Ethics and governance in the European Financial centers

The World Bank and International Monetary Fund developed a unique Reference Guide to Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) in an effort to provide practical steps for countries implementing an AML/CFT regime in accordance with international standards. The Guide describes the global problem of money laundering and terrorist financing on the development agenda of individual countries and across regions. It explains the basic elements required to build an effective AML/CFT legal and institutional framework and summarizes the role of the World Bank and the International Monetary Fund in fighting money laundering and terrorist financing.


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THE STATES assembled on Tuesday,
1st November 2005 at 9.30 a.m
(abstract)

Deputy S.C. Ferguson of St. Brelade of the President of the Homes Affairs Committee:

“Would the President inform members whether the Committee is satisfied that there is sufficient reference to the Honorary Police in the recent States of Jersey Police Plan; what efforts are being made, if any, to improve efficiencies in the Financial Crimes Unit; and whether the Committee has compiled any statistical information relating to road accident fatalities from drink driving and pure speeding and, if so, what this data concludes?”

Senator W. Kinnard (President of the Home Affairs Committee):

“The answer to the first part of the question is yes. In answer to the second part, the International Monetary Fund (IMF) inspection report of 2003 commented on the Joint Financial Crimes Unit in positive terms. Feedback, written and verbal, from other jurisdictions has been universally positive. The IT systems have been upgraded and the unit is very successful in seizing monies and assets. At the end of 2004, seizures and confiscations totalled £10.3 million of suspected drug money and £28 million of suspected proceeds of crime. The Committee is not aware of any negative evidence concerning the unit, but, to the contrary, all evidence points to a well-run and efficient operation which is vital to the security and reputation of the Island. The third part of the question refers to fatalities caused by drink driving and speeding. Due to the low number of fatalities in Jersey, it would not be possible to draw any statistical inference from the figures available. For example, there were 5 in 2004 and 3 in 2005. However, research in the United Kingdom would suggest that for 2003 17% of all road deaths occurred when someone was driving whilst over the legal limit for alcohol; and this compares to an estimate of 28% of fatalities being recorded on statistical returns as caused by excessive speed. Statistics can be complex and very hard to interpret in this area. It also needs to be remembered that, as offences of speeding and drink driving often occur at the same time, a single cause cannot always be identified. While crashes can occur at any speed, there is a great deal of evidence which demonstrates that the severity and outcome of a crash can be greatly influenced by speed. Research indicates that if a pedestrian is hit by a vehicle travelling at 30mph, the pedestrian is most likely to survive. If the pedestrian is hit by a car travelling at 40mph, the probable outcome is death. Public surveys conducted by both the States of Jersey Police and the Home Affairs Department continue to show strong concerns by Islanders concerning speeding vehicles. The Committee and the force feel that such concerns need to be responded to in very positive ways, and these are set out in the Police Plan.”

Deputy S.C. Ferguson:

“The Police Plan complains of needing extra officers. Given that at the recent Jersey Live there were 65 Honorary Police on duty compared with 40 States Police; given that data on suspicious transaction reporting is still submitted to the Financial Crimes Unit (FCU) on paper and then has to be re-input by 2 data-inputters; given that officers are seconded to the FCU with only normal policing experience and no specialised training; and given that a number of United Kingdom Police Authorities show ….. We have complaints of needing extra officers, but a very large tranche of manpower that is available to co-operate with the States Police is barely mentioned in a Police Plan. It is not realistic.”

Senator W. Kinnard:

“I am very happy to answer that, Sir. Both the Committee and the States of Jersey Police value very much the assistance and the input of the Honorary Police. In fact, the Police Plan, Sir, makes heavy reference to the rôle of the Honorary Police, particularly in the introduction by the Chief Officer. Just looking through it very quickly, there are 7 references to the Honorary Police either directly or inclusive of them just in that actual section of the report. But I think, Sir, one has to be mindful of the rôle of this particular report. It is actually a police plan for the States of Jersey Police. It sets the priorities for the States of Jersey Police, which have been set by the Committee. The subsequent sections from the introduction set out those targets. It is not within the remit of the Chief of Police, nor of the Home Affairs Committee, to set targets and objectives for the Honorary Police. Nor is there any indication, Sir, that such a course of action would be welcomed. Under the current arrangements ---”

The Deputy Bailiff:

“I think probably you have dealt then with the answer.”

Senator W. Kinnard:

“Okay, Sir, but basically there are strategic meetings going on between the Honorary Officers and the States of Jersey Police which set joint priorities, but this is not the place to set them down, Sir.”

The Deputy Bailiff:

“Now, Deputy, do you want to ask a question about the FCU?”

Deputy S.C. Ferguson:

“Yes. In the section on the Financial Crimes Unit, there is a statement that they require further manpower, but it is not available because of the overall limitations. Given that you have got certain things in the FCU like the data on suspicious transactions report comes in on paper and then has to be re-input by 2 data-inputters, which is not a way to run a database, and given that you do have officers seconded to the Financial Crimes Unit because, for instance, they are pregnant and things like this and they only have normal policing experience and there is no specialised training required, can the President really be satisfied with the degree of realism in the Police Plan?”

Senator W. Kinnard:

“As I mentioned earlier on, we have had no negative response to the rôle of the Financial Crimes Unit. I would say that the Deputy is mistaken. The officers involved in the Jersey Financial Crimes Unit are of a very broad range of experience, and some of them have experience as well from the finance industry. They all have proven investigative backgrounds and they have experience in taking complex cases through the judicial system and in handling intelligence. Sir, all of the staff in that unit are expected to undertake CID training, fraud training and the International Diploma in Anti-Money Laundering. Where other skills are required, Sir, of a particular specialist nature, and where a case is of such significance that it is felt that it should be led by the Attorney General, the Attorney General indeed heads that inquiry and engages any extra skills that may be required even from the private sector to work alongside the investigative officers. So, Sir, I do believe that the Unit works very well and very efficiently. I have mentioned that there is a new IT system and that Unit, like every other part of the States, Sir, is subject to the difficulties of having to operate a service with increasing demands upon it within limited resources.”

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The FATF Third Round of Mutual Evaluations began in 2004 and has adopted a more detailed approach to the assessment based on the tough new standards that the FATF adopted in June 2003. Since early 2005 Belgium, Switzerland, Australia, Norway, Italy, Sweden and Ireland have been evaluated. Ireland’s ratings are comparable to those obtained by these countries.

Many of the recommendations on which Ireland is currently assessed as either partially compliant or non-compliant will be addressed in the transposition into Irish Law of the 3rd EU Money Laundering Directive. The special recommendation on regulation of wire transfers (to counter terrorist financing) on which Ireland and most EEA Member States are rated non-compliant is being addressed by an EU Regulation (which will be directly applicable).

The main findings of the recent Evaluation are that Ireland generally achieves a high standard in relation to legal measures to criminalise money laundering and terrorist financing, in its institutional and other arrangements and in international co-operation. The Evaluation notes in particular that Ireland has a broad money laundering offence, which meets the FATF requirements and the provisions for the confiscation of the proceeds of crime appear effective and comprehensive. The offence of Terrorist Financing is criminalised broadly in accordance with the UN requirements.

The Ministers noted that process of reviewing and updating the Irish legal framework to meet both our domestic needs and international obligations is already under way. Ireland opted to be evaluated early in the 3rd Round of Mutual Evaluations because this would be of considerable assistance in planning the transposition of the 3rd EU Money Laundering Directive into Irish Law.

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