The role of financial intelligence units in combating money laundering : an essential ingredient of a sound financial services centre

Abstract

The message is clear: conventional forms of crime fighting are inadequate and incompatible when it comes to money laundering. The Financial Intelligence Unit (FIU) fills this lacuna, the rationale being that no agency, organisation or financial institution on its own can effectively curtail money laundering, and it is through cooperation and the sharing of information that money launderers can be successfully identified, investigated and prosecuted. Indeed, it is impossible to make sense of the law of money laundering without reference to the FIU. The effectiveness of the fight against transnational crime is dependent upon the effectiveness of international cooperation in criminal matters. This is precisely what Chapter I seeks to examine: the regional and international efforts made at forming relationships between national financial intelligence units, with the aim of harmonising principles and facilitating cooperation in financial intelligence sharing. In recent years, FIUs have increasingly become the conduit for this exchange of information. This sharing of intelligence has raised concerns about the individual's right to privacy, as this too is explored in Chapter I. Admittedly, no FIU can function, or even exist, without the cooperation of financial institutions and the information they are privy to. There must be a concerted effort, encompassing certain obligations that challenge typical, traditional banking principles, as examined in Chapter II. The obligation of financial institutions to have procedures relating to the making of suspicious transaction reports to FIUs forms an intrinsic part of the lexicon of anti-money laundering legislation, alongside "know your customer" and "record-keeping". Moreover, the introduction of reporting obligations upon other professionals outside the financial sector is a hotly contested area of recent money laundering law that is taken into account by the author. The scope of Chapter III is to examine the FIU itself: its rationale, forms, functions and mission. Indeed, combating money laundering requires the setting up of specialised FIUs designed to receive and process financial information from financial institutions. The conclusion provides some recommendations as to how this system can be improved. Ultimately, any efforts at trying to establish a sound financial centre remain futile as long as tainted money can easily move through the system. The FIU is the sword in this international fight against money laundering.