Preventing money laundering

Acknowledgements
Acronyms and abbreviations

Chapter 1 Introduction
1.1 Introduction
1.1.1 What money laundering is and why it should be combated
1.1.2 Existing efforts against money laundering
1.1.3 Current knowledge of these efforts
1.2 Definition of the problem and research question
1.3 Scope of the research
1.4 Terminology
1.5 Methodology
1.6 Relevance
1.7 ECOLEF
1.8 Developments after March 2014
1.9 Readers’ guide

PART I
Chapter 2 Effective supervision
2.1 Introduction
2.2 Effectiveness as a legal principle
2.2.1 Good governance
2.2.1.1 Origin and emergence of good governance
2.2.1.2 The principles of good governance
2.2.1.3 Relationship between effectiveness and the other principles of good governance
2.2.2 The EU principle of effectiveness
2.2.2.1 Background of the principle of effectiveness in European Union law
2.2.2.2 The principle of effectiveness as a requirement for adequate enforcement
2.2.3 Concluding remarks
2.3 Minimum requirements for supervision in the Third Directive
2.3.1 Supervision
2.3.2 Sanctioning
2.3.3 Proposal for a Fourth Directive
2.3.4 Concluding remarks
2.4 Completing the framework for effective supervision
2.4.1 Legislative requirements
2.4.2 Institutional requirements
2.4.2.1 Adequate level of independence from politics and the market
2.4.2.2 Accountability and transparency
2.4.2.3 Adequate resources
2.4.2.4 Adequate knowledge of supervisees
2.4.3 Competences and their effective application
2.4.3.1 Adequate supervisory powers
2.4.3.2 Adequate sanctioning powers
2.4.3.3 Public supervision policies
2.4.3.4 Adequate cooperation powers
2.5 Concluding remarks

Chapter 3 Supervisory architectures in the preventive anti-money laundering policy
3.1 Introduction
3.2 Background of the modelling
3.2.1 Literature on financial supervision
3.2.2 Design of models in the preventive anti-money laundering policy
3.2.2.1 Key elements
3.2.2.2 Who can combat money laundering best?
3.3 Models of anti-money laundering supervisory architectures
3.3.1 The FIU model
3.3.2 The external model
3.3.3 The internal model
3.3.4 The hybrid model
3.3.5 Positioning the different models
3.4 The models exemplified
3.4.1 Spain
3.4.2 The Netherlands
3.4.3 United Kingdom
3.4.4 Sweden
3.5 Concluding remarks

PART II

Chapter 4 Anti-money laundering supervision of banks, real estate agents and accountants in Spain
4.1 Introduction
4.2 Vulnerability of Spain for money laundering
4.3 Legal framework for the prevention of money laundering
4.4 SEPBLAC
4.4.1 Institutional embedding
4.4.1.1 Commission for the Prevention of Money Laundering and Monetary Offences
4.4.1.2 SEPBLAC
4.4.2 Independence and accountability
4.4.3 Concluding remarks
4.5 The regulation of banks, accountants and real estate agents
4.5.1 Banks
4.5.2 Real estate agents
4.5.3 Accountants
4.5.4 Designating representatives to SEPBLAC
4.5.5 Concluding remarks
4.6 Anti-money laundering supervision by SEPBLAC
4.6.1 Supervisory powers
4.6.2 Anti-money laundering supervision: policy and practice
4.6.2.1 Supervisory policy
4.6.2.2 Supervision in numbers
4.6.3 Instruments to strengthen SEPBLAC’s supervision
4.6.3.1 Function as a Financial Intelligence Unit
4.6.3.2 Supervisory arrangements with the financial regulators
4.6.3.3 External expert reviews
4.6.4 Concluding remarks
4.7 Sanctioning for breaches of AML obligations
4.7.1 The doctrine of punitive administrative law
4.7.1.1 General principles underlying the administrative sanctioning system
4.7.1.2 The general administrative sanctioning procedure
4.7.2 Sanctioning powers under the AML Act
4.7.2.1 Very serious offences and corresponding sanctions
4.7.2.2 Serious offences and corresponding sanctions
4.7.2.3 Minor offences and corresponding sanctions
4.7.2.4 Limitation of the offences and sanctions
4.7.3 The sanctioning procedure under the AML Act
4.7.4 Sanctioning in practice
4.7.5 Concluding remarks
4.8 Supervisory cooperation for the prevention of money laundering

