Inadequate info sharing is hampering AML investigations, says NCA’s Toon

Slow and inadequate sharing of information between financial intelligence units worldwide is undermining money laundering investigations, said Donald Toon, head of the Economic Crime Command and the Cyber Crime Unit at the National Crime Agency.

Toon said new powers contained in the Criminal Finances Bill would make it easier for the UK FIU to extract data from bureaucratic foreign agencies and would help them pursue complex international cases.

He pointed to two measures which he said would strengthen UK investigators’ hand. First, the International Corruption Unit would have a better chance of obtaining information and, ultimately, criminal assets with the introduction of the unexplained wealth order.

Secondly, police forces would be able to obtain more speedily information which had hitherto been held up by bureaucratic obstacles. Administrative time lags following information requests made by the UK FIU to certain overseas police forces has been known to delay an investigation beyond the allowed time limit.

Unexplained wealth order

The unexplained wealth order outlined in the new bill, initially proposed by Transparency International, would assists investigations by requiring owners to explain how they came by the funds to acquire a valuable asset. The International Corruption Unit, which sits inside the NCA, is expected to make most use of such orders.

Toon told Thomson Reuters Regulatory Intelligence that when the UK FIU asked an overseas government to investigate the suspicious purchase of an asset in the UK, the answers were often slow and inadequate. Under the proposed new regime, however, the UK would be able to challenge the individual owner. “What we are doing is switching the burden of proof around. It says, ‘you own the property but we can see no basis of funding that enabled you to buy it’. So we ask, ‘how did you fund it?’.”

The power to require an individual to answer this question will be granted by an application to the High Court, made by the NCA. “If they fail to respond we will go immediately for asset recovery. If they do respond, then that informs our ongoing investigation. If their response is subsequently proven to be false, they will have committed an offence because they have lied in response to a High Court order. This is a useful way of getting round a particular problem, which is how to obtain effective evidence from overseas jurisdictions.”

Extended investigation period

The bill’s proposal to increase the period allowed to the investigator of a “consent” SAR from the existing 31 days to six months would allow scrutiny of vague but suspicious information provided by a bank, Toon said. “When you are not entirely clear what you have got hold of and you only have a limited amount of information, then you have got to start digging into the background,” he said.

Correspondence with agencies in some countries is complex, requiring frequent clarifications and explanations. On top of that, letters have to be translated. The UK authorities may also be required to present evidence they have obtained to justify their request in front of a court, delaying the information request process still further.

“The chance of obtaining relevant information within 31 days is fairly minimal even when you are dealing with most developed jurisdictions,” Toon said, although he excluded EU jurisdictions, where he said information flowed more freely.

“If we are talking about an international transaction or accounts which may be owned by international persons or companies, then we need to get behind the transaction itself, we need to be able to go to a court and demonstrate why these funds should be restrained pending a further criminal investigation. Going from zero to the point when we have the material to stand in front of the court in less than 31 days in most international work is extremely difficult,” he said, although he made it clear that no such delays occurred when requests involved terrorism or were very high-profile.

He thought the time extension would lead to a “significant increase” in the number of investigations, although he would not be drawn on the size of the increase. “More cases will be investigated, more assets restrained, more money will be taken off criminals.”

Applications for an extension will need to be made by the investigating agency each month for a maximum period of six months, after which the probe would have to stop.

“The court will be looking for progress. We will have to show that we are making proper use of the time,” he said.

Failure to prevent tax evasion

While the Criminal Finances Bill will bring welcome changes, Toon said the inclusion of a clause that would make the “failure to prevent tax evasion” a corporate offence did not go far enough. He said he would like to see a clause which made “failure to prevent economic crime a corporate offence.

“The government has been clear that it should be extended to wider forms of economic crime but you need to be clear about the definition of economic crime such that they would fit with current legislation. How would it fit with the current structure of money laundering responsibilities, for example? I think the basic thought is ‘better right than quick’.”

  • Nick Kochanis a contributing editor to Thomson Reuters Regulatory Intelligence. He is the author of ‘The Washing Machine’, a book about money laundering and ‘Corruption: The New Corporate Challenge’. Kochan writes widely about compliance and economic crime.



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