UK must sign terrorism and money laundering treaty says Lords committee

July 30, 2009 at 2:02 pm Leave a comment

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The House of Lords EU Committee has said it is indefensible that the UK has still not signed or even ratified the Warsaw Convention on Money Laundering and Terrorist Financing.

The convention has been open to signature since May 2005.

It is the first comprehensive international treaty covering both the prevention of money laundering and the financing of terrorism.

It will allow access to information about suspicious bank accounts across Europe.

The committee said ministers must set “an urgent timetable for signature and ratification.”

The fight against money laundering depends on States sharing information about the movement of money, especially information about suspicious bank accounts, the Lords committee said.

They also criticised the Government for failing to implement the EU Framework Decision on mutual recognition of confiscation orders – pointing out that confiscation is one of the best methods of combating money laundering.

In their report, Money Laundering and the Financing of Terrorism, the committee call on the government to take the initiative in discovering the extent to which the proceeds of piracy are used to finance terrorism.

The government say there is no evidence of a link between the two.

The committee condemn this attitude as complacent; they believe the reason no link has been found is simply that none has been sought.

Lord Jopling, Chairman of the House of Lords EU Sub-Committee on Home Affairs, said:

“The government has done a lot to fight money laundering and terrorist financing, but much more can be done.

“It should be investigating the link between ransoms paid to pirates and terrorist financing.

“It should be working with other EU States, and more widely, on the confiscation of the proceeds of crime.

“We are concerned that the government has been slow to adopt measures to speed the exchange of information.

“The government should act now to ratify the Warsaw Convention on Money Laundering and Terrorist Financing.

“Monitoring suspicious movements of money and suspicious account activity can only work with cooperation from banks and financial institutions.”

Other recommendations:

Payment of a ransom should not be a criminal offence, but shipowners putting together ransom money must seek consent for the payment. The authorities must know in advance how much is being paid, to whom, and where.

The fight against money laundering depends on banks and others providing reports of suspicious activities to the Serious Organised Crime Agency (SOCA).

200,000 entries are made on their ELMER database each year, and there are now 1.5 million entries. The great majority are kept for 10 years even where there is no evidence that the suspicious activity was criminal. The Information Commissioner must investigate this.

Banks and others in the private sector dedicate large sums of money and resources to making Suspicious Activity Reports (SARs) to SOCA.

For one bank the annual cost of complying with the regulations was estimated at £36m.

The Committee are concerned that private sector organisations are not given adequate information about how and where the information they provide is used.

They assert that it is only by being provided with increased case by case feedback that the regulated sector will feel persuaded of the value of the efforts it puts into complying with the SARs regime.

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