Since when is rendering a service fraudulent? As banks target money launderers, the innocent may be suspected: risk and insurance



Roger Crombie is a UK-based columnist for Risk & Insurance®. He can be reached at [email protected]

I was recently investigated for money laundering.

There was no indication that I had cleared anything, but it took eight months to confirm my innocence.

The process was unreasonable. Much of it had little to do with money laundering, and the rationale was based on the impossibility of proving a negative.

I had offered to lend money to a friend whose property had fallen under absurd laws in the UK. The loan would allow my friend to recover her only house and live there, which the law prohibited her from doing. (And people wonder why I’m a libertarian.) The mortgage company didn’t want the loan paid off. He makes money by lending, not by buying. So he ran in agonizing slow motion the task of making sure my contribution wasn’t laundered.

The law applies to all financial professionals, including types of insurance.

Especially the types of insurance, because it turns out that large single cash premium payments are very suspicious.

In theory, it is a good law. The accumulation of dubious Russian oligarchs and their laundered fortunes in London disproves it. The first round involved submitting my financial records for the past three years. Second round extended to transactions of the last eight years.

Could you find all of your financial records for the past eight years?

I did, but if I failed I was asked to get hard copies of anything that was missing.

Electronic records were not acceptable, which reinforced my decision not to bank online. At no time did the mortgage company accept what I said. When the evidence proves innocence beyond a doubt, this is called “taking a point of view”. We have sailed well beyond this point. On and on the lenders being investigated, digging deep into deals well below the level deemed suspect in law — or even common sense.

Once I submitted every possible piece of paper and every possible reasonable explanation, the company resorted to the two remaining weapons.

The first was that since I had lived in Bermuda, what else could I be but a money launderer? (My UK bank feels the same way.) The second was even more despicable. Since six months had passed between the lenders’ first inquiry and the most recent, I had to start the process all over again.

Fortunately, this time, I had put all the papers in a pile and found them quite easily.

Eventually, unable to come up with any other delaying tactics, the mortgage company relented and said I could do the loan.

It was a good example of the law of unintended consequences. Companies have been given carte blanche to produce the result they desire, rather than the truth.

My mom laundered money once when I was still living at home. My employer had given me a travel advance of $1,000 (in today’s money). Never having had so much cash in my life, I carefully placed it in the pocket of my jeans. My mother washed the jeans, smashing the silver into a million pieces. When we sent them to the Bank of England, they refunded me the full amount, no questions asked.

The golden days of money laundering are, it seems, gone forever. &

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