Wednesday 19 September 2018

The real money-laundering threat in reality is not the City

I have read and seen so many articles of late about how the City of London is a dirty cesspit of financial money laundering. This all helps feed the Corbynista mantra about capitalism being pure evil and all money being dirty (unless it is theirs of course...).

A story out today shows how different the world really is. Danske Bank, the largest bank in Denmark, has long been a Baltic retail bank. Today its CEO resigned after many years when it has been suspected of large scale money laundering from its Estonian branches. The thing is, smaller banks have less compliance and less ability to combat fraudsters. In addition, the regulators in Denmark, for example, are not as sharp as those in London. Plus Danske is practically the only large bank so they have the too big to fail disease in a smaller economy such as Denmark.

Of course this does not make London whiter than white. The shear number of properties acquired by Russians in London in particular is beyond belief. The use of tax havens and the London markets to move dirty money around is always going to be an issue. But the realisation today is that it is even more of an issue in smaller and less regulated markets, less sophisticated ones. The money launderers are actually always going to try it on with a small backwater branch somewhere in Eastern Europe rather than try their games with JP Morgan or Barclays in London.

It is a lesson to the regulators of Europe that in reality it will be the Banks of weaker states such as Cyprus, Hungary, Romania etc that will be used for the majority of money laundering - it is these Banks and Countries that are most at risk, but it suits the French and Germans to blame London in a desperate attempt to get more Finance business to Paris and Frankfurt.


GridBot said...

Interesting post CU.

have you by any chance recently watched this documentary on youtube:

Not being a city type i don't know how much truth there is to it, but it sounds about right.


dearieme said...

Abroad is bloody.

auralay said...

"The shear number of"...
Is this a cutting remark, or can't your spillchequer handle "sheer"?

Anonymous said...

Seems to be a Danish thing then, given the issues with Iceland too. Where was "too big to fail" in that.

You also forgot to mention the link between Danish political sphere, the EU and the British Labour party's "royalty".

You're slipping

CityUnslicker said...

Auralay - sorry for the typo's but if I hope you do stay to become a regular reader you will eventually find them quaint. Once upon a time I taught as an English teacher and this has forever ruined me when it comes to both grammar and spelling.

Anon - Iceland was entirely another too big to fail issue. Their banks were bigger than the government and sunk the country! they did not go in for huge money laundering though, they were keen on examining the downsides of fractional reserve banking for the benefit of their directors

As to Kinnock's et all, this is nothing to do with that or the EU. This is quite clearly a case of ignoring compliance to boost profits. They chose not to follow the rules, for money, literally.

Steven_L said...

Their banks were bigger than the government and sunk the country!

No, the bubble burst and Iceland just came crashing back to planet Earth with a bit of a thud.

iOpener said...

Understanding what you mean by dirty money thing causes me difficulty. I conclude you mean money on which taxes have not been paid.

Sorry, but dirty money is to me the cleanest of clean money.

Starve the beast, drive a stake of Oak through its vitals, shoot it with a silver bullet, read it a Pater Noster, burn it with Holy Water, smite it with cold steel, burn its disgusting corpse after castrating it and pissing in its mouth. Boil its ashes in a mix of Sulfuric and Hydrochloric acid and pour the sludge into a cesspit.

auralay said...

CityUnslicker - I have been lurking regularly here for a coulple of years now, and appreciate the slightly irreverent insights.Sorry to be pedantic. My Welsh Valleys mother grew up in an era when the only escape from the mines was a good education. I still have her copy of Fowler.

Steven_L. I think you hit the nail on the head. Icelend crashed with a bit of a bump. We're still trying to keep aloft and the crash will be much worse. Now, if only someone could tell me exactly when it will happen...