Mr Smith is a successful and wealthy career criminal. By dint of
clever manoeuvring, he has managed to salt away considerable sums of
money in a variety of quasi-legitimate bank accounts.
But he has too much cash on deposit and wants to diversify. A friend
suggests investment bonds and unit trust investments, so he contacts
an IFA who visits him at his home, compiles a fact-find and, after
due consideration, recommends an investment bond for the £50,000
Mr Smith says he wishes to invest.
The application form is completed, the cheque is written and Mr Smith
happily produces his passport as proof of identity for the anti-money
laundering form. No problemo.
Mr Smith then contacts another IFA and through her invests another
£50,000, this time with a different insurance company. The same
follows with a variety of other IFAs.
For each new fact-find, Mr Smith says he either already has
£10,000 with those companies previously recommended and wants to
diversify or that he has had a bad experience with one of them and
wants to avoid them for the future. Or something else to ensure a
different company is recommended.
Thus, each IFA to visit Mr Smith recommends a different insurance
company from those in which Mr Smith has already invested. After
investing in half a dozen different investment bonds, Mr Smith moves
on to unit trusts, then on to structured products and then, for good
measure, adds a few offshore investments.
To avoid arousing suspicion, he provides each IFA with different and
limited data for each new fact-find until eventually he has managed
to build up a very varied portfolio without any one IFA being aware
of the extent of Mr Smith's other investments. Easy peasy.
On each occasion, Mr Smith provides the required documentation for
the anti-money laundering form, so each IFA believes he is following
the required procedure and none of the institutions concerned are in
any way aware of Mr Smith's investments with any of their competitors.
How could they be? Even if Mr Smith was asked to declare his other
investments, all he has to do is tell a few simple lies. Who's to
know any different?
So what is the practical value and effectiveness of anti-money
laundering forms? Search me, John – I really have no idea at all.
Just a waste of time and paper and money that accomplishes nothing
what-soever. Or am I overlooking something fundamental here?
WDS Independent Financial Advisers,