HMRC MSB Review

More properly, the title is;

‘HM Revenue and Customs AML/CTF Thematic Review of anti-money laundering compliance in the Money Service Business.

The report in itself is worth reading, but my interest was piqued by the following;

‘Due to concerns that MSBs may be easily abused by criminals and terrorist financiers, some banks have withdrawn services from them as they do not wish to run the risk of regulatory action’.

Those pesky criminals and terrorist financiers; have they no respect for the law?

The review continues;

‘The FCA published a report on the drivers and impacts of de-risking, written by John Howell & Co. That report is available on the FCA website’.

It is, indeed available on the website. All 73 pages of it.

The report has contents, a glossary of acronyms and an introduction. Section 2 begins by setting the scene before moving onto the ‘Drivers of De-risking’.

‘Many banks told us that they needed to lower their overall risk ‘profile’ to realign their business and that they are paying closer attention to compliance since the global financial crisis. Further, we fear that de-risking is partly a result of the higher costs of compliance and the increased amount of regulatory capital now required, and partly a response to criminal, civil and regulatory actions. These include regulatory settlements, including Deferred Prosecution Agreements (DPAs), especially those reacted in response to AML/CFT failings.’

Abused by criminals and terrorist financiers, and culled by banks lowering their overall risks and cutting costs, who would be a MSB?

That apart, has all of this honest and diligent investigation moved MSBs forward at all?

In a word, No.

Whether it be the fear of crime, the fear of regulatory action, or simply good old fashioned cost/benefit analysis, the major clearing banks show no enthusiasm for banking the MSB sector.

Were it not so serious, it would be funny. Banks, regulators, law enforcement agencies and politicians are gathered in a virtuous circle, each pointing at the next one along.

In the meantime, proper, correct businesses are going to the wall, or underground.

I’m sure that the criminals and terrorist financiers must be devastated that these vulnerable MSBs that remain now operate only in the shadows.