting in the Fight against Money Laundering and Terrorism Financing

VI.1The Creation of an International Anti-Money Laundering Network

VI.2International Cooperation of FATF, IMF and World Bank

VI.3Unsolved Problems in International Institutional Cooperation

VI.4Conclusion

VII.Corruption in the Ukraine, Brazil and Equatorial Guinea: Economical, Social And Political Consequences

VII.1The Symbiotic Relationship between Corruption and Money Laundering

VII.2Recent Juridical and Administrative Developments in the Ukraine

VII.3The Integration Process of the Ukraine into the European Union

VII.4The Current AML Regime in the Ukraine

VII.5Corruption in Brazil: The Petrobras Scandal

VII.6Recent Anti-Corruption and AML Improvements and Reforms in Brazil

VII.7Administrative Corruption in Equatorial Guinea

VII.8The Influence of Oil on Equatorial Guinea’s Economy

VII.9Recent Anti-Corruption Developments in Equatorial Guinea

VII.10Conclusion

VIII.The Global Impact of the Growing Compliance Industry on Financial Institutions in the Fight against Money Laundering, Terrorism Financing and Tax Evasion

VIII.1The Compliance Obligation of Financial Institutions

VIII.2The Rise of Compliance Requirements: Strengthening AML Policies

VIII.3Adverse Consequences of Growing Compliance for Financial Institutions

VIII.4Conclusion

Annex

List of Abbreviations

Index

Bibliography

Table of Cases

European Court of Human Rights

International Law Sources

EU Legislation

European Commission Documents

Statutes and Statutory Instruments

Recommendations, Guidelines and Standards

Books

Journal Articles, Reports and Studies

Newspaper and Online Sources

Acknowledgement

Curriculum Vitae

Afterword

This academic work examines the objectives, development, implementation and effectiveness of global anti-money laundering regulations in the US and EU and the impact of their present implementation on civil and human rights. Anti-money laundering (AML) legislation was originally aimed at protecting financial institutions from misuse and only subsequently was expanded to include counter-terrorism financing (CTF) regulations. The implementation of these regulations have largely suspended the norms and laws governing privacy and bank secrecy, turning banks and other financial institutions into an extension of law enforcement. They have also imposed burdensome reporting requirements on banks, which in order to avoid legal liability and sanctions imposed by AML/CTF legislation for non-compliance have engaged in excessive and early reporting of suspicious financial activities. Banking de-risking policies have placed ordinary citizens under a general blanket of suspicion and resulted in them being denied bank accounts or having existing bank accounts closed. In addition, banks appear to use these policies to rid themselves of legitimate but less profitable customers, who are often socially at risk. As a result, the implementation of the AML/CTF legal framework as it stands is discriminatory and infringes the European Convention on Human Rights and the Charter of Fundamental Human Rights of the European Union.

The political pressure to combat international terrorism in the wake of 9/11 sparked a flurry of AML/CTF legislation aimed at cutting off funding for terrorists. In the US, there was the passage of the USA Patriot Act 2001 and the tightening of the Bank Secrecy Act 1970; in the UK the Proceeds of Crime Act 2002 was passed and at the EU level the Fourth Anti-Money Laundering Directive (4th AMLD) was implemented. These laws added tax evasion to the list of money launering offences and, in conjunction with current Financial Action Task Force (FATF) Recommendations, have created a change from a punitive to a preventive rationale for this legislation.