Chapter 5 Anti-money laundering supervision of banks, real estate agents and accountants in the Netherlands
5.1 Introduction
5.2 Vulnerability of the Netherlands for money laundering
5.3 Legal framework for the prevention of money laundering
5.4 The AML Supervisors: institutional aspects
5.4.1 Dutch Central Bank (De Nederlandsche Bank)
5.4.1.1 Institutional embedding
5.4.1.2 Independence and accountability
5.4.2 Dutch Tax and Customs Administration/Bureau Supervision Wwft (Belastingdienst/Bureau Toezicht Wwft)
5.4.2.1 Institutional embedding
5.4.2.2 Independence and accountability
5.4.3 Financial Supervision Office (Bureau Financieel Toezicht)
5.4.3.1 Institutional embedding
5.4.3.2 Independence and accountability
5.4.4 Concluding remarks
5.5 The regulation of banks, real estate agents and accountants
5.5.1 Banks
5.5.1.1 Banks under the AML Act
5.5.2 Real estate agents
5.5.2.1 Real estate agents under the AML Act
5.5.3 Accountants
5.5.3.1 Accountants under the AML Act
5.5.4 Concluding remarks
5.6 Dutch Central Bank (De Nederlandsche Bank)
5.6.1 Supervisory powers
5.6.1.1 Supervisory powers stemming from the AML Act
5.6.1.2 Reliance on the Financial Supervision Act
5.6.2 Anti-money laundering supervision in practice
5.6.2.1 The ‘two-track’ approach to anti-money laundering supervision
5.6.2.2 Inclusion of anti-money laundering supervision in regular supervisory procedures
5.6.2.3 Thematic anti-money laundering supervision
5.6.2.4 Focus on internal policies and governance and the Dutch AML Act
5.6.3 Sanctioning powers
5.6.3.1 Sanctioning powers under the AML Act
5.6.3.2 Reliance on the Financial Supervision Act
5.6.3.3 Applying Wft sanctions for non-compliance with the preventive AML obligations?
5.6.3.4 Other sanctions
5.6.4 Sanctioning policy and practice
5.6.4.1 Duty to sanction (beginselplicht tot handhaving)
5.6.4.2 Sanctioning policy
5.6.4.3 Sanctioning in practice
5.6.5 Concluding remarks
5.7 Dutch Tax and Customs Administration/Bureau Supervision Wwft (Belastingdienst/Bureau Toezicht Wwft)
5.7.1 Supervisory powers
5.7.2 Anti-money laundering supervision in practice
5.7.2.1 Risk-based approach to anti-money laundering supervision
5.7.2.2 Project-based supervision
5.7.2.3 Individual supervision
5.7.2.4 Supervisory procedure
5.7.2.5 Creation of awareness
5.7.3 Sanctioning powers
5.7.4 Sanctioning policy and practice
5.7.5 Concluding remarks
5.8 Financial Supervision Office (Bureau Financieel Toezicht)
5.8.1 Supervisory powers
5.8.1.1 Application of supervisory powers by the Financial Supervision Office
5.8.1.2 The legal professional privilege exemption and tax advice under the AML Act
5.8.1.3 Derived legal professional privilege for accountants
5.8.2 Anti-money laundering supervision in practice
5.8.2.1 Supervision by the Financial Supervision Office
5.8.2.2 Outsourcing of supervision to professional associations
5.8.2.3 Awareness-raising activities
5.8.3 Sanctioning powers
5.8.3.1 Sanctioning powers stemming from the AML Act
5.8.3.2 Sanctioning via disciplinary law
5.8.3.3 Discussion about disciplinary law sanctioning
5.8.4 Sanctioning policy and practice
5.8.5 Concluding remarks
5.9 Supervisory cooperation for the prevention of money laundering
5.9.1 Institutionalised forums for AML cooperation on a policy and operational level
5.9.1.1 AML coordination meeting (Wwft Toezichthoudersoverleg)
5.9.1.2 Financial Expertise Centre (Financieel Expertise Centrum)
5.9.1.3 The National Task Force on Tackling the Misuse of Real Estate (Nationale Regiegroep Aanpak Misbruik Vastgoed)
5.9.1.4 Committee on the duty to disclose unusual transactions (Commissie inzake de meldingsplicht ongebruikelijke transacties)
5.9.2 Cooperation efforts by the AML Supervisors on an operational level
5.9.3 Concluding remarks

