REUTERS | Ronen Zvulun

Don’t be haunted by money laundering rules

Many years ago (longer than I care to admit) I went on my first foreign business trip. I had done a small piece of work for a UK subsidiary of a European company. I didn’t know them very well, but was pleasantly surprised when their holding company asked me to go to a meeting in their head office, to discuss a new matter. Their head office was not exactly in the Black Forest, but was pretty close.

Picture the scene

They sent a car to the airport to collect me from the evening flight and I was driven through the night at alarming speeds, first on the motorway, and then along dark and winding roads to a small hotel in a quiet village. (Picture the one used in Chitty Chitty Bang Bang. In fact, it might well have been that very one: Rothenburg ob der Tauber. I seem to remember the village had 41 “Castle Hotels”.) The hotel certainly seemed to date from the middle ages. I was assured that I would be collected the following morning, for what would no doubt be an equally hair-raising drive to actually meet the clients.

There were no mobile phones in those days and there was no telephone in the hotel room. No TV, no internet and no documents to read. I had a late supper and thought I would get an early night. As I tried to sleep, it started to rain, and the wind howled through the “period” windows. After a while it occurred to me that I didn’t really know the clients that well but, here I was, in the middle of nowhere, not knowing anybody, not speaking the local language and with no way of contacting the outside world. As you might expect, my imagination ran wild. I had visions of every possible scenario including vampires, alien abduction and beyond…

…eventually, however, the sun did come up, my car arrived and I had the meeting as planned.

Wouldn’t happen now

This story couldn’t be repeated today. Lawyers now have to take the rather sensible precaution of finding out who our potential clients actually are, before we start getting involved with them, giving them credit or allowing ourselves to be driven into the middle of a forest and left alone on a dark and windy night in a “Castle Hotel”.

Recommendations on anti-money laundering regulations

Last month, the consultation period on the Financial Action Task Force’s (FATF) latest proposals for money laundering regulation ended. Later this year, the FATF is due to complete its evaluation of the responses to that October 2010 consultation paper, reviewing its recommendations on anti-money laundering regulations. Part of those regulations involve finding out who your clients really are and understanding the ownership of their businesses.

By doing this, not only will you be complying with the law, you will also get a better night’s sleep.

Take my word for it.

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