Across the AML Divide: data sharing, de-risking and debate

George Hodgson

Having spent two days this week in Brussels at a meeting of the Financial Action Task Force’s (FATF) private sector consultation forum discussing international anti-money laundering (AML) regulations, it was striking how two or three strands are now starting to dominate the debate.

First is the growing divide between the big banks and what they looking for from governments to help with their AML obligations relative to how the legal and accountancy professions see the issues. The banks want lists – as many as possible – computerised and machine readable, with the aim of removing any human role in AML checks. With this in mind, we had a presentation of a major project the UN, US and the Wolfsberg Group of banks had been working on regarding sanctions lists. There was much talk of metadata, fuzzy logic and machine readable formats, but when asked if a sole practitioner would be able to use the list or if legal professionals had been part of the consultation process on this project there was a slightly awkward silence.

There was also a real clash of thinking around data protection and the human right to privacy. It is clear that those responsible for data protection are increasingly concerned at AML proposals that will make large amounts of personal information widely available to a range of governments and institutions. This data sharing is supposedly for AML purposes, but with relatively few checks in practice about how this data is really going to be used.  The gulf here is enormous; from the US Government’s representative who found concerns about the human rights of people who might be terrorists ‘bizarre’,  to those who feel there is now an urgent need for the FATF to bring data protection supervisors into their structure at the very top (given that the AML system FATF is building is in practice now major exercise in data exchange).

The other major theme that attracted intense debate was the way the banks are ‘de-risking’ in the face of huge penalties for any AML breaches. They are therefore increasingly pulling out of business with a range of clients or jurisdictions based on their perception of potential AML risks. The debate identified correspondent banking as an area where this was already having a major impact but it was widely felt to be a growing issue across all bank business lines.  I suspect STEP members may also have views on this too.

George Hodgson is Deputy Chief Executive of STEP.

Why it pays to keep an eye on developments in foreign jurisdictions

Robin MacKnight

Robin MacKnight

Technology may very well be the bane of a busy practitioner’s existence. It makes us all too accessible. It deprives us of the solitude we all need to think and recharge. It makes available too much information. Then we have to deal with the follow-up surveys and questionnaires! Fortunately, the editors of Trust Quarterly Review (TQR) are pleased to report that the latest survey of STEP members showed overwhelming satisfaction with STEP publications generally, but only 70 per cent of members were satisfied with the TQR. In fact, about 28 per cent of members were ‘indifferent’.

Among the reasons provided in the survey, we discovered a number of apparent contradictions. The sentiment that surprised us most was the demand for more ‘local’ coverage – from every region where STEP operates. This sense of ‘mimby’-ism (more in my backyard) perhaps supports the demand for quality continuing education, or perhaps highlights the differences between our members’ areas of practice.  The editors are sympathetic to both possibilities and will strive to address them in future issues.

One disturbing fact emerged from the survey: there does not appear to be recognition among our members (in common-law jurisdictions at least) of the near universality of the trust concept. Trust law is generally consistent across the common-law jurisdictions, so that developments in England are transportable to other parts of the world, and issues in New Zealand are likely to be repeated, or perhaps have already occurred, elsewhere.  In fact, a decision of the British Columbia (BC) Supreme Court has recently been released in a case in which the trustees argued mistake. The BC court accepted the reasoning of the UK court in Pitt v Holt; Futter v Futter [2013] 2 AC 108, and the Jersey Supreme Court in In the Matter of the S Trust (2011) JRC 117.

We have much to learn from each other, and the Editors of TQR are pleased to help enable this. We are also cognisant of growing issues affecting our clients across economic classes, both locally and internationally. We all have clients with aging parents and dependent or incapacitated family members and we should be relieved that some of our colleagues are prepared to share their experiences so we can all provide a better service to our clients.

We encourage TQR readers to think about whether the decisions discussed could be applied in other jurisdictions. We note how trust law has developed in emerging financial centres, and how new thinking from new jurisdictions can shape thinking locally – wherever that locale may be. We encourage our readers to ‘think global, act local’!  We welcome your thoughts, your experiences and new articles.

Adapted from Robin MacKnight’s editorial in Volume 12, Issue 1 of the Trust Quarterly Review.

Robin MacKnight is a Partners with Wilson Vukelich LLP in Ontario, Canada. He sits on the Editorial Board of STEP’s Trust Quarterly Review.

Time to acknowledge excellence

David Harvey

On Monday STEP announced that nominations for the 2014/15 Private Client Awards (PCA) had opened. Now in their ninth year, the PCAs are our opportunity to acknowledge and celebrate the professional achievements of our peers in private client practice, be they solicitors, attorneys, accountant, barristers, bankers, family business consultants, trust managers or financial advisors. This year there are 19 award categories for individuals, teams, chambers or firms to enter and, for the first time, all categories will be open to practitioners worldwide.

I strongly encourage you to consider submitting a nomination for a STEP PCA. All entries are rigorously evaluated by the Presiding Judges and to be recognised as a top-tier performer in the industry is an occasion you can be proud of. Given the broad range of jurisdictions and respective regulatory frameworks in which practitioners work, I expect to see contrasting nominations that all share the same hallmarks of excellence.

Nominations close on 30 May with finalists announced on 1 July. The awards night will be held in London on 17 September and I look forward to seeing many of you there.

View the 2014/15 Private Client Awards website including award categories and nomination forms

David Harvey is Chief Executive of STEP

STEP PCA 2014/15 Logo