Chapter 6 Anti-money laundering supervision of banks, real estate agents and accountants in the United Kingdom
6.1 Introduction
6.2 Vulnerability of the United Kingdom for money laundering
6.3 Legal framework for the prevention of money laundering
6.4 The AML Supervisors: institutional aspects
6.4.1 Financial Conduct Authority
6.4.1.1 Institutional embedding
6.4.1.2 Political independence and accountability
6.4.1.3 Market independence and accountability
6.4.2 Office of Fair Trading
6.4.2.1 Institutional embedding
6.4.2.2 Political independence and accountability
6.4.2.3 Market independence and accountability
6.4.2.4 Transfer of the AML supervision of estate agents to HM Revenue and Customs as of April 2014
6.4.3 Institute of Chartered Accountants in England and Wales
6.4.3.1 Institutional embedding
6.4.3.2 Independence and accountability
6.4.4 Association of Accounting Technicians
6.4.4.1 Institutional embedding
6.4.4.2 Independence and accountability
6.4.5 Concluding remarks
6.5 The regulation of banks, real estate agents and accountants
6.5.1 Obligation to register under MLR 2007
6.5.2 Banks
6.5.3 Real estate agents
6.5.4 Accountants
6.5.5 Membership of ICAEW
6.5.6 Membership of AAT
6.5.7 Concluding remarks
6.6 Financial Conduct Authority
6.6.1 Supervisory powers
6.6.1.1 Money Laundering Regulations 2007
6.6.1.2 Financial Markets and Services Act 2000
6.6.2 Anti-money laundering supervision in practice
6.6.2.1 The ‘two-track’ approach to anti-money laundering supervision
6.6.2.2 Inclusion of anti-money laundering supervision in regular supervisory procedures
6.6.2.3 Specialist financial crime supervision team
6.6.3 Sanctioning powers
6.6.4 Sanctioning policy and practice
6.6.4.1 Sanctioning policy
6.6.4.2 Sanctioning in practice
6.6.5 Concluding remarks
6.7 Office of Fair Trading
6.7.1 Supervisory powers
6.7.2 Anti-money laundering supervision in practice
6.7.2.1 Supervision by the Office of Fair Trading
6.7.2.2 Outsourcing of supervision to LATSS
6.7.3 Sanctioning powers
6.7.4 Sanctioning policy and practice
6.7.4.1 Sanctioning policy
6.7.4.2 Sanctioning in practice
6.7.5 A look ahead: AML supervision by HMRC as of April 2014
6.7.6 Concluding remarks
6.8 Institute of Chartered Accountants in England and Wales
6.8.1 Supervisory powers
6.8.2 Anti-money laundering supervision in practice
6.8.2.1 Risk-based approach
6.8.2.2 Procedure
6.8.2.3 Supervision in numbers
6.8.3 Sanctioning powers
6.8.4 Sanctioning policy and practice
6.8.4.1 Disciplinary procedure
6.8.4.2 Sanctioning policy
6.8.4.3 Sanctioning in practice
6.8.5 Concluding remarks
6.9 Association of Accounting Technicians
6.9.1 Supervisory powers
6.9.2 Anti-money laundering supervision in practice
6.9.2.1 Risk-based approach
6.9.2.2 Procedure
6.9.2.3 Supervision in numbers
6.9.3 Sanctioning powers
6.9.4 Sanctioning policy and practice
6.9.4.1 Disciplinary procedure and sanctioning policy
6.9.4.2 Sanctioning in practice
6.9.5 Concluding remarks
6.10 Supervisory cooperation for the prevention of money laundering
6.10.1 Institutionalised forums for AML cooperation on a policy level
6.10.2 Cooperation efforts by AML supervisors on an operational level
6.10.3 Concluding remarks

