Journal of Money Laundering Control

ISSN: 1368-5201

Article publication date: 17 October 2008


Bosworth-Davies, R. (2008), "Editorial", Journal of Money Laundering Control, Vol. 11 No. 4. https://doi.org/10.1108/jmlc.2008.31011daa.001



Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited


Article Type: Editorial From: Journal of Money Laundering Control, Volume 11, Issue 4

Academic researchers at Newcastle University have continued to present important findings which engage with an analysis of Government statistics on outcomes from police-related asset recoveries. The research indicates that in order to justify expansion of legislation and the associated costs spent on anti-money laundering systems and procedures, the Government is using “threat” rhetoric to imply a problem of significant magnitude that endangers the entire financial system. But the facts don’t back this up.

The topic became part of an important presentation to the 5th annual conference of the Institute of Money Laundering Prevention Officers (IMLPO) on 12 May 2008, drawing on the continuing investigation of the validity or otherwise of the UK’s approach to financial crime. Where this work is so important is that it concentrates on making a distinction between the statistics that are published arising out of police activities, as opposed to the submerged figures for white-collar crime which never seem to make it to the surface.

The first public discussion on how the facts and the figures do not add up was made in an address to the Cambridge International Symposium on Economic Crime last year: “The UK Government quotes that 2.5 per cent GDP is laundered, but where do they get these numbers from?” Continuing in this vein, the speaker said:

The evidence I've seen from the Home Office and the Assets Recovery Agency suggests that criminals are far from financially sophisticated and that money does not appear to be entering the financial system on anything like the scale that is being talked about.

Decision making in this arena is based on “imagery and rhetoric … ”

The presentation at the recent IMLPO event was challenged by police officers present, who maintained that the benefits to them from the SARs regime included being able to attack criminals where it hurt them most, in the pocket.

For the police, the SARs regime points them in directions to find criminal assets they might otherwise miss. Today, police are increasingly charged with achieving pre-defined targets for financial seizures, and the political game which all police managers are increasingly being required to play is all about civil forfeiture, not arrests or convictions. As a former Scotland Yard detective, I believe that the primary job of the police who investigate crime is to make arrests, and provide evidence that leads to satisfactory, and safe convictions. The traditional role of the Police has never been that of quasi tax collectors, merely making asset seizures without a criminal justice component.

The police like the new SARS regime, but, while it helps them achieve their seizure targets, it does nothing for the criminal justice process, because it exonerates them from the task of having to focus on prosecuting criminals, which is expensive, time-consuming and riddled with potential pitfalls and problems. Arresting top criminals can be a career-threatening move, these days. Focusing on the new dimension of “disrupting” criminal activity aligns the police much more closely with the unaccountable Intelligence Service culture.

The new system of control now amplifies the widening distinction between those areas of criminality on which the police traditionally focus – theft, robbery, burglary, drug trafficking, and other street-level crimes, what Professor Robert Reiner of the London School of Economics defined as “police property” – and the significant amount of criminal activity in the financial sector that goes virtually unnoticed and uninvestigated.

The proceeds from ordinary ”working class crime” are not as significant as Government would like us to believe. The Newcastle study states; “money does not appear to be entering the financial system on anything like the scale that is being talked about” No, the Government is lying to us by saying that the police findings themselves demonstrate the enormity of the scale of the crime problem, which they don’t.

However, maintaining this fiction suits the Government because it means that they do not have to confront the statistics of white-collar crime. Whatever minimal benefits may be accruing to law enforcement by way of these low-level cash seizures, they are wholly submerged by the volume of financial crime occurring in the financial sector in the form of insider trading, market manipulation, front-running, and other forms of fiscal criminal wrongdoing by market professionals. As a speech by Philip Robinson on 19 July 2004 set out:

[…] Financial crime occurs in all sectors of our industry, the challenge is vast. We cannot stop it. Let me begin by reminding you of the scale of the problem we face. The government’s best estimate of the amount of money laundered in the UK each year is £25 billion – approximately the same as the turnover of, say, a major UK supermarket […]

On the losses sustained from another type of white collar crime, tax fraud, The Tax Payer’s Alliance estimates the figures of ”…Britain’s losses to tax fraud and evasion are currently running in the range £60-80bn pa … ” (“Whole lotta tax fraud”, 18.07.2006).

The FSA is forced to acknowledge that there is a significant, amount of City crime occurring, as Philip Robinson’s speech (above) identifies. The figures quoted above deal only with the statistics from money laundering and tax fraud. In fact, the entire volume of police recoveries do nothing to demonstrate the scale of the problem at all and I believe that they do not even begin to scatch the surface of the volume of financial wrong-doing which is occurring in the Financial Sector.en

However, as long as the Government can continue to argue that the recoveries made by Police represent a major step forward in crime interdiction, they absolve themselves from having to address the white-collar phenomenon. It was ever thus!

Rowan Bosworth-Davies