border control

EU proposed enhanced ‘Cash’ disclosure rules are welcomed, but why do we persist with using outdated references to 'cash' and 'money laundering'?

Whilst many of us were busy shopping for loved ones or enjoying yet another festive Christmas lunch and looking forward to 'family down-time', our crime-fighting colleagues in the European Commission were busy proposing new disclosure rules on the cross-border movement of ‘cash’, which are expected to be introduced in 2017.

The changes are being implemented as part of new measures to counter the risk of criminal and terrorist financing and were published on 21st December 2016. These include:

  • tightening cash controls on cash and precious commodities valued at €10,000 or more which are sent through postal parcels or in freight consignments;
  • extending the definition of 'cash' to gold and other high-value commodities, as well as prepaid payment cards which are not linked to a financial account;
  • creating a simplified and more robust mechanism for the exchange of information between national customs authorities and FIUs;
  • enabling competent authorities to act on amounts lower than €10,000 of cash entering or leaving the Union when there are indications that the cash is related to criminal activity.

I think that most financial crime professionals will welcome and support these changes as a step in the right direction, although I am less than convinced that it will lead to a rush of self-disclosed crimes and even more perplexed by how the authorities propose to enforce rules on prepaid cards. How precisely will the authorities confirm balances on cards? Will we see ATM machines or similar devices at border controls and will we be required to empty our wallets and cards and punch in our pin numbers whilst we wait for the over-worked border guard to confirm the authenticity of our passport? Good luck.

Putting these practical concerns aside for a moment, what is unclear to me and more frustrating is why we still insist on ‘badging’ these risks using terms such as ‘cash' and 'money laundering’? Why in 2017 are we categorising gold as ‘cash’ in these publications and regulations?

It is my belief that we need to seriously consider how we badge these risks at a higher level, to help and support the wider public, and indeed our own staff, to understand and recognise crime risks in our products and services, and to move on from a fixation on using outdated labels that are simply misleading at times.

We can of course deliver this message in our training materials and in supporting policies and procedures within the regulated sector, but we need to change some mindsets and particularly the headlines that support these regulatory developments if we are ever going to grow an enhanced awareness of these risks in the wider public domain, and become more effective in identifying, reporting and seizing illicit finance.

I prefer to use the term ‘value transfer’, which I believe is more reflective of financier aims and objectives in most cases, and which captures other emerging issues relating to digital currencies and trade based activity which involves goods and services, not ‘cash’ or ‘money’.

These issues are never simple I know and they may just be the ramblings of an aged compliance professional and so I am genuinely interested in your view. A penny for your thoughts!

The fact sheet may be found at: http://europa.eu/rapid/press-release_MEMO-16-4458_en.htm
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