When AML Legal Obligations Are NOT Equal
The alternative name of the article would have been:
In a country where people from state companies believe they are above the law …
A few days ago, in Romania, the letter of a customer towards his bank became viral through the lack of attention of a bank employee. We will not talk here about the data privacy laws (GDPR in the European Union), the lack of professionalism, ethics or maybe just maturity of the bank employee, which are all extremely obvious. We will ignore all that and we will focus on the AML side of the story, on the reason of the bank’s request, on the customer’s answer and the public opinion versus this subject.
But let’s start with the beginning!
The customer’s letter was an “explanation” of the destination of funds to be withdrawn in cash and you will find it translated below – both for a clear understanding of the situation, as well as for mere fun.
“The undersigned X.X, customer of Bank YY, I hereby give the present statement forced by Bank YY, based on internal norms that are NOT opposable to me, in order to justify to the bank what I do with my money…
For this reason, I give the present statement:
Considering that it is summer and vacation time, being after a quarantine period, I very much wish to have some fun, for which reason I will travel to the Netherlands where prostitution is LEGAL, in order to f*k some prostitutes. I will probably do the same in Austria and Germany until I reach the Netherlands.
Then, still in the Netherlands, where drugs are LEGAL, I wish to consume marijuana, hashish and I would also try some mushrooms. I hear that in the Netherlands there are some really good marijuana cakes, that I would suggest you to try, maybe you wake up and stop imposing people to give stupid statements based on idiot procedures, in order to justify what they do with their personal money.
Of course, if I don’t have toilet paper and I still have all this money, I will probably fulfill my dream and I will wipe my a*s like rich people with some hundred euros…
The rest of the money is to borrow to my friends and make useless expenses, in order to regret the money afterwards.”
If at first glance you feel like laughing at such an answer, afterwards you feel like crying – for the man’s ignorance crowned with a big, fat, unjustified superiority against the bank employee, for the sheep flock behind him that applauded virally throughout the internet, for the massive attack against the bank (both online & at the TV news) because it was just doing its legal obligation to ask about the destination of funds, because the customer in question was above all a jurist and a former manager at a state-owned company. And most of all…because this is the world we live in.
A world in which we have 40 FATF international recommendations, 5 AML Directives at the European Union level until now, a big national AML law (which just got amended), formidable National Banks who continuously control banks to see how they do their AML jobs – everything imposing rules, obligations and demands that the Banks know the source and destination of their customers’ funds BUT NO LEGAL OBLIGATION TO THE CUSTOMERS TO PROVIDE SUCH STATEMENTS AND JUSTIFICATION DOCUMENTS.
We are in a serious disproportionate equilibrium of forces and a legislative void!
Banks are legally forced to ask, but customers are not legally forced to answer. The only method to “force” them is through contracts signed between customers and the banks which afterwards, in the absence of a legal requirement for the customers, are considered abusive and the Banks are just mercenaries.
And thus, many times, such Robin Hoods as the one from our story rise as dung (please, please look this word up, because it’s very important) in the field. And they puff and they huff and they battle like true heroes against the oppressive, irrational banks in a background full of applauses from other “oppressed” bank customers and the media (which has well learned so far that hitting a bank is a sure way to get high audience).
What hit me the most in this story was that nobody “took the bank’s side”. No newspaper or TV news talked about the legal obligations imposed by the AML law that led to the Bank’s request. Everybody talked about the absurd request and many people encouraged themselves via internet to further give such stupid answers to Bank requests as if a sudden contest of “worst answer ever” had been launched.
And what should hit us all even more is the fact that our Robin Hood is a person with a legal background and a former managerial position in a Romanian state-owned company – The National Road Infrastructure Management Company (CNAIR). In a country where corruption in the national road infrastructure is a well-known fact, where only 44% of the national roads are paved and where there are only 866 kms of highways (according to official data*) and yearly forgotten promises of thousands more kms in an unknow future, should we be surprised that a jurist and a former manager of such a national company shows such an impressive lack of knowledge and consideration of the national AML laws? Should we be surprised that he considers himself above the law?
Surprised? Unfortunately, no.
Sad? Unfortunately, yes
And just to be clear, for our Robin Hood who is enjoying his days of fame, glory and public approval, as well as for all his supporters who are now planning similar answers towards the abusive banks:
Banks don’t care what you do with your money as well as you don’t launder money, finance terrorism or evade international sanctions. Because, the truth is that Banks still are the main vehicles used for money laundering.
In case of large amounts (by themselves or related to your previous bank activity), the bank must ask questions in order to establish that the funds and your intentions are legal – both for incomings, as well as for payments or cash withdrawals. Sometimes even for them both, especially if they occur in a short period of time and are atypical. If you answer (simply, without considering that a large, occult organization is behind your back), it just helps the bank understand your transactions and move on. If you don’t answer, it doesn’t mean that the Bank won’t process your transactions. It will, but it will most probably take other legal measures as well, depending on its suspicions – the most often being to report you to the national AML office with AML/CFT suspicions where an investigation will at some point be initiated on your behalf.
The Banks are just doing their jobs.
And, for the ones analyzing transactions from an AML/CFT point of view, in many cases customers do not even have names as they are many times irrelevant (except of publicly renowned AML/Corruption cases). They are just bank customers, most often called a “Private Individual” or a “Legal Entity”. Once the AML case is solved, it is forgotten and the AML officers move on to the next case.
Yes, it would be a lot simpler if instead of bordering, individual bank frameworks, there would be national and international connected networks where all bank transactions would be visible to a national or global AML system. In such a situation, legal transactions would be more visible versus the illegal ones and the Banks would not be forced to ask “stupid” and “abusive” questions about the intention of a former state-owned company manager to suddenly withdraw in cash 85.000 EUR.
But, until this interconnected AML system is formed, FATF, the European Union and national Authorities could take “one small step for them, but one giant leap for mankind” and introduce the legal obligations of bank customers to provide to banks the justification documents and information that the banks are legally bound to ask.
By Andreea Tampu, ACAMS
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Thank you for your post and for your site! Best luck!