Money laundering 'isn’t taken seriously', financial journalist tells GACO conference

Journalist and author Oliver Bullough questioned whether money laundering is taken seriously and the effectiveness global efforts, describing how the Financial Action Task Force (FATF) was better at generating paperwork and targeting small jurisdictions than tackling the problem in major financial centres.

Mr Bullough delivered the keynote address at the Gibraltar Association of Compliance Officers’ conference, Risk on the Rock, where he discussed the history of efforts to combat money laundering and what he described as continuing failures in the global system.

His most recent book, Everybody Loves Our Dollars, is a deep dive into money laundering posing the question why, when society is moving to being cashless, is the supply of cash increasing?

He told the Chronicle that money laundering was the “support industry” for serious crime, including terrorism and people trafficking, and added that governments needed to do more to follow up on the information generated by financial institutions’ compliance departments.

“Although there are big demands on financial institutions that they employ a gazillion compliance officers, governments themselves don't tend to employ a gazillion law enforcement officers to check all the information that the compliance officers provide,” he said.

“And generally speaking, people just don't take money laundering seriously.”

Asked about Gibraltar’s experience of being placed on the FATF grey list and its efforts to strengthen its approach to financial crime, Mr Bullough criticised the organisation’s methods.

“My thoughts on the FATF is that the FATF is very, very good at generating paperwork and very good at putting small jurisdictions on grey and black lists,” he said.

“It's very bad when it comes to actually stopping money laundering or putting large jurisdictions on grey and black lists.”

He said money laundering takes place in major financial centres, pointing to Manhattan, London and Zurich.

“The problem is that money laundering happens where there's money,” he said.

“None of those countries get black-listed. None of those countries get grey-listed.”

Mr Bullough said this had been a longstanding criticism of the FATF.

He also praised the role of compliance officers, describing them as being on the front line of efforts to combat financial crime.

“Compliance officers, it's a thankless job,” he said.

“Everyone's slagging them off but they're really important. They're on the front line of keeping us safe from financial crime and infiltration of our societies by criminals. It's really important.”

Mr Bullough also identified developments involving cryptocurrency in the US as the “biggest failure globally” in anti-money laundering efforts.

He said the US had historically been a leader in anti-money laundering legislation and enforcement, but that this had changed over the past two or three years.

The discussion also turned to Gibraltar’s position as a pro-blockchain jurisdiction.

Mr Bullough questioned what wider benefits cryptocurrencies brought to Gibraltar, beyond potential tax revenue and employment.

“No one has really stopped and said, ‘do we really need these things? Are they actually doing us any good? What are they for?’” he said.

He said he could see how cryptocurrencies could benefit criminal organisations, tax dodgers and others, but questioned how Gibraltar itself benefited from their existence.

“I mean, I know how cartels benefit from them. I can see how scam compounds in Southeast Asia benefit from them. I can see how tax dodgers benefit from them.”

“I can certainly see how the Trump family benefits from them. But how Gibraltar benefits from them, I can't see at all.”

Mr Bullough said financial innovation did not necessarily have positive consequences and that changes to the “basic plumbing of the financial system” could be introduced before their potential downsides were fully understood.

He also said he believed money should remain under the democratic oversight and nationalised rather than being privatised, like with cryptocurrencies.

“I think that something as important as money needs to be under the oversight of democratic authorities, not under the oversight of billionaires," he said.

"I don't believe that billionaires have all of our interests at heart.”