Anti money laundering – no more secrets

“If you reveal your secrets to the wind, you should not blame the wind from revealing them to the trees” (Khalil Gibran)

Over the past few years, we have grown accustomed to the fact that a regular visit to the bank has become an interrogation, the likes of which the Spanish inquisition would not be ashamed of.  This trend is soon to be expanded for the Israeli public.

 

From September 1st 2015 Israeli lawyers and accountants will also be required to perform due-diligence and examination of their clients on behalf of the money-laundering authorities. This new law, passed in November 2014, is a vital part in Israel’s effort to be considered tier A in anti-money laundering policy. The small respite gained by an energetic struggle on behalf of the industry by the IsraelBar Association is that there will be no reporting requirements to the AML Authority; the level of lawyer-client discretion should remain intact.

 

Lawyers and accountants will, however, be required to view the transaction from an AML perspective and refrain from representation should there be a reasonable doubt as to the ethics of the transaction. They will also be required to store the information they accrue, either physically or digitally.

 

Have we forgotten what we set out to achieve?

 

The Anti money laundering acts of the beginning of the century were enacted to reduce the rate of crime in the world, by restricting the flow of funds from criminal activities. After this came the anti-terrorism financing acts with the same goal but relating to terrorist activity. These laws were a self-certificate of failure of the law-enforcement authorities, stating that they cannot achieve their goal without the assistance of the business sector. After 15 or so years we should be seeing whether all these processes and changes are indeed effective. Has worldwide crime reduced? Studies show that this is not the case. Has terrorism been curbed? We do not need studies to see that terrorism is only on the rise.

 

What has happened is that Anti-money laundering regulations, originating as an ends to a truly justified means, has instead become a means in itself; the focus on AML has blurred our vision of the true issue.

Instead of seeing this point and returning to the drawing board to find other creative solutions to solve the real issues, the authorities are immersing themselves deeper into the extraneous to avoid having to actually resolve that which they set out to achieve.

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