Money laundering and the financing of terrorism are matters which, in the years following the atrocities in New York on September 11th 2001, have been the subject of dynamic change and reinforcement. Worldwide legal and financial institutions had, for many years, been targeted by money launderers and terrorists in the pursuit of their various activities: launderers making legitimate the once proceeds of criminal activity and the terrorists, almost in the opposite direction, feeding legitimate proceeds through to groups or individuals requiring funds to finance their latest plot against peaceful co- existence. The Anti-money laundering (‘AML’) movement gathered pace after 9/11 and took on an additional focus of combatting the financing of terrorism (‘CFT’).
The purpose of the various AML/CFT measures developed in recent times was to make it fundamentally harder for the money launderer to place proceeds of criminal activity into general financial circulation, giving the funds in question the legitimacy needed to properly manage the newly acquired wealth. In order to do this, an increasing number of controls were designed and implemented which required financiers and other providers involved in financial activity to understand who the client was and where their money came from.
The latest approach, developed and enhanced by the last of the European directives on AML which came into force on 15 December 2007, now allows all those institutions to which the legislation applies to determine the extent of information they must obtain from a client on the basis of that company/person's assessment of the risk the individual poses on initial enquiry. As a company, which would worry you more? An elderly lady known personally to the employee looking to open a bank account into which she will deposit her pension or, by contrast, a client who has just walked in the door looking to transfer the sum of $5,000,000 (allegedly a gift) through a new account to a charity registered in Iraq?
When buying a property, here or abroad, a number of the institutions governed by all these measures will necessarily be involved in the process. At the very least, your chosen law firm and bank will be required by law to make enquiry of you as to who you are and where your money came from. If you are local, employed and have no other income, you can expect this enquiry to be very limited. If, however, you have never done business with the relevant entities and the source of your wealth is family/your own business, you may well find yourself subjected to a probing questionnaire. In addition, research done on your name as part of standard checks could reveal some undesired/inaccurate/old information about you which may cause the company to make even further enquiries. In the majority of cases, all this will mean is more delay for you and for the transaction as a whole. In some cases however, banks may refuse to work with you or make available the financing you require.
If at this point you're thinking along the lines that it’s always the wealthy ones who get targeted, you’re not far off, simply because that’s where risk usually lies. If you’re one of these medium to high-risk personalities, here's a few pointers to make your life that little bit easier...
A spoonful of sugar…
1. Make full disclosure (of as much information as you feel you need to disclose) of information relating to your background to facilitate the bank/law firm's job of approving your application to do business with the institution in question.
2. Point the relevant adviser to the most important aspects of your background and give them some details. If, for example, you're a wealthy entrepreneur and are purchasing property without obtaining finance, determining the source of your wealth and the funds with which you will buy the property will be fundamental to the lawyer's ability to assist you in the transaction.
3. Google yourself, online of course! The worldwide web has a wealth of unchecked information and knowing what's out there and whether or not there is any inaccurate or misleading information about you which might cause difficulty could prove invaluable when you're trying to establish a business relationship;
4. Finally, if a query is raised by your lawyer/customer service representative, deal with it immediately. If you fail to revert in the shortest possible amount of time, your case/matter/file will quickly burrow itself to the depths of that persons 'pending' tray. 'Out of sight, out of mind' as they say. Keep your matter active at all costs.
All these measures can sometimes prove a bit inconvenient but the much slated 'due diligence process' is an inevitable part of life. There are things that you can do to make the process less painful and much more efficient. AML and CFT are here to stay but, frankly, a small price to pay to help make crime and terrorism that little harder and riskier to do.