Chapter 7 Anti-money laundering supervision of banks, real estate agents and accountants in Sweden
7.1 Introduction
7.2 Vulnerability of Sweden for money laundering
7.3 Legal framework for the prevention of money laundering
7.4 The AML supervisors: institutional aspects
7.4.1 The independence of administrative authorities in Sweden and their accountability
7.4.2 Financial Supervisory Authority (Finansinspektionen)
7.4.2.1 Institutional embedding
7.4.2.2 Political independence and accountability
7.4.2.3 Market independence and accountability
7.4.3 Estate Agents Inspectorate (Fastighetsmäklarinspektionen)
7.4.3.1 Institutional embedding
7.4.3.2 Independence and accountability
7.4.4 Supervisory Board of Public Auditors (Revisorsnämnden)
7.4.4.1 Auditing and the accountancy profession
7.4.4.2 Institutional embedding
7.4.4.3 Independence and accountability
7.4.5 County administrative boards of Stockholm, Västra Götaland and Skåne (Länsstyrelserna)
7.4.5.1 Institutional embedding
7.4.5.2 Independence and accountability
7.4.6 Concluding remarks
7.5 The regulation of banks, real estate agents and accountants
7.5.1 Banks
7.5.2 Real estate agents
7.5.3 Accountants
7.5.3.1 Accountants under the AML Act
7.5.4 Concluding remarks
7.6 Financial Supervisory Authority (Finansinspektionen)
7.6.1 Supervisory powers
7.6.2 Anti-money laundering supervision in practice
7.6.2.1 The ‘two-track’ approach to anti-money laundering supervision
7.6.2.2 Inclusion of anti-money laundering supervision in regular supervisory procedures
7.6.2.3 Thematic anti-money laundering supervision
7.6.3 Sanctioning powers
7.6.4 Sanctioning policy and practice
7.6.5 Concluding remarks
7.7 Estate Agents Inspectorate (Fastighetsmäklarinspektionen)
7.7.1 Supervisory powers
7.7.2 Anti-money laundering supervision in practice
7.7.2.1 Supervision on the basis of complaints
7.7.2.2 Supervision initiated by FMI
7.7.2.3 Supervision in numbers
7.7.3 Sanctioning powers
7.7.4 Sanctioning policy and practice
7.7.5 Concluding remarks
7.8 County administrative boards of Västra Götaland, Stockholm and Skåne (Länsstyrelserna)
7.8.1 Supervisory powers
7.8.2 Anti-money laundering supervision in practice
7.8.3 Sanctioning powers
7.8.4 Sanctioning policy and practice
7.8.5 Concluding remarks
7.9 Supervisory Board of Public Auditors (Revisorsnämnden)
7.9.1 Supervisory powers
7.9.2 Anti-money laundering supervision in practice
7.9.2.1 Systematic and outreach supervision
7.9.2.2 Periodic quality controls
7.9.2.3 Supervision in numbers
7.9.3 Sanctioning powers
7.9.4 Sanctioning policy and practice
7.9.5 Concluding remarks
7.10 Supervisory cooperation for the prevention of money laundering
7.10.1 Institutionalised forums for AML cooperation on a policy level
7.10.2 Cooperation efforts by AML Supervisors on an operational level
7.10.3 Concluding remarks

PART III

Chapter 8 Synthesis
8.1 Introduction
8.2 Legal framework for the prevention of money laundering
8.2.1 Gaps and conflicts in substantive AML legislation
8.2.2 Clarity and enforceability of substantive AML legislation and related norms
8.3 Independence and accountability of AML supervisors
8.3.1 Political independence and accountability
8.3.1.1 Spain and the Netherlands
8.3.1.2 Sweden and the United Kingdom
8.3.2 Market independence and accountability
8.4 Knowledge of AML supervisors of their supervisory population
8.4.1 The regulation of banks, real estate agents and accountants
8.4.2 Initiatives from national legislators to overcome (potential) problems
of non-regulation
8.5 Anti-money laundering supervision of banks
8.5.1 Supervision
8.5.1.1 Supervisory powers
8.5.1.2 AML supervision of banks in practice
8.5.2 Sanctioning
8.5.2.1 Sanctioning powers
8.5.2.2 Public supervision (sanctioning) policies
8.5.2.3 Sanctioning in practice
8.6 Anti-money laundering supervision of real estate agents
8.6.1 Supervision
8.6.1.1 Supervisory powers
8.6.1.2 AML supervision of real estate agents in practice
8.6.2 Sanctioning
8.6.2.1 Sanctioning powers
8.6.2.2 Public supervision (sanctioning) policies
8.6.2.3 Sanctioning in practice
8.7 Anti-money laundering supervision of accountants
8.7.1 Supervision
8.7.1.1 Supervisory powers
8.7.1.2 AML supervision of accountants in practice
8.7.2 Sanctioning
8.7.2.1 Sanctioning powers
8.7.2.2 Public supervision (sanctioning) policies
8.7.2.3 Sanctioning in practice
8.8 Supervisory cooperation for the prevention of money laundering
8.8.1 Institutionalised forums for AML cooperation on a policy level
8.8.2 Cooperation efforts by AML supervisors on an operational level
8.9 Concluding remarks

Chapter 9 Conclusion
9.1 Introduction
9.2 Effective supervision
9.3 Institutional differences in AML supervision in the European Union
9.4 Anti-money laundering supervision in the Member States
9.5 The most effective anti-money laundering supervision
9.5.1 Answer to the research question
9.5.2 Recommendations
9.6 Conclusions in perspective
9.6.1 Effective supervision and the principle of effectiveness
9.6.2 Supervisory models in the preventive AML policy
9.7 Epilogue
Summary
Samenvatting
Bibliography
Table of interviews
Curriculum Vitae