The Presumed Crime of Not Money Laundering

     They following is a justifiably concerned critique of the way anti-money laundering laws are structured to presume guilt, with all the punishment that that deserves, from Henry Stern from InsureBlog.

As a licensed life insurance agent, I have to take a triennial anti-money-laundering course. Having just completed this task, I came away with some major reservations about the whole thing.

Over at his eponymous blog, Ace of Spades noted a few months ago that (disgraced) former Speaker of the House Dennis Hastert was sentenced to almost a year and a half of prison time for …. “hiding [his] transactions from the government by making them in increments below the level at which a bank must report them.”

This got me to thinking about my own industry as I sat down to begin this round of online training. They are part of the USA Patriot Act, and reg’s specific to my industry became effective exactly 10 years ago.

And what is the true purpose of this training, and of these regulations? If you said “well, to catch terrorists and various other scofflaws,” you’d be wrong. The second slide made the answer abundantly clear:

“This knowledge will help to ensure that the producer and the carriers he or she is working with do not become involved in investigations or scandals that could harm the carrier’s reputation and damage relationships with clients.”

Hunh. Nothing about keeping us safe, or catching tax cheats or drug dealers; those are of secondary importance. No, it’s all about image and reputation, as if **these** are anything but illusory.

And what, exactly, am I signing up for?

“If you suspect money laundering, contact the carrier’s AML compliance officer and document the communication.”

So now I’m a forensic accountant and a cop. When do I get my bonus? Also, don’t I have a fiduciary responsibility to my client, and an obligation to protect his/her privacy?

Here’s more of what really ticked me off:

“Generally, you should regard a transaction that appears to lack a reasonable economic basis or recognizable strategy as suspicious.”

Oh, goody: now I get to be Kreskin, too!

“Applicant for insurance business attempts to use cash to complete a proposed transaction when this type of business transaction would normally be handled by checks or other payment instruments.”

Last time I looked, cash is still “legal tender for all debts, public and private.”

“Charles informs him that while the accounts have been transferred to a new bank, he has decided to pay his premiums and make additional contributions to his annuity and other investments via money orders to avoid bank transaction fees. He then tells Thomas that the change in payment method is “None of your concern.” Thomas decides to listen to his client.”

I agree. But that’s not what the law says. Am I the only one who has a problem with this?

Oh for goodness sake:

“Clients whose businesses conduct transactions primarily in cash is a red flag and heightened-awareness is required.”

This is just egregious. There are plenty of legit cash-only businesses; for example, we were recently in New York and enjoyed several delicious food cart items. Are the vendors automatically tax cheats? What happened to the presumption of innocence?

“The referral of Gene from a non-client.”

Since when? I get these from time to time, always legit. Maybe the agent has a really great rep.

“William has an out-of-state driver’s license and no other verification of a local residential address.”

For goodness’ sake: guy just moved here. My daughters moved out of state for grad school, and took their sweet time getting new driver’s licenses. Does this make them suspect?

There was more, but these are the ones that truly hit a nerve. I liken it to the whole TSA kabuki theater; that is, it’s there for show, but no one actually believes that it makes us safer.

And neither does this. But it does impinge on my relationship with my clients, and that’s just not right.

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One Response to The Presumed Crime of Not Money Laundering

  1. Pingback: Coming Clean: Anti-Money Laundering | Untruth