What is money laundering?

In our latest podcast, Neil Walsh, the Vienna-based head of the Cybercrime, Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) Department at the United Nations, gives an exclusive interview to New Money Review. Here are some highlights:

What is money laundering?

“Unsurprisingly, there are a ton of politics in what we do. We try not to define our work too tightly. But if it looks like a duck and quacks like a duck, it’s a duck.”

How much money laundering is there globally?

“Based upon my background in policing, it’s exceptionally hard to measure. By definition, a lot of money laundering is covert activity. But I’ve heard estimates of anything from 1 to 8 percent of global GDP.”

What is the difference between the UN and the FATF when it comes to perceived illicit financial activity?

“We are not a regulatory body, an assessment body or an evaluation body. The FATF, World Bank and others evaluate countries to see how they are complying with FATF guidelines and recommendations. We don’t do that: we are politically neutral and we will work with anyone, including grey-listed and black-listed countries. We work on capacity building and support, rather than making a judgement on the effectiveness of a country per se.”

The relationship between crime, terrorism and cryptocurrency

“We have to accept the premise that most crime and terrorism is still done for profit. If we see that profit being moved or facilitated online, especially through a cryptocurrency that’s pseudonymous or totally anonymous, we have to be cognizant of that threat. We have to help our policymakers and politicians to understand that and to make sure their policy and capabilities are in the right place.”

How have governments responded to the invention of cryptocurrencies?

“In 2017 I was briefing 100 politicians from 30 different countries on darknet markets, cybercrime and cryptocurrencies. There really wasn’t much cognizance of things. Now the understanding of risk is much better.”

How significant is the role of cryptocurrencies in money laundering and terrorist financing?

“Cryptocurrencies create a new methodology and capability. Are they the biggest part of money laundering and terrorist financing now? No. Could they be? Potentially.”

Efforts to improve the transparency of ownership of companies and trusts

“These are having some success. But it comes down to scale and the ability to implement regulation. Regulation, law and policy on their own are meaningless if you don’t put the necessary staff in place.”

“We’ve seen a real growth in people being kidnapped for ransom and held hostage”

According to the FATF, the UK is a global leader in promoting corporate transparency. But the Tax Justice Network says the opposite: the UK, with its overseas territories, is the top country in the world in promoting corporate secrecy. Who’s right?

“I would have to refer you to the UK to answer that question*. More broadly, there are a number of different methods to tell you whether your AML and CFT policies are working. Countries should not just rely on evaluation methodologies, they should make sure they are getting views from NGOs, the private sector and journalists.”

On competition amongst jurisdictions to offer financial secrecy via corporate and trust structures

“We fully support the security of the banking and financial infrastructure. But we need to make sure there’s a proportionate, legal, accountable and necessary mechanism for countries to comply with legislation and regulation to counter money laundering and the financing of terrorism. If there are structures that make that fundamentally more difficult, that is not overall in the best interests of society.”

What is the role of NGOs and journalists in helping to combat money laundering and cybercrime?

“It’s never been more important. We need the guidance and the policy support of civil society. Everyone has a role to play.”

Dealing with kidnappings of cryptocurrency tycoons

“We are looking at our cryptocurrency investigative capability. In some countries we’ve seen a real growth in people being kidnapped for ransom and held hostage. My staff have been giving operational and tactical advice on tracing the cryptocurrencies and recovering the victims.”

What areas of work have you personally found most satisfying and most challenging?

“Most satisfying—where we’ve had impact in combating online child sexual abuse. Most challenging—getting countries to recognise that they are all facing the same threat and that it’s better to work together than against each other.”


*We did. The UK Home Office replied:

“The UK has a robust legislative framework for tackling money laundering and recovering criminal assets. The UK is a global standard-setter for anti-money laundering and counter-terrorist financing. The Financial Action Task Force (FATF) assessed in Oct 18 that the UK has the strongest Anti Money Laundering/Counter Terrorism Financing regime of over 60 countries assessed to date.”

“The UK’s public register of company beneficial ownership, the People with Significant Control register, went live in 2016, and includes over 4.9 million names.”

“Companies House undertakes numerous checks on the validity of information, both at incorporation and throughout the life of the company as new information is submitted. When irregularities are identified, Companies House takes action to ensure companies adhere to transparency requirements and will consider a move to prosecute or pass information to criminal enforcement.”

“The UK Government will shortly respond to a public consultation on plans to enhance the quality of the register even further. Our Companies House Reform plans will help increase the accuracy and usefulness of the information available on the companies register.”

“The UK Government plans to introduce a register of the beneficial owners of overseas entities owning land in the UK to prevent and combat the use of land for money laundering. It will do this by increasing transparency relating to overseas entities that own or wish to purchase land in the UK.”

“In July 2018, the UK Government published a draft Registration of Overseas Entities Bill, which will require overseas entities to register the details of their beneficial owners with Companies House before they can undertake certain land transactions. The draft Bill underwent pre-legislative scrutiny by a Joint ad hoc Committee last year. The UK Government responded to the Committee’s report in July 2019. The UK Government intends to introduce legislation to Parliament when parliamentary time allows.”

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